The Gartner group was responsible
for spurring the rise of Enterprise
Resource Planning (ERP) as we know it today. In the 90’s they came out with the terms material resource planning (MRP) and manufacturing resource planning (MRP II)
which were ERP’s predecessors. The only
difference is that while MRP and MRP II were manufacturing specific, ERP transcended and became a holistic tool
for corporate resource governance.
Any enterprise is comprised of SALES, PRODUCTION, FINANCE, HUMAN RESOURCES,
LOGISTICS and BILLING. What ERP does is to BRIDGE the information in between these departments and create a
seamless work flow.
Addressing the Database Issue
Before the advent of ERP,
businesses were tasked with a lot of paper work and very cumbersome and storage
hungry data management. When
computerization came, done were the days of records keeping in huge
warehouses. Data is now stored in large
capacity hard disk drives. Each
department now conveniently houses their own database.
Problem solved---partly.
Multiple Software System Disaster
While the issue of storage has
been addressed by computerization, it created multiple databases that are
managed by different software solutions. With the different silos in place transactions
tends to get lost along the way and keeping track was a matter of inter
department coordination---as if each department cared.
In a multi-silo set up, each
department’s goal is to get the data, process it, and then provide this to
their stakeholders. Inter-department
coordination is often times non-existent and information sharing is a matter of
unending red tape.
Bridging the Gap
With the existence of multiple
software within a company, there is a need to consolidate information in such a
way that there is transparency in the flow of transaction and at the same time
provide a peace of mind that the data flowing to each department silos are
correct. This is what an ERP software
can do for the company.
With proper implementation, an
ERP system can unify the transaction gaps existing in a traditional corporate set
up and the mayhem that goes with it. Inter-department walls are brought down as
department dashboards are put up for ready access and faster decision making
capability.
Living in an Imperfect
World
In a perfect world, ERP implementation
is easy enough to deploy. However,
we do not live in a perfect world and there will be stumbling blocks that
would make ERP a challenge to put in place.
First of all, there is a question of BUDGET.
A solid cost benefit analysis should be clear to the decision makers to
justify the cost of implementation. Mind
you---ERP is not cheap.
Then there’s the matter of integrating the
existing legacy systems. This is where
the real challenge is. The more the legacy systems there are, the
more complicated the integration.
But the complication does not stop
there. Selecting the ERP software can be a subject of much debate. You can base your decision on market
share. But then, choosing the vendor who
will implement your chosen system can be a daunting task. A common trait of these vendors is that they
are all PROMISING. They will promise to give you the stars and the moon just to get the
contract. So it is up to you to weed
out the undesirable and pick from those who has the competency to deliver the
right solution for your company.
