CIS205 – Introduction To Information Systems Management

Bonaparte

Enterprise Resource Planning

An ERP System is an enterprise wide software solution to information management.

An ERP system is an integrated set of software modules aimed at information management for specific areas of an organization.

To get a feel for an ERP system is all about, go to the following link and explore:

https://www.openerp.com/

ERP – enterprise resource planning

ERP is short for enterprise resource planning.

Enterprise resource planning (ERP) is business management software that allows an organization to use a system of integrated applications to manage the business. ERP software integrates all facets of an operation, including product planning, development, manufacturing processes, sales and marketing.

ERP Software Modules

ERP software typically consists of multiple enterprise software modules that are individually purchased, based on what best meets the specific needs and technical capabilities of the organization. Each ERP module is focused on one area of business processes, such as product development or marketing. Some of the more common ERP modules include those for product planning, material purchasing, inventory control, distribution, accounting, marketing, finance and HR.

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As the ERP methodology has become more popular, software applications have emerged to help business managers implement ERP into other business activities and may also incorporate modules for CRM and business intelligence and present them as a single unified package.

The basic goal is to provide one central repository for all information that is shared by all the various ERP facets in order to smooth the flow of data across the organization.

ERP Vendors

Depending on your organization’s size and needs there are a number of enterprise resource planning software vendors to choose from in the large enterprise, mid-market and the small business ERP market.

Large Enterprise ERP (ERP Tier I)

The ERP market for large enterprises is dominated by three companies: SAP, Oracle and Microsoft.

Midmarket ERP (ERP Tier II)

For the midmarket vendors include Infor, QAD, Lawson, Epicor, Sage and IFS.

Small Business ERP (ERP Tier III)

Exact Globe, Syspro, NetSuite, Visibility, Consona, CDC Software and Activant Solutions round out the ERP vendors for small businesses

What Is An ERP System

Defining Enterprise Resource Planning (ERP) Solutions & Their Benefits

A true Enterprise Resource Planning (ERP) system integrates both internal and external information flows used by the organization within a single, comprehensive solution. An ERP solution incorporates the practical systems used by organizations to manage the basic commercial functions of their business, such as: planning, inventory/materials management, purchasing, manufacturing, finance, accounting, human resources, marketing and sales, services etc. The objective of the ERP solution is to drive the flow of information between all internal business functions while managing connections, or “touchpoints”, to outside stakeholders.

ERP solutions run on a variety of computer hardware and network configurations, including “on premises” (i.e. client/server) or hosted (i.e. “cloud-based” or SaaS).

Regardless of the configuration, typically ERP solutions use a common database to hold information from the various business functions that’s accessible in some form or another by various users. The use of an integrated database to manage the solution’s multi-module application framework within a common information system is one of the primary benefits of an ERP system over “point solutions”.

Unlike point solutions (historically used by small to midsize businesses) that rely on multiple (sometimes duplicating) databases which strain IT resources, ERP solutions standardize the use of one application to run an entire business. This not only increases efficiencies, but also decreases the overall total cost of ownership (TCO), thereby reducing operational costs and improving the company’s profitability.

Additional ERP Benefits:

• Tighter controls for financial compliance declaration (e.g. Sarbanes-Oxley and Basel II) as well as other forms of compliance reporting.
• The single data source for product and services information – such as information related to suppliers, vendors, customer orders and the products themselves – drive rapid product development and launch cycles which increases a company’s overall market share.
• Increased access to valuable corporate data delivers a clear, global view of the business that drives continuous improvement strategies and establishes common performance metrics and measures to gauge the health of the business.
• Effectively managing projects holistically fosters decision making at critical levels in the development and/or manufacturing process.
• Support for streamlined sourcing and procurement processes drive alignment to customer demands, and also deliver a centralized buying model to reduce unauthorized and unnecessary expenses.
• Providing sales and operations planning with access to critical information fosters “closed loop” processes that ensures the business does not overpromise and/or under-deliver to customers.
• Automating business processes such as invoicing and sales and purchase orders within one systems improves forecasting accuracy and reduces inefficiencies.
• Using a single base of information for billing and other customer interactions improves service levels and increases customer retention.

Selecting and Implementing the Right ERP Solution

ERP solutions are continually refined and updated. With the myriad of different systems that are available today, it’s critical for organizations who are considering an ERP system for the first time or migrating to an alternative ERP solution to partner with a company that first assesses their needs and helps them identify the system that will support their business objectives. Equally, if not most important, is to work with a company that defines and integrates an ERP solution that seamlessly supports their business processes.

Since ERP solutions are the operational backbone of a growing or established organization, it’s necessary to partner with a company that understands your business, can improve the quality and efficiency of your organization, and delivers a solution that will ultimately save time and expense.

Benefits of an ERP System

Any company investing in any new tools or equipment will want to know that the investment will pay off—have sufficient return on investment (ROI) to justify the expenditure. And that’s certainly the case with an ERP system.

Interest in implementing a new or replacement ERP system usually starts with a need to address some operational difficulties—trouble in meeting production schedules, too much inventory, high costs, inability to meet competitor’s moves, shortcomings of the current system, or sometimes just a general desire to improve performance. Once this interest is recognized, a project team is established to set a budget, select a system, and put together an ROI justification.

Most companies will identify inventory reduction as one of the biggest benefits of an ERP system. Many companies actually achieve the savings that they anticipate, but it is the implementation effort and the focus on procedures and discipline that generate inventory reduction (without increasing shortages), not the software itself. Nevertheless, the software implementation is the mechanism for the improvements so it’s not unfair to give the ERP system the credit.

Many companies also achieve significant cost savings through increased productivity, better control of material acquisition, improved quality and reduced lead time. These are all direct and measurable improvements that are often sufficient to fulfill most companies’ capital expense guidelines. But there are even greater benefits available from ERP that are less easy to measure and therefore are often overlooked.

The REAL Advantages of ERP Systems

ERP collects, manages and distributes information across functional boundaries and helps break down information “silos”—those barriers that stand in the way of full cooperation between production, materials, planning, engineering, finance and sales/marketing. The resulting higher quality, reduced time-to-market, shortened lead times, higher productivity and lowered costs can help improve customer service and increase sales and market share as well as margins.

Measurements, analysis and simulation capabilities can help companies plan better and react sooner and more effectively to changes in demand, competitive actions, and supply chain disruptions.

Modern ERP systems are built for the internet-enabled world with e-commerce capabilities and provision for integration and collaboration with supply chain partners, customer portals, and enhanced tracking of incoming material and outgoing product to extend the visibility and control. Many companies are challenged by the continually changing requirements of Internet-based business processes and find that their current ERP system is not able to take them where they need to go. It’s hard to put a value on the ability to take advantage of new and evolving e-business imperatives—or the cost of not being able to keep up with (or perhaps even lead) the competition.