Critical Success and Failure Factors of ERP Implementations: A Market Perspective–Continued

Posted at February 11, 2010

ERP Business Functions

The Enterprise Resource Planning (ERP) system is a unified set of programs and applications that provides support for core organizational activities such as supplychain, operations, manufacturing, distribution, finance and accounting, sales and marketing and human resources (Prasad Bingi, 1999). In a nutshell, an ERP systemhelps the different corporate functions of the organization share data and knowledge,reduce costs and improve management of business processes. An ERP applicationstreamlines the entire business flow of an organization so that it is automated and there is less scope for human error. Business functions like inventory management, order management, MRP, finance, supply chain management, customer relationship management and human resources among others are taken care of by the ERP system.What we need to understand here is that Enterprise Resource Planning (ERP) is not software. Improper terminologies such as enterprise-wide transaction processing software systems are being labeled as ERP.Software Packages such as these help in efficient resource planning and cannot be completely depended upon for accuracy. These packages not only contain resource planning but also contain other business processes. As a matter of fact, they do not come as a complete package which helps in streamlining its operations entirety unlike ERP packages. Therefore, we need to coin another acronym that does refer to software: ES. This stands for Enterprise System or Enterprise Software. In the book “Mission Critical” (Davenport, 2000) author Thomas H. Davenport describes enterprise systems as “packages of computer applications that support many, even most, aspects of a company’s information needs.” This is more relevant to today’s business scenario. Another distinctive feature is that: Not all ERP business functions are contained in the typical Enterprise Software (ES) Suite. ERP packages address the entire range of business processes that are required for operating an organization. Figure 1.1 represents this in totality:

ERP1 As the above figure graphically shows, the typical Enterprise System contains software support and components for business processes that are not a part of ERP. There are three areas on the above diagram. The circular figure to the right shows the
operations that are not a part of ERP; the circular figure to the left is not part of the Enterprise System and supports ERP functions; the intersecting area between the two refers to those ERP functions typically supported by Enterprise Software. The above
diagram therefore shows that Enterprise Systems do not cover all the areas that ERP takes care of and hence one should not get confused with the terminologies. As we have a clear understanding of the difference between ES and ERP, it is necessary to further understand what ERP is all about. Enterprise Resource Planning (ERP)—and its predecessor, Manufacturing Resource Planning—are helping transform our business landscape in way that’s helping organizations manage their business processes better. Enterprise Resource Planning (ERP) as the name suggests, is a system that encompasses the basic processes existing in an organization. It started
with the need to capture the processes in an organization and map it into the system for smoother transaction and it eliminates the hassles and the chances of error drastically comes down.