SYSPRO 6.1

Enterprise Resource Planning (ERP)

Broadly speaking, the objective of enterprise resource planning (ERP) is to integrate all departments and functions in an organisation onto a single computer system that can serve all those different sections’ particular needs. In considering where ERP may lead the modern organisation, it is helpful to reflect on the origins of all business information systems. 

The role of business information systems, as well as the hardware that enable them, has changed enormously over the past five decades. In the 1950s and 1960s “Electronic Data Processing Systems” were used to record and store bookkeeping data such as journal entries and ledger accounts. Affordable to only the largest companies and government agencies, these systems were limited to an operations role. In the 1960s “Management InformationSystems” generated limited reports including balance sheets, sales reports and income statements. The “Decision Support Systems” that were introduced in the 1970s allowed the user to configure programs to suit their specific needs. Still operating on a mainframe system, most companies required the employment of a system developer on site as part of the leasing agreement. By the 1980s, the introduction of decentralised computing via the desktop PC saw each user with their own computer, their own suite of programs and their own standalone Disk Operating Systems (DOS). 1985 saw the release of MS Windows 1.0. (It was, as a matter of interest, less than 15 years ago, on April 6, 1992, that Windows 3.1 was released.) 1992 also saw the introduction of “Strategic Information Systems”. Following the commercialisation of the internet and the growth of intranets, the role of business information systems had now expanded to include strategic support.  

Business information systems have the four roles of functional support, decision support, strategic support and a performance-monitoring role.  Information systems most basic function is that of business process and operations support. This involves the collection, recording, storing and basic processing of data. At a higher level, information systems are required to support decision making processes through the analysis of statistical data. Information systems also have the requirement of supporting a company’s competitive positioning. “Business Workflow Analysis” tools allow better integration and control of an organisation’s functional elements and the real time analysis of the cost of dysfunctions. Lastly business or management information systems are used to establish relevant and measurable objectives and then to monitor results and performances. 

Enterprise Resource Planning systems (ERP) are information systems that integrate and automate many of the business practices associated with the operations and management of an organisation. ERP software will typically aid in the control of business activities such as sales, delivery, billing, production, distribution, accounting, inventory, projects, strategic management and Human Resources management. Rather than use the expensive approach of having programs written specifically to control their business processes, organisations are seeking common, reusable software to provide a cost-effective alternative. ERP software systems are some of the largest bodies of software ever written. This software is typically marketed in component form, with prospective clients able to purchase the element they currently need with the knowledge that future expansion or change will allow them to expand their system by purchasing extra components that will amalgamate with the existing structure. A key principle to implementing ERP software is the concept of “configuring” software to suit a particular task, rather than “customising” (rewriting) parts of it. A customised package will lose the key functions of future expansion and upgradeability. Additionally the introduction of an ERP requires the nature of the business to be well understood so that the foundation setup in the beginning provides for future addition and expansion. 

When a business or organisation adopts an ERP solution, there are many side effects on the way the business operates and manages itself. Many business practises need to change to fit the way the ERP works. One of the key advantages of an ERP is the reuse and sharing of common information across the organisation. However, this introduces new requirements on business practices and people to ensure the captured data is fit for the wider usage across the business, not just locally. Some of the better known ERP software vending companies includes SYSPRO, SAP, Oracle, Peoplesoft and JD Edwards.