Information Technology & Systems

SUMMARY: ERP is an organization-wide management system that helps companies automate their processes, integrate various functions, enable optimum planning and utilization of resources and improve process efficiency.

ERP packages initially focused on large corporations that operated in various businesses in various countries. The various traditional applications used by these organizations served as information islands and did not facilitate exchange of data between departments.

ERP solved this problem by facilitating integration of various functions. However, the implementation of an ERP system needs a huge amount of investment, and if the application is not suitable for the organization, it can do more harm than good. There are instances when profitable organizations have become bankrupt after the failed implementation of ERP.

ERP packages are not implemented in an organization as easily as installing software in a PC. ERP implementation involves managing changes in the corporate culture, business processes, and communication and feedback systems. Only an efficient project leader with strong leadership skills can implement an ERP system in an organization effectively. However, without the cooperation of employees, he cannot achieve anything. ERP, when implemented properly, can offer many benefits to organizations such as lead time reduction, on-time shipment, cycle time reduction, enhancement of customer satisfaction, improved supplier performance, flexibility in processes, cost reduction, and improved resource utilization and information accuracy. It is essential for companies to take adequate measures during ERP implementation to ensure that the ERP application integrates with existing applications.

Investments on ERP systems form a major part of IT investments made by organizations. The investments on ERP can be broadly studied as industry specific extensions, business intelligence, and general ERP upgradations. Industry specific extensions enhance the productivity of operating processes. Application BI tools help organizations in data extraction and maintaining up-to date information. General upgradations aim at achieving regulatory compliance. Emergence of service-oriented architecture (SOA) and Extended ERP (XERP) products are some of the trends witnessed by the ERP market. SOA is described as an approach towards the design, implementation, and deployment of information systems. XERP products are dependent on connectivity and web services. They emphasize sharing of Application Programming Interface (API) for easy working on products of different companies.