Enterprise resource planning
Enterprise resource planning (ERP) is the integrated management of main business processes, often in real time and mediated by software and technology.
Cloud-based applications have grown in recent years due to the increased efficiencies arising from information being readily available from any location with Internet access.
The applications that make up the system share data across various departments (manufacturing, purchasing, sales, accounting, etc.)
[6] ERP systems run on a variety of computer hardware and network configurations, typically using a database as an information repository.
Without replacing these terms, ERP came to represent a larger whole that reflected the evolution of application integration beyond manufacturing.
[15] ERP systems initially focused on automating back office functions that did not directly affect customers and the public.
[17][18] It describes web–based software that provides real–time access to ERP systems to employees and partners (such as suppliers and customers).
[23] As an example, the e-commerce platform Shopify was able to make ERP tools from Microsoft and Oracle available on its app in October 2021.
ERP now covers more functions and roles—including decision making, stakeholders' relationships, standardization, transparency, globalization, etc.
This means the software reflects the vendor's interpretation of the most effective way to perform each business process.
[32] Use of best practices eases compliance with requirements such as International Financial Reporting Standards, Sarbanes-Oxley, or Basel II.
Direct integration – ERP systems have connectivity (communications to plant floor equipment) as part of their product offering.
This requires that the vendors offer specific support for the plant floor equipment their customers operate.
[36] Besides that, information processing influences various business functions e.g. some large corporations like Walmart use a just in time inventory system.
[40] Poor understanding of needed process changes prior to starting implementation is a main reason for project failure.
Research indicates that risk of business process mismatch is decreased by: ERP implementation is considerably more difficult (and politically charged) in decentralized organizations, because they often have different processes, business rules, data semantics, authorization hierarchies, and decision centers.
Given the realities of globalization, enterprises continuously evaluate how to optimize their regional, divisional, and product or manufacturing strategies to support strategic goals and reduce time-to-market while increasing profitability and delivering value.
[54] Alternatively, there are non-technical options such as changing business practices or organizational policies to better match the delivered ERP feature set.
[60] The most fundamental advantage of ERP is that the integration of a myriad of business processes saves time and expense.
[69] According to Gartner's definition of the postmodern ERP strategy, legacy, monolithic and highly customized ERP suites, in which all parts are heavily reliant on each other, should sooner or later be replaced by a mixture of both cloud-based and on-premises applications, which are more loosely coupled and can be easily exchanged if needed.
[71] There is, however, no golden rule as to what business functions should be part of the core ERP, and what should be covered by supplementary solutions.
[citation needed] The main benefits that companies will gain from implementing postmodern ERP strategy are speed and flexibility when reacting to unexpected changes in business processes or on the organizational level.
[citation needed] With the majority of applications having a relatively loose connection, it is fairly easy to replace or upgrade them whenever necessary.
In addition to that, following the examples above, companies can select and combine cloud-based and on-premises solutions that are most suited for their ERP needs.
The downside of postmodern ERP is that it will most likely lead to an increased number of software vendors that companies will have to manage, as well as pose additional integration challenges for the central IT.
