What is ERP?
Enterprise Resource Planning or shortly ERP is process
of integration of information from multiple departments and divisions of an
enterprise/organization to facilitate informed decision making and to provide
mutual support to achieve the ultimate enterprise goal. However, there is no
common agreed upon definition of Enterprise Resource Planning or ERP system.
Various authors have described the term in their own perspective. The American
Production and Inventory Control Society (APICS) defines Enterprise Resource
Planning as “an accounting oriented information system for identifying and
planning the enterprise wide resources needed to take, make, ship, and account
for customer orders” (Watson & Schneider, 1999).
Thomas F. Wallace and Michael H. Kremzar (2001) have defined Enterprise Resource
Planning (ERP) as: “An
enterprise-wide set of management tools that balances demand and supply, containing
the ability to link customers and suppliers into a complete supply chain, employing
proven business processes for decision-making, and providing high degrees of
cross-functional enterprise integration among sales, marketing, manufacturing,
operations, logistics, purchasing, finance, new product development, and human
resources, thereby enabling the enterprises to run their business with high levels of customer service
and productivity, and simultaneously
lower costs and inventories; and providing the foundation for effective
e-commerce”.
In his book “The Enterprise Resource Planning Decades” after literature review on ERP definitions, Dr. David Sammon has concluded that ERP system is a generic term for enterprise wide integrated standard information system that stores deep knowledge of business practices.
The question is whether an ERP is a
software? Some authors have included the term “Software” while defining ERP systems
whereas others presume Enterprise Resource Planning to be a super-set to an ERP
software. Dr. Thomas F. Wallace is of the view that it is a misleading concept to
take a cross departmental enterprise wide transaction processing software system
to be an ERP. Such softwares do support enterprise resource planning but it is incorrect
to say that they perform enterprise resource planning. Dr Wallace has argued
that these softwares also include many business processes which are not part of
enterprise resource planning. Therefore, there is a need to distinguish an Enterprise
Software System from Enterprise Resource Planning. Thomas H. Davenport has
defined an Enterprise Software System as “packages of computer applications
that support many, even most, aspects of a company’s information needs.” [Book:
Mission Critical].
It can be safely concluded that Enterprise
Resource Planning is the process of enterprise wide integration of cross functional
information and an ERP software supports this Enterprise Resource Planning
process.
Recommended Readings on ERP:
Following are the links to various famous study material on ERP
- Enterprise Resource Planning Systems: Systems, Life Cycle, Electronic Commerce, and Risk by Daniel E. O'Leary
- The Enterprise Resource Planning Decade: Lessons Learned and Issues for the Future by Idea Group Inc (IGI)
- Second-Wave Enterprise Resource Planning Systems: Implementing for Effectiveness by Graeme Shanks, Peter B. Seddon, Leslie P. Willcocks
- The Evolution of ERP Systems: A HistoricalPerspective by Mohammad A. Rashid (Massey University–Albany, New Zealand), Liaquat Hossain (Syracuse University, USA) and Jon David Patrick (University of Sydney, Australia)
- ERP: Making It Happen - The Implementers’Guide to Success with Enterprise Resource Planning by Thomas F. Wallace Michael H. Kremzar
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