Enterprise Resource Planning: Success and Failures
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Brandy Lail
Rati Patel
Ashley White
Jennifer Zinkeler
Enterprise Resource Planning: Success and Failures
Enterprise resource planning systems (ERP) are management information systems that integrate and automate many of the business practices associated with the operations or production aspects of a company. These aspects typically include manufacturing, logistics, distribution, inventory, shipping, invoicing and accounting. Generally, an ERP system is integrated with a relational database system. The use of an ERP system can involve considerable business process analysis, employee retraining, and new work procedures. The systems are often called back office systems because customers and the general public are not directly involved. On the other hand, front office systems like customer relationship management systems deal directly with the customer. ERP systems are cross-functional and enterprise wide, which means that all functional departments involved in operations or production are integrated into one system. In addition to manufacturing, warehousing, and shipping, this would include accounting, human resources, marketing, and strategic management (
There is a significant need for ERP systems in businesses today. A few years ago, in most businesses, each department had their own computer files that they had to work with. Today, with ERP software, things are different. All of the departments still have the files they need but everything is accessible to everyone within the company. An example of the need for ERP systems in businesses today is if the purchasing manager needed to check the status of the invoice, he could do so from his own desk with his own computer without ever having to contact the accounting department. It saves him time and makes it faster for him to get an answer back to the supplier who asked the question in the first place, thus strengthening that relationship as well. While that single example may not sound impressive, this is just one example. Every transaction a company does from taking orders to paying bills is streamlined through an ERP system. The efficiency gains that companies can realize over time from these systems can be incredible (
The best know Enterprise Resource Planning (ERP) system is the SAP R/3 system. SAP R/3 is a client/server based application using a 3-tiered model. The presentation layer communicates with the user. The application layer houses all the business-specific logic and the database layer records and stores all the information about the system. Another type of ERP system used by J.D. Edwards is PeopleSoft. PeopleSoft is “well known for its ability to be easily customized, or tailor-made, to fit the specific business needs of each client, while still being generic enough to meet corporate and governmental tracking requirements” (www.wikipedia.com). Oracle Corporation (another producer of ERP systems) merged with PeopleSoft in 2005 but PeopleSoft ERP systems are still used by thousands of companies.
ERP vendors such as Oracle, BAAN and SAP offer standardized systems to which companies operate from. Standardized systems are often more expensive than proprietary systems (ERP systems created specifically for a particular company). With standardized systems a company takes the risk of losing a strategic advantage. A company should take this into account and decide whether a standardized system is best or to hire professionals to build from scratch a proprietary system designed exclusively for that company. J.D. Edwards uses Oracle/PeopleSoft as its ERP system, as mentioned above. ERP investments are critical in the redesigning, streamlining and automating the business processes that interact with these powerful systems. Proprietary or standardized, every company should have an Enterprise Resource Planning System and utilize the efficiency and effectiveness of the software. Its more than just having the software; its knowing how to use it (www.cio.com/research/erp).
ERP is basically cleaning up the mess your business has made with its old system. It is business process reengineering and its critical to the success of most businesses. With an ERP system implementation you completely change the way you do business, for the better. Its not just software implementation like a new website or a high-end security system. Reengineering your company to do day-to-day business processes in half the time is critical to maintaining a strategic advantage. ERP implementation can be more risky, more complex and costly than implementing other types of software but also more valuable if executed correctly
There are several advantages for a company to implement an ERP system. An ERP system is designed to support advantages to implementing an ERP system. An ERP system allows greater efficiencies by creating effective ways to provide computer support to a companys daily business functions. An ERP system can also help reduce the organizations operating costs by managing inventory more efficiently. When inventory is managed efficiently this will reduce wasted or stolen inventory within the company, so their operating costs will decrease. Since ERP helps with the integration of information systems this enables the company to exchange information across the organization seamlessly (http:projects.bus.isu.edu). An ERP system also increases a companys customer services, with an ERP system a company can locate a customers purchase or information about their account in a short period of time. It helps reduce the number of times the customer has to be transferred because everyone in the business has access to the same information because the system is integrated. This saves the customers time and your business money. Lastly, another advantage with ERP is that it can help an organization totally redesign its operations rather than with implementing a computer based system this just computerizes the existing ways of doing business. A company who was experienced huge success with the implementation of an ERP system is IBM. IBM can be highly flexible and customers are able to rely on them because of their SAP system. Their SAP system also allows them to lower operational costs, helps them to be responsive to changes within their