Enterprise Resource Planning; Challenges of Implementation
Enterprise Resource Planning or ERP is actually a process or approach which attempts to consolidate all of a company's departments and functions into a single computer system that services each department's specific needs. It is, in a sense, a convergence of people, hardware and software into an efficient production, service and delivery system that creates profit for the company.
While the idea is easy to grasp in theory, the reality has been different. Most companies have a conglomeration of different systems and procedures (as well as hardware and software) designed 'specifically' for their own needs. Employee records (including payroll, medical and other benefits) are held by Human Resources. Financial data and processing, which includes payroll computations and employee compensation as well as invoicing and billing for company products and services, are held by the Finance Department. Production data is held by manufacturing. Inventories are held by warehousing. Customer orders are held by Customer Relations, and so on. The 'dream' of ERP is to have a single software solution integrating the different functions and activities into a seamless whole where information needed for decision-making is shared across departments, and the action taken by one department results in the appropriate follow-up action up and down the line.
The most often-cited example of an ERP software is customer ordering and delivery where a customer's order moves smoothly from Sales, where the 'deal' is consummated, to Inventory and Warehousing, which retrieves and packages the order for delivery, to Finance, where invoicing, billing and payments are handled, and on to Manufacturing, where replacement of the bought-and-paid-for product is done.
Prior to ERP, each department may be considered an independent fiefdom. Once a department's particular function is completed, it no longer cares for what...