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Enterprise Resource Planning (ERP)

Oct 30, 20242 min read

What is Enterprise Resource Planning (ERP) Systems

  • ERP systems are core software programs that help companies integrate and coordinate information across all areas of the business.
  • These systems are designed to:
    • Automate and integrate most business processes.
    • Share common data and practices.
    • Provide and access real-time information.
    (Ellen F. Monk & Bret J. Wagner, Concepts in Enterprise Resource Planning, 4th ed.)

Goals of Enterprise Resource Planning (ERP) Systems

  • A primary goal of ERP is to integrate departments and functions into a single infrastructure to meet the needs of each department.
  • ERP systems replace the assortment of individual systems previously used by organizations (e.g., Accounting, HR, Materials Planning, Transaction Processing).
  • ERP addresses the critical challenge of integrating information from different sources, providing real-time availability.

ERP example invert_B

ERP Architecture

  • A system’s architecture is a blueprint that helps the implementation team build the ERP system.
  • A flexible architecture is ideal for scalability as business needs change.
  • ERP architecture may be vendor-driven, while other IT architectures are guided by organizational strategy and business processes.

Enterprise Resource Planning (ERP) components

  • Hardware: Servers and peripherals.
  • Software: Operating systems and databases.
  • Data & Information: Organizational data from internal and external sources.
  • Process: Business processes, procedures, and policies.
  • People: End users and IT staff.

System Benefits of an ERP System

  • Integration of data and applications across functional areas (data entered once improves accuracy and quality).
  • Maintenance and support improvements through centralized IT staff.
  • User interface consistency reduces training needs, boosts productivity, and enables cross-functional roles.
  • Enhanced security through better controls and centralized hardware.

System Limitations of an ERP System

  • Increased complexity in installation, configuration, and maintenance requiring specialized IT resources.
  • Consolidation of IT hardware, software, and personnel can be challenging.
  • Data conversion from old to new systems is often tedious and complex.
  • Retraining IT staff and end users can cause resistance and lower productivity.

Brief Overview

  • ERP systems implementation is a complex organizational activity.
  • It requires strong project management oversight to ensure success.
  • ERP systems offer improved and added functionality for an organization.

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