ERP By: The class What is ERP? ERP stands for: Enterprise Resource Planning systems This is what it does: attempts to integrate all data and processes of an organization into a unified system. A typical ERP system will use multiple components of computer software and hardware to achieve the integration. A key ingredient of most ERP systems is the use of a unified database to store data for the various system modules. Overview Some organizations - typically those with sufficient in-house IT skills to integrate multiple software products - choose to only implement portions of an ERP system and develop an external interface to other ERP or stand-alone systems for their other application needs. Overview This is very common in the retail sector, where even a mid-sized retailer will have a discrete Point-of- Sale (POS) product and financials application, then a series of specialised applications to handle business requirements such as warehouse management, staff rostering, merchandising and logistics. Overview Ideally, ERP delivers a single database that contains all data for the software modules, which would include: Manufacturing: Engineering, Bills of Material, Scheduling, Capacity, Workflow Management, Quality Control, Cost Management, Manufacturing Process, Manufacturing Projects, Manufacturing Flow Supply Chain Management: Inventory, Order Entry, Purchasing, Product Configurator, Supply Chain Planning, Supplier Scheduling, Inspection of goods, Claim Processing, Commission Calculation Data Warehouse: and various Self-Service interfaces for Customers, Suppliers, and Employees Overview ERPs are cross-functional and enterprise wide. All functional departments that are involved in operations or production are integrated in one system. In addition to manufacturing, warehousing, logistics, and Information Technology, this would include accounting, human resources, marketing, and strategic management. Advantages ERP delivers a single database that contains all data for the software modules across an entire company. People in different departments all see the same information and can update it. Computer security is included within an ERP system to protect against both outsider and insider crime Advantages ERP systems tie together varied processes using data from across the company. For instance, a typical ERP system manages functions and activities as different as the bills of materials, order entry, purchasing, accounts payable, human resources, and inventory control, to name just a few of the modules. Advantages ERP software combined the data of formerly separate applications. This made the worry of keeping information in synchronization across multiple systems disappear. It standardized and reduced the number of software specialties previously required. Advantages ERP systems allow companies to replace multiple complex computer applications with a single integrated system. ERP systems replace two or more independent applications and eliminate the need for external interfaces previously required between systems and provide additional benefits that range from standardization and lower maintenance to make reporting capabilities easier. Disadvantages There are several disadvantages to enterprise resource planning: Cost Implementing ERP is very expensive, price can range from $30,000 - $500,000, depending on the size of the company. ERP vendors can charge a license renewal fee annually which can also be costly for any business. Consultants may need to be used for installation or to maintain the ERP. Employees may need to be trained in ERP so they can fully utilize the system. Training times takes away from work time and can also cost additional funds. Disadvantages Expertise Success of ERP depends on the skill level and experience of the company’s work force. Enterprises view cutting training funds as a way to cut costs. Smaller companies may even need to underfund training this means their ERP system is often operated by personnel with inadequate education in ERP and the ERP vendor package being used. Proper training of the workforce is dependent to success with ERP. New employees must be trained before they can properly start working because of the ERP system Disadvantages Flexibility ERP’s can be very rigid and may not fit the business flow of the company trying to use it. Company’s may need to customize their ERP package which isn’t allowed by most ERP vendors. Disadvantages Change Employees may be needed to change the way they work to become more efficient. They maye feel resistant to change which can be a negative. Bugs! Technical When Designing an ERP system, knowledge of the application takes an extremely important role. The ERP system is meant to allow a business to run its operations swiftly, this cannot be achieved if a company cannot perform a task a certain way, because the programmer only allowed for it to be done a certain way because he lacked proper knowledge of the application. This would in effect make running the business more complex thereby defeating the purpose of ERP. Technical It is difficult and expensive to tailor an ERP system to the way a specific company does business. Part of the challenge of building an ERP system for a company is training. The ERP system is going to drastically change the way many employees perform their jobs. This means they must be trained to use the software efficiently and this will not occur overnight. This means that either the software company or less commonly the business will have to train their employees. Technical The machines that are sold are indeed reliable. However, many companies like to “Set it and Forget it.” 80% of companies that request IT service list there problem as severe with corruption and data loss iminent. Abacus Data Systems suggests that companies should have a more proactive attitude when it comes to system maitenance. Technical Open Source Software is making a large splash in the world of ERP because it allows for easy customization. The source code is easily available so the company can employ a team of developers to customize the software to their needs. IF the company ever may need a new feature, all they need to do is code it and it could be implimented within hours! The double edged sword to this method is that the technical responsibilites are in the company's own hands. On one side they do not need to pay the company that wrote the software for service, on the other side they are the only one's responsbile for repairing the system.
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