ERP (Enterprise Resource Planning) – an organizational strategy for the integration of production and operations, human resources management, financial resources and activation management, focusing on continuous balancing and resource optimization using a specialized integrated application software package that provides a common data and process model for all types of activities , ERP-system – a specific software package that implements the ERP strategy.
The concept of ERP was introduced by analyst Lee Wiley in a 1990 study on the development of MRP II]. Wiley predicted the emergence of replicated multi-user systems that provide balanced management of all organization resources. In the early 1990s, a concept for developing applications for application software was developed, in particular, it was implemented in the SAP R / 3 system, released in 1992 to develop the SAP R / 2 material flow management package for Oracle applications and applications. Application development based on integration and reengineering of applications developed by Oracle by order in the late 1980s.
In 1998, PricewaterhouseCoopers, representing the market for ERP-systems, introduced the acronym BOPSE Oracle, Peoplesoft, SAP, JD Edwards – representing the five main suppliers of ERP. In addition to these systems, Lawson, Great Plains, QAD, Ross and Solomon in the late 1990s marketed. Over 60% of multinationals have implemented SAP R / 3.
Whereas in the early 1990s ERP systems were introduced, first of all, in industry, and as a solution for SME II it was used as a component – machine-building enterprises, then in the second generation of the 1990s, the use of ERP systems became widespread in the field of services, and even state power and non-profit organizations.
Internet browsers with developed functionality and capabilities in the late 1990s – early 2000s, almost all leading manufacturers use web access to the ERP system (the first attempts to implement search functionality in 1996 in SAP, the Oracle system was implemented in 1999, the web interface for PeopleSoft appeared in 2000).
The second half of the 2000s was marked as a universal support system for ERP-systems, providing a service-oriented architecture. This ensures a reduction in the cost of intersystem integration in organizations using systems from different manufacturers. It starts in the mid-2000s when it comes to subscriptions (the most common ones are NetSuite and Plex. Next, ERP will be discussed.
Reliability, that is, the ability to use the same software package for different organizations (possibly with different settings and extensions), is one of the prerequisites of an ERP system. One of the reasons for the widespread use of replicated ERP systems instead of custom development is the possibility of applying best practices through the reengineering of business processes according to the solutions used in the ERP system
The need for the comprehensive application of the ERP system in geographically distributed organizations requires support in a single system for exchanging currencies and languages. Moreover, the need to provide several organizational units (several legal entities, several enterprises), various types of planned accounts, various taxation schemes in a single copy of the system is a prerequisite for use in holdings, transnational corporations.
The applicability in various industries imposes on ERP-systems, the requirements for universality, on the other hand – support for the extensibility of industry specifics. Major large systems include off-the-shelf specialized modules and extensions for various industries.
The modular principle of organization allows you to implement an ERP-system in stages, using only one or more functional modules. In addition, the modularity of ERP-systems allows you to build solutions based on several ERP-systems. Groups of modules are distinguished: finance, personnel, operation.
ERP-system provides many different functional blocks, different versions and different versions: accounting services: general ledger, receivable account (debtors), payable account (credo)
The use of ERP-systems in the enterprise a universal program suitable for all organizations does not exist. For each company, the optimal product is selected. This process is performed in the following order:
- Business analysis. The program will work for decades or more. Therefore, it is worth determining the prospects for the development of the organization.
- The choice of a modern ERP system. They will be open and private, cloudy and internal, desktop and browser, paid and free. Choose the appropriate type of ERP system.
- Supplier selection. There are many vendors or system integrators of the same program on the market. We select a supplier, it is worth paying attention to the list of services offered and their cost.
- Project management. Coordination of the interaction of employees with suppliers. They also control the amount of work, deadlines, budget, compliance with ERP requirements and so on.
- There is always a risk of errors. Therefore, it is worth looking at ERP compliance testing.
- Trainings and education. This is a prerequisite for the use of ERP-systems in the enterprise. Students learn without the complexity of programs.
- The launch can be phased or immediately throughout the organization. The first option is preferable because it allows you to gradually switch to new working conditions
Benefits of Using ERP Systems
ERP is, first of all, a tool for combining the organization’s business processes in one powerful system, so you can list its advantages for a long time. The most significant of them are:
- availability of information. Once entered information becomes available to all departments;
- consistency of information. Using a common database eliminates the verification, coordination and verification of information;
- control over the work of employees. When the same information is used by different units, a discrepancy in numbers is not possible. The general database eliminates the possibility of abuse by employees: the enterprise management sees discrepancies and their causes in real time
- reduction in the number of errors associated with the human factor. A single program, for example, will not allow to write off products from the wrong warehouse, since the general database will indicate that it is not there;
- ready-made set of combined tools. For example, if employees of the sales department create an invoice, it is considered the basis for the automatic generation of accounting documents, and after payment – of consumables from the warehouse;
- using only the right solutions. A feature of the ERP-system is that it allows you to implement a huge number of processes. At first, as a rule, only a part of the functionality is used. As the enterprise grows and develops, programs that enable the introduction of new solutions are connected.