Enterprise Resource Planning refers to an approach or process implemented with a prime objective of merging all the departments and business functions within an organization into a single in integrated computer system that meets the information units of every business unit within the organization (Alexis, 2007).
The outcome of ERP systems is a convergence of organizational workforce, computer hardware and software that fosters an efficient production process and delivery in order to increase revenue for the organization.
ERP systems has a positive impact on the execution of organizational processes and functions because it enhances information flow among the various business units inside and outside the organization (O’Leary, 2000).
History of Enterprise Resource Planning
Enterprise Resource Planning is a concept that was first embraced during the early 80s; it was used to merge the functions of Finance, Manufacturing and business logistics, and was primarily implemented with a sole objective of facilitating the execution of business level strategies such as purchasing, production and sales (O’Leary, 2000).
ERP systems witnessed increased growth during the 1990s in order to address the problems imposed by the year 2000 problem and impact of the Euro on the business systems, as such business enterprises made use of the opportunity to upgrade their systems to ERP (O’Leary, 2000).
ERP systems were originally implemented to automate functions that were related to back office that had direct effect on the clientele. Front office functions were later merged into ERP such as Customer Relationship management and Supplier Relationship Management.
ERP II was adopted during the early 2000s and primarily focused on web-based application that facilitated real time access of the systems by the employees of an organization and external entities such as suppliers, stakeholders and customers (O’Leary, 2000).
Components of an Enterprise Resource Planning System
- Business Intelligence Systems
- External Access platforms using technology such as web-based applications
- Management of documents
- Reporting platforms that can be customized
- Management portal
- And management of organizational workflow
Implementation of ERP Systems in an Organization
Process Preparation: The implementation of an ERP system needs an overhaul of the current business processes. It is vital that business enterprise conduct an analysis of the current business processes before implementing an ERP system in order to identify the opportunities that can be posed by modernization of the business process (Alexis, 2007).
Configuration: involves matching the needs of the organization and the design of the ERP system
Customization: it is important that ERP systems can be customized in accordance with the changing needs of the organization. Despite the fact that customization will affect the implementation time of the ERP system, it is important in establishing the frameworks through which the organization can achieve competitive advantage.
Data migration: refers to the transferring of data from the current system to the Enterprise Resource Planning system. Data migration is a vital process and requires adequate attention by identifying the data that is to be migrated to the new ERP system, determining the time of data migration, generation of templates for the data, freezing of the data sets and archiving of the data (O’Leary, 2000).
The Role of ERP In the Current Management Approaches
- Impacts of the ERP on the on the way organizations are managed
- ERP and its contributions to E-commerce.
ERP is an integral element of organizational management and processes that business enterprises should not overlook. The basic implication is that ERP results to increased revenue and competitive advantage
Alexis, L. (2007). Enterprise Resource Planning. New Delhi: Tata McGraw-Hill Education.
O’Leary, D. E. (2000). Enterprise resource planning systems: systems, life cycle, electronic commerce, and risk. Cambridge: Cambridge University Press.