Sunday, July 11, 2010

Lessons Learned - Bilkent Summer - Week 1

What is ERP?

ERP is an administrative and strategic tool that integrates the functional units of a business. ERP centralises data storage, allowing each area of the business real-time access to company-wide data.

The benefits of ERP include better, faster and more reliable information; improved process efficiency; better and quicker decision making (competitive advantage); greater control of resources (lower costs); stronger internal controls.

ERP developed from simple material and manufacturing systems into an integrated strategic business tool. Latest ERP developments have show a trend toward the inclusion of business intelligence and customer relationship management (CRM) functions.

ERP is about the ‘bigger picture’, and best in breed modules don’t necessarily create the best ERP system. An ERP system’s true power lies in its ability to integrate different business functions, not just in its ability to perform individual functions well.

ERP Implementation:

The basic costs which need to be considered are:

  • Hardware
  • Software
  • Implementation
  • Consultancy
  • Training
  • After go-live support

In selecting a software system, a company must consider which style of software is best suited to its needs. The primary branches of ERP systems are:

Major Players: SAP, Oracle, etc. The advantage of these systems is that they are often crafted around industry best practices. In addition, their large size and market presence means they typically have a long-life, which means access to ongoing support for users of these softwares.

Smaller players: These companies usually offer simpler, less complex systems. They are generally cheaper that the big names and may cater to niche industries. However, their small size makes providers vulnerable to takeover or bankruptcy.

Open-source: Open source ERP software is provides the client with access to the software’s raw code; this is often provided free of charge. Open source makes the ERP software much more flexible to changes. And in addition, the open-source nature of the software means a greater number on contributors which may result in a more stable and secure program. However, open source software may require costly in-house development in order to properly tailer the program to the company’s needs.

- Peter Jones (Week 1)