1. ERP: Enterprise Resource Planning:
An Enterprise Resource Planning (ERP) system is an integrated computer-based application used to manage internal and external resources, including tangible assets, financial resources, materials, and human resources. Its purpose is to facilitate the flow of information between all business functions inside the boundaries of the organization and manage the connections to outside stakeholders. Built on a centralized database and normally utilizing a common computing platform, ERP systems consolidate all business operations into a uniform and enterprise-wide system environment.
An ERP system can either reside on a centralized server or be distributed across modular hardware and software units that provide "services" and communicate on a local area network. The distributed design allows a business to assemble modules from different vendors without the need for the placement of multiple copies of complex and expensive computer systems in areas which will not use their full capacity.
2. Some Examples of ERP applications:
2. Oracle Apps (or) Oracle E-Business Suite
3. JD Edwards EnterpriseOne, Siebel Systems and PeopleSoft (Oracle owned products)
3. How an ERP application(say oracle apps) is developed?
Oracle, has done a study of all the major companies/industries of all sectors (like Manufacturing, telecom, Retail etc.,) example GE, and came up with an application package which is generic to all the businesses and helps in efficiently managing the business process.
4. How are these ERP applications (say oracle apps) implemented to our business?
First, Oracle E-Business Suite has to be bought from oracle corp with the required modules (Order Management, Inventory, Manufacturing, Purchase order etc.,).
second, we have to hire a consulting company (like TCS, Infosys, Wipro) which implements oracle application. The consulting team will first analyses our business and customizes the oracle E-Business suite based on the business (Customer) requirements.
5. Why is ERP Needed?
All most all todays businesses have the following:
a. Different kinds of Assets
b. Jobs & roles of Employees
c. Accounting of their daily transactions
d. Selling to customers
e. Buying from vendors
f. Maintaining material stock
g. Maintaining Material Plans
h. Maintaining material costs etc.,
So, business involves many complex processes and interaction among them has to be properly maintained.
An ERP provide the following things:
(i) Help reduce operating costs
ERP software attempts to integrate business processes across departments onto a single enterprise-wide information system.
The major benefits of ERP are improved coordination across functional departments and increased efficiencies of doing business.
The immediate benefit from implementing ERP systems we can expect is reduced operating costs, such as lower inventory control cost, lower production costs, lower marketing costs and lower help desk support costs.
(ii) Facilitate Day-to-Day Management
ERP systems offer better accessibility to data so that management can have up-to-the-minute access to information for decision-making and managerial control.
ERP software helps track actual costs of activities and perform activity based costing.
(iii) Support Strategic Planning
Strategic Planning is "a deliberate set of steps that assess needs and resources; define a target audience and a set of goals and objectives; plan and design coordinated strategies with evidence of success; logically connect these strategies to needs, assets, and desired outcomes; and measure and evaluate the process and outcomes."
Part of ERP software systems is designed to support resource-planning portion of strategic planning.
(iv) The Competitive Business Environment and the Emerging Digital Firm
Four powerful worldwide changes have altered the business environment.
- Emergence of the Global Economy
Today, information systems provide the communication and analytical power that firms need for conducting trade and managing business on a global scale. Globalization and information technology also bring new threats to domestic business firms.
2. Transformation of Industrial Economies
In a knowledge and information, based economy; knowledge and information are key ingredients in creating wealth. Knowledge and information are becoming the foundation for many new services and products.
3.Transformation of the Business Enterprise
The traditional business firm was and still is a hierarchical, centralized, structured arrangement of specialist that typically relied on a fixed set of standard operating procedures to deliver a mass- produced product.
4. The Emerging Digital Firm
The intensive use of information technology in business firms since the mid 1990s, coupled with equally significant organizational redesign, created the condition for a new phenomenon in industrial society. The digital firm is organization where nearly all significant business processes and relationships with customers, suppliers, and employees are digitally enabled, and key corporate assets are managed through digital means. Business processes refer to the unique ways in which organizations coordinate and organization work activities, information, and knowledge to produce a product or service.