Enterprise Resource Planning (ERP) plays a vital role in the business world, which requires people to have a general understanding of the key components of ERP to function well in any organization. Companies have been in transition to computer technology at an increasing rate since the advent of the desktop computer in the early 80s. The focus of information technology in business has always been to increase productivity through information management. After the introduction of the Internet and advances in networking technologies and software, companies need to implement some form of information technology to automate common tasks such as word processing, accounting, and access to the Internet by employees, the most advanced software applications that cover all or most of an organization's business processes. These advanced software applications, generally known as ERP, capitalize on information technology and allow businesses to have detailed perspectives in a wide range of business operations, allowing them to share information quickly between organizations, departments and personnel for better management.
ERP is a term used broadly to describe software but mainly includes hardware and software systems used by a company to collect, store, retrieve and use information flows through an enterprise. The term ERP, therefore, can be applied to a single microcomputer with an accounting package (Quick Books, for example) to track sales, inventory, billing and accounting, to the most complex ERP systems that automate the processes of business throughout the chain of production, distribution, supply, retail, service and, ultimately, the customer, which can be either upstream or downstream of the supply chain. These functional abilities of ERP are generally grouped into categories of software known as Supply Chain Management (SCM) and Customer Relationship Management (CRM) and can be implemented in small, medium or large enterprises using various hardware and software configurations. complex ERP systems can be designed (hardware and software architecture) to large multinational companies that use the Internet, Intranet and Extranet in their business operations. An Intranet functions like the Internet; however, it is limited to the organization and its users and denies access to the public. An extranet, on the other hand, is a mechanism that allows people authorized to access the Intranet portions of an enterprise (on the Internet) with a user name and a password. For example, a manufacturer may allow dealers to access the Extranet to view product information and prices, limited proprietary information to authorized dealers.
ERP is an extremely complex subject best understood by looking at the main components of an ERP system, including hardware, software, and the main areas of concern for business owners and managers. Looking at these major components from a conceptual point of view, we can point the side of the technical jargon allowing for greater understanding of the purpose of ERP and its importance in business and the workplace.
Hardware
The size of an organization dictates the type of hardware used in an ERP system. For small businesses, the hardware component of an ERP system may be a single microcomputer or a few microcomputers connected together over a local area network (LAN). In the case of a small LAN, one of the microcomputers would act as a server, which is simply a dedicated computer with the task of acting as a centralized data warehouse where the data is stored. The server accepts data inputs, process the inputs and "serves" data to other software applications, or, provides output in various forms including screen information, print output or other types of digital output.
Generally, in larger ERP environments, an enterprise will use a dedicated server, which, in most cases, is a mini-computer . Mini-computers have increased operational and storage capacity than desktop computers and can serve many users at once. Users access the server via either dumb terminals (a monitor and keyboard) or an intelligent terminal (a fully functional desktop microcomputer) networked to the server via a local area network (LAN). As the server and the new (or existing microcomputers, known as legacy systems) are connected sets the stage for the hardware architecture of the system. As these systems are connected to the server and, between them, form the topology (or layout) of the system within an organization.
A major concern facing many companies; new computer hardware acquisitions, has two dimensions; on the one hand, it is crucial for acquiring state of the art computer equipment that not aged rapidly changes in technology while, on the other hand, the attempt to interface, the old existing systems in the ERP system. This is especially important if the existing legacy systems perform many business processes, making the transition to ERP, and systems integration, more complicated.
There are many technical issues related to hardware configurations, requiring the expertise of Information Technology (IT) specialists. User-operators of an ERP system rarely address these technical problems, have little or no input regarding system configurations and rely on technical support staff to handle technical issues, training and support.
In summary, the hardware component of an ERP system is comparable to the skeletal system of the human body; It is the framework, or platform, the software "rides" on and provides for user interaction interface.
Software
ERP software encompasses most business processes and, according to the Department of Defense, US Enterprise Solutions Competency Center:
The activities supported by ERP systems include all basic functions of an enterprise, including financial management, human resource management, and operations. Increasingly, ERP vendors are offering "bolt-on" products that offer specific features to increase the core, such as the Advanced Planning and Scheduling (APS), and Customer Relationship Management (CRM) (07).
designERP software uses a "best practice" approach which helps to ensure the accuracy and integrity of data. For example, all users of accounting software design forces to enter financial data according to the rules of standard generally acceptable accounting practices (GAAP). This GAAP standard helps to ensure that the financial statements and reports reflect the true financial situation of a company. Accounting software achieves this by checking compliance with the entry of financial information in the software program. Similar types of rigorous-standards used in ERP software conform to standard business practices around the ERP software industry, including the bolt on products. According to author Jim Welch:
The companies can learn from the lessons of the past implementations. Many programs were overly focused on IT functionality at the expense of the development of business processes. As a result, their expected benefits have been compromised or delayed. In contrast, the best performers meant that the process management, governance, and other non-technical issues have been adequately addressed (07).
One of the primary considerations of ERP software is if the processes and practices of a company will conform to ERP software (best business practices) standards without radical changes to the software. This can, and often do not, it means that a company will have to change their business processes to comply with the software, rather than the reverse. This is practical for a number of reasons; First, the software changes may be cost prohibitive for smaller companies and in the second place, the software changes may put at risk the integrity of the data, endangering the very purpose of the ERP. In addition, the software changes can make the software upgrade, even with the same vendors and application software (ERP ERP2.0 to 2.1, for example), extremely complex and expensive.
One of the key considerations when selecting an ERP software system is how well the business process is part of the standard of the best business practices of an ERP program and the integration potential with the present and the future bolt- on programs. It is a complex problem well outside the scope of this document and requires a thorough analysis of the individual software packages on the market in conjunction with senior management working with IT consultants who represent the ERP software vendors.
In summary, the software component of an ERP system is the core of business information and is comparable to the arterial system of the human body, through it streams of data, the lifeblood of the organization.
Software Vendor
The major players in the ERP software are Oracle / PeopleSoft and SAP and both companies are highly respected in the ERP industry. While there are competitors, these two companies dominate the market with nearly 20 billion in combined annual revenue, with Oracle at $ 10 billion and SAP for $ 9.7 billion dollars. This does not mean that these two software companies represent the best ERP solution for every company. In fact, one of the most important elements of an ERP system acquisition due diligence to find the right software for the business, or, according to Dustin Alexander of Global Shop Solutions; "You can not invest too much time in the evaluation process" (07).
The choice of the software component (s) of an ERP system is one of the single most important issues facing a business considering an ERP implementation. Most companies do not have the IT staff to monitor and manage the entire acquisition process, which requires close examination management from different angles to safeguard the IT investment. Depending on the size and scope of ERP acquisition, a company can expect to draw on external experts to conduct a series of tests, including the feasibility, business processes, and supplier performance / software. The implementation of an ERP solution in an organization is a deep science that requires the best of business and IT minds, working together to help ensure the success of the project through a broad spectrum of issues. Among these problems are the functionality, effectiveness, utility and ease of use with an eye on acquisition costs, gradual implementation, training, process transition, and ongoing development that achieves the goals and objectives of the organization.
Real Business Issues
There are many important issues that a business considering ERP implementation and management must perform due diligence during the whole process to safeguard against system failure. Successful projects start with a well-written plan in detail every step of the acquisition process so people can understand so that management can take ownership of the project and employees will use the system. Among these problems are contract negotiations covering hardware and software, software license agreements, changes, updates, technical support, services, training and support transition people and processes. In addition, the company must establish a governance model to control all aspects of an ERP implementation with an emphasis on the transition of business processes that meet the organizational needs and maintain business mission to the front line.
Conclusions
small, medium and large companies use computer technology to manage their business enterprises and streamline data flows for better business management. Business applications can be as simple as using rapid Books to manage inventory, billing and other financial processes, or very complex systems known as Enterprise Solutions. ERP systems can include departments or organizations and use a variety of hardware and software to support and automate business operations. Among the most complex systems, the use of microcomputers, servers, operating systems, and support of application software Internet, intranet, extranet, local area networks (LAN) and wide area networks (WAN) to communicate and share data across departments and organizations.
ERP is a complex subject, but understandable that plays a huge and growing role in business and government, which requires people to have a perspective more in this technology and application in the workplace. The three main components of an ERP system are the hardware, software and the people who operate it. The important thing to remember is that ERP is very technical, and no single person has all the answers when it comes to implementing ERP systems. In order to ensure the successful implementation of ERP in enterprises, many businesses and skilled IT professionals they need to work together across a variety of disciplines to maximize the potential for a seamless transition to a digital enterprise.
References
Alexander, D. (07, September 26). "What is ERP ERP-Get Right the first time." Retrieved September 26, 07, Global Solutions Store:
Welch, J. Dmitry, Kordysh. (07). "Seven Keys to ERP success." Strategic Finance, 89 (3), from 40 to 47.61. Retrieved September 26, 07, from ABI / INFORM Global database. (Document ID: 1339921.401000).
Unkown. (07, June 12). ERP Overview. Retrieved September 15, 07, Enterprise Solutions Competency Center:
Copyright (c) 07 Jim Hart, All rights reserved
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