ERP, or
enterprise resource planning, is a modular software system designed to
integrate the main functional areas of an organization's business processes
into a unified system.
BREAKING DOWN 'Enterprise Resource Planning -
ERP'
Enterprise resource planning is
the glue that binds together the different computer systems for a
large organization. Typically, each department would have its own system
optimized for that division's particular tasks. With ERP, each department still
has its own system, but it can communicate and share information more easily
with the rest of the company.
The ERP software functions like a
central nervous system for a business. It collects information about the
activity and state of different divisions, making this information available to
other parts, where it can be used productively. Information on the ERP is added
in real time by users.
ERP resembles the human central
nervous system in that its capacity transcends the collective ability of the
individual parts to form what is known as consciousness. It helps a corporation
become more self-aware by linking information about production, finance,
distribution and human resources together. ERP connects different technologies
used by each individual part of a business, eliminating duplicate and
incompatible technology that is costly to the corporation. This involves
integrating accounts payable, stock-control systems, order-monitoring
systems and customer databases into one system.
The first ERP system was
developed by SAP, a software firm created in 1972 by three software engineers
based in Mannheim, Germany. SAP's goal was to link different parts of a
business by sharing information gathered from those parts to help the company
operate more efficiently.
Why ERP Systems Fail to Achieve Objectives
A company could experience cost
overruns if its ERP system is not implemented carefully. An ERP system doesn't
always eliminate inefficiencies within the business. The company needs to
rethink the way it's organized, or else it will end up with incompatible
technology.
ERP systems usually fail to
achieve the objectives that influenced their installation because of a
company's reluctance to abandon old working processes that are incompatible
with the software. Some companies are reluctant to let go of old software that
worked well in the past. The key is to prevent ERP projects from being
split into many smaller projects, which can result in cost overruns.
No comments:
Post a Comment