Enterprise Resource Planning (ERP)

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3 January 2008

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The mantra of the modern-day organization is innovation. In order to stay competitive in the market, companies require increasing globalization and flexibility. Challenging issues faced by companies today are the management of large-scale projects and cooperation among enterprises within geographically distributed networks. Companies desperately need innovations; however, the inflexibility of legacy-information technology infrastructure slows down the process. Today, organizations need information technology to support flexible business strategies rather than hold them back. In order to survive, organizations must develop innovative strategies that:

• Sense and respond to real-time customer demands
• Gain market insight by extending processes beyond the enterprise
• Adapt to market changes
• Implement new ways of doing business
Enterprise resource planning (ERP) software is the answer to the agility and flexibility required by today’s organizations. ERP software helps organizations easily manage efficiency, productivity, and cost, thus freeing the human and financial resources to execute innovation and growth strategies.

The origin of ERP can be traced back to its application in the manufacturing environment; however, today, the term “ERP systems” has a much broader scope. Today, Enterprise Resource Planning systems (ERPs) are not just limited to planning resources. Instead, the purpose of an ERP system is to integrate all of an enterprise’s departments and processes into a unified system. It is not easy to develop a software infrastructure that simultaneously holds an entire company together and also supports all of the external business processes that the company engages in. But, if done successfully, the payback is tremendous, and in fiercely competitive environments, enterprises need such integrated approaches to survive. Some of the key traits of ERP system-integrated solutions are:
• They address business processes.
• They are modular. Some of the examples of modules in an ERP include manufacturing, supply chain, financials, customer-relationship management, human resources, warehouse management, and decision-support systems.
• They use unified databases to store data for all system modules.
• They allow companies to reach to their suppliers, customers, and partners.
• They address almost areas of companies’ business functions.
Regardless of the organization’s business or charter, ERP systems are capable of covering all basic functions, which make them the preferred choices of just businesses but also non-profit organizations, non-governmental organizations, governments, and other large entities.

Implementing ERP software systems in any organization is not easy. A wide range of applications make ERP software systems complex and impose changes on staff practices. People generally don’t like change, and ERP asks them to change how they do their jobs, thus making implementation of ERP systems a painful task. Implementing ERP systems generally takes one to three years. Before actually jumping to the bandwagon of implementing ERP systems, though, organizations must check the suitability of prospective ERP packages. Every industry is unique, and ERP systems must be designed to cater to the industry’s specific requirements. To implement ERP systems in cost-effective manners, consultants with expertise in ERP implementation should be employed. ERP vendors provide professional services in consultancy, customization, and support. Some of the leading vendors of ERP systems are SAP, Oracle Applications, The Sage Group, Microsoft Dynamics, and SSA Global Technologies. Successful implementation of an ERP system by any organization requires trained personnel and a corporate policy that will protect the data integrity of the ERP system. To train personnel involved with the implementation and testing stages of the ERP system, adequate funds have to be allocated.

ERP professionals are in demand. For ERP professionals experienced in SAP, People Soft, Oracle, Baan, or any other ERP package, there is a booming job market. Companies need them for hardware and software support. Some of the areas in which ERP professionals are in demand are:
• Production
• Materials
• Accounting
• Marketing
• Human Resource Development
Some of the industries in which ERP professionals work are insurance, defense and security, construction, material management, pharmaceutical, electrical, automobile, and heavy engineering. Pay for ERP professionals depends on the natures of work they are doing and the experiences they have. For independent consultants, earnings are higher than for those working for organizations. ERP professionals work in two areas—implementation and development. Prospective ERP professionals can either work with consultants like Anderson or KPMG, whom software providers have certified for developing ERP systems for client companies, or they can join ERP-package providers like SAP and Oracle.

Companies are continuously striving to develop the best practices for ERP implementation. One of the factors that will drive the future development of ERP systems is the availability of trained personnel, keeping the market for ERP professionals hot.