ERP Sytem is a modular and integrated system. It is a complete suite of integrated applications consisting of different modules such as Finance, Accounting, Sales, Manufacturing, etc..If used effectively, ERP eliminates need for duplicate information.
ERP History consists of following phases:
MRPI- Material Resources Planning
MRPII- Includes financial and human aspects as well
ERR- Includes forecasting, supply chain management with many modules
ERPII- Included more strategic components such as CRM and Business Intelligence.
Difference between BI and Datamining:
- BI creates reports for decision making.
- Datamining looks for patterns in data to make a business decision such as investigating demographic effect on buying a product.
“In Best of Breed Approach” of ERP, the firm buys best modules from different vendors.
Also if a module is missing in an ERP software, it is possible to use Bolt-on’s which are 3rd party softwares. However there is a risk in using Bolt-on’s because integration points should be managed by the firm itself.
Costs of ERP:
- Hardware
- Software licence
- Implementation
- Consulting
- Training
- After go-live support
Benefits of ERP:
- Process efficiency (better info flow)
- Competitive advantage benefits (e.g. higher revenues, better supply chain management)
- Strategic benefits (better decision making)
ERP systems are provided by some major players such as Oracle and SAP, some smaller vendors and also by open-source ERP systems such as OFBIZ, WebERP and Compiere. The ERP system (major vendor, smaller vendor, or open-source) should be carefully chosen with respect to needs and technical capability of a company.
In the open-source systems, software source code is available for everyone to see. Advantages include the following:
- Mostly they are free
- They can have high security and stability because many people look at the code and find bugs
- They have an existing community and can be used as a leverage of resources
On the other hand, it can be expensive to develop open source systems further, requiring an in-house development team. Also community cannot be depended upon solving problems on a scheduled basis.
Buying a Major SW is better if company has less development experience and in terms of following the best practices in the industry.
Smaller ERP SW’s, can develop niche software which larger companies may not serve and they are lower priced. However, they are also riskier because you do not know how long they will stay in business
Business Process Reengineering: involves business process analyzing and optimizing those systems in terms of time, workers, etc..while decreasing cost and increasing customer satisfaction.
Meric Turker, Week 1
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