ERP

Enterprise resource planning (ERP) systems integrate internal and external management information across an entire organization, embracing finance/accounting, manufacturing, sales and service, customer relationship management, etc. ERP systems automate this activity with an integrated software application. The purpose of ERP is to facilitate the flow of information between all business functions inside the boundaries of the organization and manage the connections to outside stakeholders. ERP systems can run on a variety of computer hardware and network configurations, typically employing a database as a repository for information.

Origin of ERP
In 1990 Gartner Group first employed the acronym ERP as an extension of material requirements planning (MRP), later manufacturing resource planning and computer-integrated manufacturing. Without supplanting these terms, ERP came to represent a larger whole, reflecting the evolution of application integration beyond manufacturing. Not all ERP packages were developed from a manufacturing core. Vendors variously began with accounting, maintenance and human resources. By the mid1990s ERP systems addressed all core functions of an enterprise. Beyond corporations, governments and nonprofit organizations also began to employ ERP systems

Characteristics
ERP (Enterprise Resource Planning) systems typically include the following characteristics:

An integrated system that operates in real time (or next to real time), without relying on periodic updates. A common database, which supports all applications. A consistent look and feel throughout each module. Installation of the system without elaborate application/data integration by the Information Technology (IT) department.

Advantage of erp system

Installing an ERP system has many advantages - both direct and indirect. The direct advantages include improved efficiency information integration for better decision-making, faster response time to customer queries, etc.

The indirect benefits include better corporate image, improved customer goodwill, customer satisfaction and so on. Some of the benefits are quantitative (tangible) while others are non-quantitative (intangible). Tangible benefits are those measured in monetary terms and intangible benefits cannot be measured in monetary terms but they do have a very significant business impact. Tangible benefits: Improves the productivity of process and personnel Lowering the cost of products and services purchased Paper and postage cost reductions Inventory reduction Lead time reduction Reduced stock obsolescence Faster product / service look-up and ordering saving time and money Automated ordering and payment, lowering payment processing and paper costs

Intangible benefits: Increases organizational transparency and responsibility Accurate and faster access to data for timely decisions Can reach more vendors, producing more competitive bids ; Improved customer response Saves enormous time and effort in data entry ; More controls thereby lowering the risk of mis-utilization of resources Facilitates strategic planning Uniform reporting according to global standards

CHALLENGES OF ERP

Complexity and inflexibility: implementation of ERP can be so complex and tasking to handle. The search has to start from looking for ERP software that will meet the objective of our company. Once the search for the right kind of software is over, series of tests will have to be carried out on the selected software for possible vulnerability. Some times, you really cant bend the software to change to any latest development unless the software vendor does that for your company. Fear of past implementation failures of others: the fear that grips most companies when they hear about the failure tales of businesses that have tried implementing ERP in the past and fail makes them nervous and prone to make even graver mistakes. Absence of competitive advantage: the implementation of ERP does not guarantee any competitive advantage. Gone are the days when the mere implementation of IT automatically guarantees success. The main challenge here is to ensure that the ERP when implemented would actually yield result. Perhaps the only benefit is that you will have smoother operations. That is enough to compensate for the troubles. Difficulty in configuration: configuring the softwares and making them actually useful to the business is an aspect of ERP implementation that no business manager is ever willing to face. Again, getting the staff members to learn know how of the ERP softwares are usually problematic and difficult. Time taken to implement: a lot of time needs to be invested into the implementation of ERPs before they can see the light of the. The most annoying part of it is that most of the time invested end up being a waste of time. Integrating an ERP system into a company's strategy takes too much time, energy and resources. Is not custom-ly developed: you dont have the opportunity of telling your developer what you want to be included in the software. Your company may have a peculiar need that may warrant that the software be tweaked, but, will not have the opportunity of doing so. Collection different softwares are better: there is this problem that the collection of different softwares might do the job perfectly well.

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