PC Quest

Enterprise apps have been talked of for quite some time now, but still remain an enigma for many. The term ERP is back in the reckoning and is fast descending on to Indian medium and small organizations. The world beyond the ERP, typically called Extended Enterprise Applications- notably SCM and CRM is also ripe for adoption.

ERP (Enterprise Resource Planning)

The simplest definition of an ERP: a software solution that takes the process view of an enterprise to meet the organization’s goals while integrating and interlinking the various functional areas of the business. As a result, it performs the role of an enterprise-wide information system that tracks all business transactions, internal or external, and is therefore considered the transaction backbone of the business.

The software that ERP is, be it SAP, PeopleSoft, or JD Edwards to name a few, helps mimic the best business process for the particular organization because it is highly configurable. Designing the business process is a separate exercise, but is the starting point of an ERP implementation and is typically handled by process consultants. Technically, the ERP software comes in the form of various modules, some of which are technical components, while most of them are function-specific modules in areas of material requirement planning, bill of materials, master scheduling, shop-floor control, accounts payable/ accounts receivable, sales, distribution, financials and the like.

The ERP sits atop a database, usually a relational database that is scalable as per requirement. At a technical level, the ERP software integrates the relational database, the base ERP module, the various functional modules opted for, other applications that the organization might have, and tools and interfaces between the applications and the database- in such a manner that the business process that was designed is satisfied. Typically, the design is done from an ‘events-based’ philosophy. That is, "if such-such action happens, such-such is the action that has to succeed".

Inherently, therefore it helps tackle day-to-day business problems like excess of inventory, shortage of inventory, gap between planned output and realized output, unutilized cash beyond certain limit and potential working capital crunch. These are all identified and suitable actions can be taken. One reason the benefits of an ERP is considered to be real is that the benefits are for the whole enterprise rather than for a part of the enterprise, assuming that the ERP has been deployed across all the sites of the organization and across all the functions. Looking at it the other way, the entire enterprise gets aligned to handling processes in the same manner and the performance of the business gets reported from one place.

There are two choices that companies could make: build an ERP in-house or go for a packaged product. The benefits derived from a packaged ERP application are far more than one that has been built in-house because the packaged ERP has most of the business logic culled from successful organizations already built-in. Besides the quality of documentation, standardization on technology, room for growth and adding more functionality, and availability of talent are the other plus points. Globally ERP vendors have been adding additional functionality and capability to their products in the areas of supply chain management, CRM, data mining, business intelligence, e-business enabling, enterprise portal, and some very industry-specific templates. Newer generation ERP that enables collaborative commerce is called ERP II.

Amongst the various vendors of ERP in the market, there are ones that are suited to large organizations and others for small and medium companies. ERP packages also differ in their ability to address different industries and industry sub-segments. But the essence of all these products remains the same - to provide and integrated suite of business applications.