ERP (Enterprise Resource Planning) Overview covers What is
ERP, Brief history of ERP, Why is it necessary, Market
Leaders and the future of ERP.
What is ERP?
Enterprise Resource Planning or ERP is an industry term for
integrated, multi-module application software packages that
are designed to serve and support multiple business
functions. An ERP system can include software for
manufacturing, order entry, accounts receivable and payable,
general ledger, purchasing, warehousing, transportation and
human resources. Evolving out of the manufacturing industry,
ERP implies the use of packaged software rather than
proprietary software written by or for one customer. ERP
modules may be able to interface with an organization's own
software with varying degrees of effort, and, depending on
the software, ERP modules may be alterable via the vendor's
proprietary tools as well as proprietary or standard
Brief History of ERP
The focus of manufacturing systems in the 1960's was on
Inventory control. Most of the software packages then
(usually customized) were designed to handle inventory based
on traditional inventory concepts. In the 1970's the focus
shifted to MRP (Material Requirement Planning) systems that
translated the Master Schedule built for the end items into
time-phased net requirements for the sub-assemblies,
components and raw materials planning and procurement.
In the 1980's the concept of MRP-II (Manufacturing Resources
Planning) evolved which was an extension of MRP to shop
floor and Distribution management activities. In the early
1990's, MRP-II was further extended to cover areas like
Engineering, Finance, Human Resources, Projects Management
etc i.e. the complete gamut of activities within any
business enterprise. Hence, the term ERP (Enterprise
Resource Planning) was coined.
Why is it Necessary?
By becoming the integrated information solution across the
entire organization, ERP systems allow companies to better
understand their business. With ERP software, companies can
standardize business processes and more easily enact best
practices. By creating more efficient processes, companies
can concentrate their efforts on serving their customers and
The top five ERP vendors, SAP, Oracle Corporation,
Peoplesoft, Inc. (now Oracle Corp.), JD Edwards & Company,
and Baan International, account for 64 percent of total ERP
market revenue. These vendors continue to play a major role
in shaping the landscape of new target markets, with
expanded product functionality, and higher penetration
rates. SAP dominates the $6.7 billion ERP applications
market in Europe with 39% market share. Oracle and
PeopleSoft come second and third respectively, followed by
SAGE Group and Microsoft Business Solutions.
The Future of ERP
Industry analysts expect that every major manufacturing
company will buy the software, which ranges in cost -- with
maintenance and training -- from hundreds of thousands of
dollars for a small company to millions for a large company.
AMR Research of Boston says consolidation among the major
players will continue and intensify. ERP vendors are
expected to put more effort into e-commerce, CRM and SCM
initiatives, with leaders redirecting between 50% and 75% of
their R&D budget to these projects.
According to Gartner research group, the rapid evolution of
ERP has already lead to a new corporate must-have, ERP II,
which is supposed to help businesses gain more competitive
edge in the future. The major difference is that ERP II
involves collaborative commerce, which enables business
partners from multiple companies to exchange information
posted on eCommerce exchanges.
In the next tutorial we will talk about popular ERP Products
and the Modules and Application related to them.
For more visualization of this article along with the screen shots and more visit with step by step instructions, http://www.exforsys.com/content/category/17/260/342/
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