Enterprise Resources Planning (ERP)

Enterprise Resource Planning (ERP) is an integrated information system that serves all departments within an enterprise.
Enterprise resource planning systems (ERPs) are management information systems that integrate and automate many of the business practices associated with the operations or production aspects of a company.
An ERP system can include software for manufacturing, order entry, accounts receivable and payable, general ledger, purchasing, warehousing, transportation and human resources. The major ERP vendors are SAP, PeopleSoft, Oracle, Baan and J.D. Edwards. Lawson Software specializes in back-end processing that integrates with another vendor's manufacturing system.
Think of ERP as the glue that binds the different computer systems for a large organization. Typically each department would have their own system optimized for that division's particular tasks. With ERP, each department still has their own system, but they can communicate and share information easier with the rest of the company.
ERP systems typically handle the manufacturing, logistics, distribution, inventory, shipping, invoicing, and accounting for a company. Enterprise Resource Planning or ERP software can aid in the control of many business activities, like sales, delivery, billing, production, inventory management, and human resources management.
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.
In the early days of business computing, companies used to write their own software to control their business processes. This is an expensive approach. Since many of these processes occur in common across various types of businesses, common reusable software may provide cost-effective alternatives to custom software. Thus some ERP software caters to a wide range of industries from service sectors like software vendors and hospitals to manufacturing industries and even to government departments.
Because of their wide scope of application within the firm, ERP software systems rely on some of the largest bodies of software ever written. Implementing such a complex and huge software system in a company usually involves an army of analysts, programmers, and users, and often comprises a very expensive project in itself for bigger companies, especially transnationals.
To implement ERP systems, companies often seek the help of an ERP vendor or of third-party consulting companies. Consulting in ERP involves two levels, namely business consulting and technical consulting. A business consultant studies an organization's current business processes and matches them to the corresponding processes in the ERP system, thus 'configuring' the ERP system to the organisation's needs. Technical consulting often involves programming. Most ERP vendors allow changing their software to suit the business needs of their customer.
Today there are also web-based ERP systems. Companies would deploy web-based ERP because it's requires no client side installation, is cross-platform and maintained centrally. As long as you have an Internet connection, accessing web-based ERPs is done through typical web-browsers.
Disadvantages
The limitations and pitfalls of the enterprise resource planning are claimed to be:

• the systems can be very expensive to install and maintain

• ERPs are often seen as too rigid, and difficult to adapt to the specific Workflow and Business process of some companies--this is cited as one of the main causes of their failure.

• some systems can be difficult to use

• the system is no better than the weakest link in the chain - a problem in one department or at one of the partners will affect all the other participants

If the ERP system is integrated with a supply chain management system, other potential problems include:

• the system is vulnerable to a strike or labour problem at any one link in the chain

• there can be transportation inefficiencies if small lots of product are transported several times before reaching the consumer/user

• once a system is established, switching cost are very high for any one of the partners (reduced flexibility and strategic control at the corporate level)

• the blurring of company boundaries can cause problems in accountability, lines of responsibility, and employee morale

• there is a resistance to sharing sensitive internal information, information that may be essential to the process

• there are compatibility problems with the various legacy systems of all the partners

• customers may order more than they require (as in the dot.com/telecommunications boom and bust of 2001)

Some ERP vendors
Vendors of popular ERP software include (sorted roughly according to worldwide ERP related revenue):
1. SAP
2. Oracle Applications
3. Microsoft Business Division
4. The Sage Group
5. SSA Global Technologies
6. Lawson Software
7. Exact Software
8. QAD
9. Epicor
10. NetSuite Inc.
11. SIV.AG
12. 24SevenOffice
Vendors without known revenue figures (sorted alphabetically):

• Compiere
• Datasul
• Deltek
• Favourite Computer Systems
• Office123
• Ramco Systems
• Technology Group International