History of Enterprise Resource Planning
Before ERP was introduced, the departments within an institution would each have their own computer networks. For instance, the Human Resources department would have their own network of computers, while the Financial department might have a separate network.
Each computer system would be comprised of information that was directly related to that department. The personal information the employees might be listed, and this would generally be combined with a reporting structure. The Financial department would be responsible for storing information that was related to the payroll of the employees, and it would also deal with the financial aspects of the company.
Each department would be dependent on specific information that would allow them to communicate with each other. A number of processes would have to take place in order for information to be transferred from one department to another. In most cases, one department may not have been interested in the various aspects of another department. While this may have seemed logical at first, it gave rise to a number of problems. If the two departments didn’t work together on specific issues, it could lead to complications that could disrupt the operations of the company, thus leading to a loss in profits or the productivity of employees.
The introduction of ERP solved a number of these problems. It did this by taking the data from multiple applications, and once this data was collected, it could make the organization operate more efficiently. A standard was created. The number of software packages that a company used could be greatly reduced. In addition to making the company more efficient, it also allowed the company to save money on the cost of software and frequent updates. To fully understand Enterprise Resource Planning, it is first important to understand the concept of Best Practices. When an ERP system was utilized by a company, the company had to decide if the software would be customized or if they would simply modify that existing procedures.
The next important part of ERP is called implementation. In order for an ERP system to function properly, it must have a great deal of software written for it. Adding a complex system such as ERP to a company takes considerable resources. In most cases, a company would need to use programmers, analysts, and end users in order to make sure it functioned correctly. While the introduction of the Internet has greatly sped up this process, it can still take time to set up. If professionals are not used to set up the ERP system, the process can become exceptionally expensive.
The costs involved with ERP has only allowed it to be adopted mostly by multinational corporations. However, it is possible for medium sized business to use it. If a company uses the services of a professional, and ERP system can be implemented in about six months. There are a number of similarities between ERP systems and logistics automation and supply chain maintenance. In some cases, these elements can be used to extend the capabilities of ERP. The process of setting up ERP is very important. In most cases, a company will have to hire an ERP vendor. Consultants are commonly used as well. The consultation process of ERP will generally be comprised of three categories, and these are top level architecture, process consulting, and technical consulting.
The systems architect is the individual who will be responsible for dealing with the flow of data. The business consultant will analyze the existing processes of the company, and they will compare them ERP processes. This will modify the ERP system in a way that makes it useful to the organization. The technical consulting will handle the programming. The software will need to be altered in a way that allows it to be useful for the company. A number of sources have stated that the most challenging part of ERP is customizing it to suit the needs of the organization that wishes to utilize it. Because of these challenges, it can be quite costly. A number of ERP systems available on the market today were not originally designed to be modified. This is why "best practices" must be used when the system is actually implemented.