Enterprise resource planning: Difference between revisions
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[[File:ERP_modules.svg|300px|thumb|Diagram showing some typical ERP modules|alt=Refer to caption]] | [[File:ERP_modules.svg|300px|thumb|Diagram showing some typical ERP modules|alt=Refer to caption]] | ||
'''Enterprise resource planning''' ('''ERP''') is the integrated management of main [[business process]]es, often in [[Real-time computing|real time]] and mediated by [[software]] and [[technology]]. ERP is usually referred to as a category of [[Business management tools|business management software]]—typically a suite of integrated [[application software|application]]s—that an organization can use to collect, store, manage and interpret data from many [[business sector|business]] activities | '''Enterprise resource planning''' ('''ERP''') is the integrated management of main [[business process]]es, often in [[Real-time computing|real time]] and mediated by [[software]] and [[technology]]. ERP is usually referred to as a category of [[Business management tools|business management software]]—typically a suite of integrated [[application software|application]]s—that an organization can use to collect, store, manage and interpret data from many [[business sector|business]] activities. | ||
The finance module in particular is essential to a suite of applications meeting the definition of an ERP system<ref>{{Cite web |date=27 November 2023 |title=ERP finance module |url=https://www.techtarget.com/searcherp/definition/ERP-finance-module}}</ref>. The finance module provides the '''[[system of record]]''' for the organisation; recording the commercial impact of the business operations in the [[General ledger|General Ledger.]] | |||
'''ERP systems''' can be local-based or [[Cloud computing|cloud-based]]. Cloud-based applications have grown rapidly since the early 2010s due to the increased efficiencies arising from information being readily available from any location with Internet access. However, ERP differs from integrated business management systems by including planning all resources that are required in the future to meet business objectives. This includes plans for getting suitable staff and manufacturing capabilities for future needs. | |||
ERP provides an integrated and continuously updated view of core business processes, typically using a shared [[database]] managed by a [[database management system]]. ERP systems track business resources—cash, [[raw material]]s, [[production capacity]]—and the status of business commitments: orders, [[purchase order]]s, and [[payroll]]. The applications that make up the system share data across various departments (manufacturing, purchasing, sales, [[accounting]], etc.) that provide the data.<ref>{{Cite journal|title=Antecedents of ERP systems implementation success: a study on Jordanian healthcare sector|journal=Journal of Enterprise Information Management|volume=29|issue=4|pages=549–565|last=Almajali|first=Dmaithan|doi=10.1108/JEIM-03-2015-0024|year=2016|url=http://elartu.tntu.edu.ua/handle/lib/31749}}</ref> ERP facilitates information flow between all business functions and manages connections to outside [[stakeholder (corporate)|stakeholder]]s.<ref>{{cite book |last=Radovilsky |first=Zinovy |editor-last=Bidgoli |editor-first=Hossein |year=2004 |title=The Internet Encyclopedia, Volume 1 |publisher=John Wiley & Sons, Inc. |page=707 |url=https://books.google.com/books?id=ACfBmYiNaTcC&pg=PA707|isbn=978-0-471-22202-6 }}</ref> | |||
Estimates of the size of the global ERP market range between USD $78 and $81 billion in 2026<ref>{{Cite web |title=ERP Systems Market Share: 2026 Guide to Buyers & Trends |url=https://blog.hyperbots.com/erp-systems-market-share-2025-guide-to-buyers-trends}}</ref> <ref>{{Cite web |last=Leichter |first=Rasmus |date=October 16, 2025 |title=How Big is the ERP Market? (2025) |url=https://www.cargoson.com/en/blog/how-big-is-the-erp-market}}</ref>. Though early ERP systems focused on large enterprises, smaller enterprises increasingly use ERP systems.<ref>{{Cite conference |author=Runtong Zhang|author2= José Cordeiro|author3= Xuewei Li|author4= Zhenji Zhang |author5= Juliang Zhang |date=2011 |title=ACCEPTANCE OF ENTERPRISE RESOURCE PLANNING SYSTEMS BY SMALL MANUFACTURING ENTERPRISES |conference=Proceedings of the 13th International Conference on Enterprise Information Systems |publisher=SciTePress - Science and Technology Publications |pages=229–238 |doi=10.5220/0003500302290238 |isbn=978-989-8425-53-9|doi-access=free }}</ref> | |||
The ERP system integrates varied organizational [[systems]] and facilitates error-free transactions and production, thereby enhancing the organization's efficiency. However, developing an ERP system differs from traditional system development.<ref>{{cite journal | last1 = Shaul | first1 = L. | last2 = Tauber | first2 = D. | year = 2012 | title = CSFs along ERP life-cycle in SMEs: a field study | journal = Industrial Management & Data Systems | volume = 112 | issue = 3| pages = 360–384 | doi=10.1108/02635571211210031}}</ref> | The ERP system integrates varied organizational [[systems]] and facilitates error-free transactions and production, thereby enhancing the organization's efficiency. However, developing an ERP system differs from traditional system development.<ref>{{cite journal | last1 = Shaul | first1 = L. | last2 = Tauber | first2 = D. | year = 2012 | title = CSFs along ERP life-cycle in SMEs: a field study | journal = Industrial Management & Data Systems | volume = 112 | issue = 3| pages = 360–384 | doi=10.1108/02635571211210031}}</ref> | ||
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==Origin== | ==Origin== | ||
Business and technology research and advisory firm [[Gartner]] is credited for first using the [[acronym and initialism|acronym]] ERP in the 1990s.<ref>{{cite web|url=http://www.computerworld.com/article/2583660/e-commerce/extended-erp-technology-reborn-in-b2b.html|title=Extended ERP technology reborn in B2B|last=InfoWorld|first=Heather Harreld|date=August 27, 2001|access-date=July 20, 2016}}</ref><ref name=Savin>{{Cite book |last=Savin |first=Jerald |title=IT Auditing: The Practitioner's Guide to Reliable Information Automation |date=2025 |url=https://books.google.com/books?id=w29GEQAAQBAJ&q=Gartner%20coined%20the%20acronym%20ERP%20in%20the%201990s |isbn=978-1-040-25977-1 |publisher=Taylor & Francis |chapter=Preface - IT Auditing |quote=Automation was clearly part of the business by the 1960s and 1970s and was fully on this path before Gartner coined the acronym ERP in the 1990s. ERP, Enterprise Resource Planning, focused on the capabilities of these systems and their integration.}}</ref> The term captured a functional extension of two manufacturing-based concepts, [[material requirements planning]] (MRP) and [[manufacturing resource planning]] (MRP II). Without replacing these terms, ERP came to represent a larger whole that reflected the evolution of application integration beyond manufacturing.<ref>{{cite book |last= Shields |first=Murrell G. |title=E-Business and ERP: Rapid Implementation and Project Planning |year=2005 |publisher=[[Wiley_(publisher)|Wiley]] |page=9 |quote=Even the term ERP is a successor to the manufacturing term MRP (materials requirement planning) and came into use when vendors started to fill out the suite of applications provided beyond the manufacturing areas.}}</ref> | |||
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Not all ERP packages are developed from a manufacturing core; ERP vendors variously began assembling their packages with finance-and-accounting, [[Maintenance, repair and operations|maintenance]], and human-resource components. By the mid-1990s ERP systems addressed all core enterprise functions. Governments and non–profit organizations also began to use ERP systems.<ref>{{cite conference |first=SI |last=Chang |author2=Guy Gable |author3= Errol Smythe |author4= Greg Timbrell |conference= International Conference on Information Systems |title= A Delphi examination of public sector ERP implementation issues |pages= 494–500 |publisher= [[Association for Information Systems]] |year= 2000 |location= Atlanta |url= http://dl.acm.org/citation.cfm?id=359640.359793|access-date= September 9, 2008 }}</ref> An "ERP system selection methodology" is a formal process for selecting an enterprise resource planning (ERP) system. Existing methodologies include: Kuiper's funnel method, Dobrin's three-dimensional (3D) web-based decision support tool, and the Clarkston Potomac methodology.<ref>{{citation|url=https://books.google.com/books?id=dlAeqOOZ6WUC&pg=PA94 |title=The enterprise resource planning decade |author=Frédéric Adam, David Sammon |page=94|year=2004|publisher=Idea Group Inc (IGI) |isbn=978-1-59140-262-6}}</ref> | Not all ERP packages are developed from a manufacturing core; ERP vendors variously began assembling their packages with finance-and-accounting, [[Maintenance, repair and operations|maintenance]], and human-resource components. By the mid-1990s ERP systems addressed all core enterprise functions. Governments and non–profit organizations also began to use ERP systems.<ref>{{cite conference |first=SI |last=Chang |author2=Guy Gable |author3= Errol Smythe |author4= Greg Timbrell |conference= International Conference on Information Systems |title= A Delphi examination of public sector ERP implementation issues |pages= 494–500 |publisher= [[Association for Information Systems]] |year= 2000 |location= Atlanta |url= http://dl.acm.org/citation.cfm?id=359640.359793|access-date= September 9, 2008 }}</ref> An "ERP system selection methodology" is a formal process for selecting an enterprise resource planning (ERP) system. Existing methodologies include: Kuiper's funnel method, Dobrin's three-dimensional (3D) web-based decision support tool, and the Clarkston Potomac methodology.<ref>{{citation|url=https://books.google.com/books?id=dlAeqOOZ6WUC&pg=PA94 |title=The enterprise resource planning decade |author=Frédéric Adam, David Sammon |page=94|year=2004|publisher=Idea Group Inc (IGI) |isbn=978-1-59140-262-6}}</ref> | ||
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ERP systems initially focused on automating [[back office]] functions that did not directly affect [[customer]]s and the public. [[Front office]] functions, such as [[customer relationship management]] (CRM), dealt directly with customers, or [[electronic business|e-business]] systems such as [[e-commerce]] and [[e-government]]—or [[supplier relationship management]] (SRM) became integrated later, when the internet simplified communicating with external parties.<ref name="HaymanERP00">{{cite journal |title=ERP in the Internet Economy |journal=Information Systems Frontiers |author=Hayman, L. |volume=2000 |issue=2 |pages=137–139 |year=2000 |doi=10.1023/A:1026595923192|s2cid=207642319 }}</ref> | ERP systems initially focused on automating [[back office]] functions that did not directly affect [[customer]]s and the public. [[Front office]] functions, such as [[customer relationship management]] (CRM), dealt directly with customers, or [[electronic business|e-business]] systems such as [[e-commerce]] and [[e-government]]—or [[supplier relationship management]] (SRM) became integrated later, when the internet simplified communicating with external parties.<ref name="HaymanERP00">{{cite journal |title=ERP in the Internet Economy |journal=Information Systems Frontiers |author=Hayman, L. |volume=2000 |issue=2 |pages=137–139 |year=2000 |doi=10.1023/A:1026595923192|s2cid=207642319 }}</ref> | ||
"ERP II" was coined in 2000 in an article by Gartner Publications entitled ''ERP Is Dead—Long Live ERP II''.<ref>{{cite web|title=B. Bond, Y. Genovese, D. Miklovic, N. Wood, B. Zrimsek, N. Rayner, ERP Is Dead — Long Live ERP II; GartnerGroup RAS Services, SPA-12-0420 4 October 2000|url=https://www.researchgate.net/publication/3420069|access-date=October 23, 2020}}</ref><ref>{{cite web|title=ERP: What you need to ask before you buy |url=http://www.projectauditors.com/Papers/Buying_An_ERP_System/ERP_Purchasing_the_right_ERP_package_3.php |publisher=projectauditors.com |access-date=April 23, 2014 }}</ref> It describes web–based software that provides real–time access to ERP systems to employees and partners (such as suppliers and customers). The ERP II role expands traditional ERP resource optimization and [[transaction processing]]. Rather than just manage buying, selling, etc.—ERP II leverages information in the resources under its management to help the enterprise collaborate with other enterprises.<ref>{{cite web |url=http://www.uncg.edu/bae/people/holderness/readings/ERP_is_Dead--Long_Live_ERP_II.pdf |title=The Bryan School of Business and Economics at UNCG—Exceptional Problem Solvers |publisher=Uncg.edu |access-date=November 8, 2012 |archive-url=https://web.archive.org/web/20120912185508/http://www.uncg.edu/bae/people/holderness/readings/ERP_is_Dead--Long_Live_ERP_II.pdf |archive-date=September 12, 2012 | "ERP II" was coined in 2000 in an article by Gartner Publications entitled ''ERP Is Dead—Long Live ERP II''.<ref>{{cite web|title=B. Bond, Y. Genovese, D. Miklovic, N. Wood, B. Zrimsek, N. Rayner, ERP Is Dead — Long Live ERP II; GartnerGroup RAS Services, SPA-12-0420 4 October 2000|url=https://www.researchgate.net/publication/3420069|access-date=October 23, 2020}}</ref><ref>{{cite web|title=ERP: What you need to ask before you buy |url=http://www.projectauditors.com/Papers/Buying_An_ERP_System/ERP_Purchasing_the_right_ERP_package_3.php |publisher=projectauditors.com |access-date=April 23, 2014 }}</ref> It describes web–based software that provides real–time access to ERP systems to employees and partners (such as suppliers and customers). The ERP II role expands traditional ERP resource optimization and [[transaction processing]]. Rather than just manage buying, selling, etc.—ERP II leverages information in the resources under its management to help the enterprise collaborate with other enterprises.<ref>{{cite web |url=http://www.uncg.edu/bae/people/holderness/readings/ERP_is_Dead--Long_Live_ERP_II.pdf |title=The Bryan School of Business and Economics at UNCG—Exceptional Problem Solvers |publisher=Uncg.edu |access-date=November 8, 2012 |archive-url=https://web.archive.org/web/20120912185508/http://www.uncg.edu/bae/people/holderness/readings/ERP_is_Dead--Long_Live_ERP_II.pdf |archive-date=September 12, 2012 }}</ref> | ||
ERP II is more flexible than the first generation ERP. Rather than confine ERP system capabilities within the organization, it goes beyond the corporate walls to interact with other systems. Enterprise application suite is an alternate name for such systems. ERP II systems are typically used to enable collaborative initiatives such as [[supply chain management]] (SCM), [[customer relationship management]] (CRM) and [[business intelligence]] (BI) among business partner organizations through the use of various [[electronic business]] technologies.<ref>{{Cite journal|last=Charles Møller|date=August 1, 2005|title=ERP II: a conceptual framework for next-generation enterprise systems?|journal=Journal of Enterprise Information Management|volume=18|issue=4|pages=483–497|doi=10.1108/17410390510609626|issn=1741-0398}}</ref><ref>{{Cite journal|last=Ruhi|first=Umar|date=July 1, 2016|title=An experiential learning pedagogical framework for enterprise systems education in business schools|journal=The International Journal of Management Education|volume=14|issue=2|pages=198–211|doi=10.1016/j.ijme.2016.04.006}}</ref> The large proportion of companies are pursuing a strong managerial targets in ERP system instead of acquire an ERP company.<ref>{{Cite journal |last1=Adam |first1=Frédéric |last2=O'Doherty |first2=Peter |date=December 2000 |title=Lessons from enterprise resource planning implementations in Ireland – towards smaller and shorter ERP projects | ERP II is more flexible than the first generation ERP. Rather than confine ERP system capabilities within the organization, it goes beyond the corporate walls to interact with other systems. Enterprise application suite is an alternate name for such systems. ERP II systems are typically used to enable collaborative initiatives such as [[supply chain management]] (SCM), [[customer relationship management]] (CRM) and [[business intelligence]] (BI) among business partner organizations through the use of various [[electronic business]] technologies.<ref>{{Cite journal|last=Charles Møller|date=August 1, 2005|title=ERP II: a conceptual framework for next-generation enterprise systems?|journal=Journal of Enterprise Information Management|volume=18|issue=4|pages=483–497|doi=10.1108/17410390510609626|issn=1741-0398}}</ref><ref>{{Cite journal|last=Ruhi|first=Umar|date=July 1, 2016|title=An experiential learning pedagogical framework for enterprise systems education in business schools|journal=The International Journal of Management Education|volume=14|issue=2|pages=198–211|doi=10.1016/j.ijme.2016.04.006}}</ref> The large proportion of companies are pursuing a strong managerial targets in ERP system instead of acquire an ERP company.<ref>{{Cite journal |last1=Adam |first1=Frédéric |last2=O'Doherty |first2=Peter |date=December 2000 |title=Lessons from enterprise resource planning implementations in Ireland – towards smaller and shorter ERP projects |journal=Journal of Information Technology |volume=15 |issue=4 |pages=305–316 |doi=10.1080/02683960010008953 |doi-broken-date=1 July 2025 |issn=0268-3962}}</ref> | ||
Developers now make more effort to integrate mobile devices with the ERP system. ERP vendors are extending ERP to these devices, along with other business applications, so that businesses don't have to rely on third-party applications.<ref name=":0">{{Cite news|date=2021-10-14|title=Shopify enlists Microsoft, Oracle for business tools on app|language=en|work=Reuters|url=https://www.reuters.com/business/shopify-enlists-microsoft-oracle-business-tools-app-2021-10-14/|access-date=2021-12-08}}</ref> As an example, the e-commerce platform [[Shopify]] was able to make ERP tools from [[Microsoft]] and [[Oracle Enterprise Resource Planning Cloud|Oracle]] available on its app in October 2021.<ref name=":0" /> | Developers now make more effort to integrate mobile devices with the ERP system. ERP vendors are extending ERP to these devices, along with other business applications, so that businesses don't have to rely on third-party applications.<ref name=":0">{{Cite news|date=2021-10-14|title=Shopify enlists Microsoft, Oracle for business tools on app|language=en|work=Reuters|url=https://www.reuters.com/business/shopify-enlists-microsoft-oracle-business-tools-app-2021-10-14/|access-date=2021-12-08}}</ref> As an example, the e-commerce platform [[Shopify]] was able to make ERP tools from [[Microsoft]] and [[Oracle Enterprise Resource Planning Cloud|Oracle]] available on its app in October 2021.<ref name=":0" /> | ||
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* Data services: various "self-service" interfaces for customers, suppliers or employees | * Data services: various "self-service" interfaces for customers, suppliers or employees | ||
*Management of school and educational institutes. | *Management of school and educational institutes. | ||
*[[Contract management | *[[Contract management]]: creating, monitoring, and managing [[contract]]s, reducing administrative burdens and minimising [[legal risk]]s. These modules often feature contract templates, [[electronic signature]] capabilities, automated alerts for contract milestones, and advanced search functionality. | ||
=== GRP – ERP use in government === | === GRP – ERP use in government === | ||
Government resource planning (GRP) is the equivalent of an ERP for the [[public sector]] and an integrated office automation system for government bodies.<ref>{{Cite book |doi=10.1109/ICNDC.2010.42 |chapter=Design of E-Government Information Management Platform Based on SOA Framework |title=2010 First International Conference on Networking and Distributed Computing |year=2010 |last1=Yunliang |first1=Jiang |last2=Xiongtao |first2=Zhang |last3=Qing |first3=Shen |last4=Jing |first4=Fan |last5=Ning |first5=Zheng |pages=165–169 |isbn=978-1-4244-8382-2 |s2cid=17798379 }}</ref> The software structure, modularization, core algorithms and main interfaces do not differ from other ERPs, and ERP software suppliers manage to adapt their systems to government agencies.<ref>Allen, Kern and Havenhand (2000) "ERP Critical Success Factors: an exploration of the contextual factors in public sector institutions", Proceedings of the 35th Hawaii International Conference on System Sciences.</ref><ref>Chang, Gable, Smythe and Timbrell (2000) "A Delphi examination of public sector ERP implementation issues" Proceedings of ICIS.</ref><ref>{{cite journal | last1 = Ebrahim | first1 = Zakareya | last2 = Irani | first2 = Zahir | year = 2005 | title = E-government adoption: architecture and barriers | journal = Business Process Management Journal | volume = 11| issue = 5| pages = 589–611| doi = 10.1108/14637150510619902 | citeseerx =10.1.1.453.87}}</ref> | Government resource planning (GRP) is the equivalent of an ERP for the [[public sector]] and an integrated office automation system for government bodies.<ref>{{Cite book |doi=10.1109/ICNDC.2010.42 |chapter=Design of E-Government Information Management Platform Based on SOA Framework |title=2010 First International Conference on Networking and Distributed Computing |year=2010 |last1=Yunliang |first1=Jiang |last2=Xiongtao |first2=Zhang |last3=Qing |first3=Shen |last4=Jing |first4=Fan |last5=Ning |first5=Zheng |pages=165–169 |isbn=978-1-4244-8382-2 |s2cid=17798379 }}</ref> The software structure, modularization, core algorithms and main interfaces do not differ from other ERPs, and ERP software suppliers manage to adapt their systems to government agencies.<ref>Allen, Kern and Havenhand (2000) "ERP Critical Success Factors: an exploration of the contextual factors in public sector institutions", Proceedings of the 35th Hawaii International Conference on System Sciences.</ref><ref>Chang, Gable, Smythe and Timbrell (2000) "A Delphi examination of public sector ERP implementation issues" Proceedings of ICIS.</ref><ref>{{cite journal | last1 = Ebrahim | first1 = Zakareya | last2 = Irani | first2 = Zahir | year = 2005 | title = E-government adoption: architecture and barriers | journal = Business Process Management Journal | volume = 11| issue = 5| pages = 589–611| doi = 10.1108/14637150510619902 | citeseerx =10.1.1.453.87}}</ref> | ||
Both system implementations, in private and public organizations, are adopted to improve productivity and overall business performance in organizations, but comparisons (private vs. public) of implementations shows that the main factors influencing ERP implementation success in the public sector are cultural.<ref>Wingreen, Maryam and Hritik (2014) "An Investigation into Enterprise Resource Planning Implementation Success: Evidence from Private and Public Sector Organizations", [http://aisel.aisnet.org/pacis2014/339 PACIS 2014/339].</ref><ref>{{cite arXiv | eprint=1207.2860 | author1=Shafqat Ali Shad | last2=Chen | first2=Enhong | author3=Faisal Malik Faisal Azeem | title=Enterprise Resource Planning - Real blessing or a Blessing in Disguise : An Exploration of the Contextual Factors in Public Sector | year=2012 | class=cs.CY }}</ref><ref>{{cite book | last1 = Coelho | first1 = Cunha | last2 = Meirelles | title = Proceedings of the 16th Annual International Conference on Digital Government Research | chapter = The client-consultant relationship in the implementation of ERP in government: Exploring the dynamic between power and knowledge | year = 2015 | page = 140 | doi = 10.1145/2757401.2757405 | isbn = | Both system implementations, in private and public organizations, are adopted to improve productivity and overall business performance in organizations, but comparisons (private vs. public) of implementations shows that the main factors influencing ERP implementation success in the public sector are cultural.<ref>Wingreen, Maryam and Hritik (2014) "An Investigation into Enterprise Resource Planning Implementation Success: Evidence from Private and Public Sector Organizations", [http://aisel.aisnet.org/pacis2014/339 PACIS 2014/339].</ref><ref>{{cite arXiv | eprint=1207.2860 | author1=Shafqat Ali Shad | last2=Chen | first2=Enhong | author3=Faisal Malik Faisal Azeem | title=Enterprise Resource Planning - Real blessing or a Blessing in Disguise: An Exploration of the Contextual Factors in Public Sector | year=2012 | class=cs.CY }}</ref><ref>{{cite book | last1 = Coelho | first1 = Cunha | last2 = Meirelles | title = Proceedings of the 16th Annual International Conference on Digital Government Research | chapter = The client-consultant relationship in the implementation of ERP in government: Exploring the dynamic between power and knowledge | year = 2015 | page = 140 | doi = 10.1145/2757401.2757405 | isbn = 978-1-4503-3600-0 | s2cid = 13941079 }}</ref> | ||
==Best practices== | ==Best practices== | ||
Most ERP systems incorporate [[best practice]]s. This means the software reflects the vendor's interpretation of the most effective way to perform each business process. Systems vary in how conveniently the customer can modify these practices.<ref>Monk, Ellen and Wagner, Brett."Concepts in Enterprise Resource Planning" 3rd ed. Course Technology Cengage Learning. Boston, Massachusetts.2009</ref> | Most ERP systems incorporate [[best practice]]s. This means the software reflects the vendor's interpretation of the most effective way to perform each business process. Systems vary in how conveniently the customer can modify these practices.<ref>Monk, Ellen and Wagner, Brett."Concepts in Enterprise Resource Planning" 3rd ed. Course Technology Cengage Learning. Boston, Massachusetts.2009</ref> | ||
Use of best practices eases compliance with requirements such as [[International Financial Reporting Standards]], [[ | Use of best practices eases compliance with requirements such as [[International Financial Reporting Standards]], [[Sarbanes–Oxley]], or [[Basel II]]. They can also help comply with de facto industry standards, such as [[electronic funds transfer]]. This is because the procedure can be readily codified within the ERP software and replicated with confidence across multiple businesses that share that business requirement.<ref name="IngolfoEstab11">{{cite book |volume=6998 | last1=Ingolfo | first1=S. | last2=Siena | first2=A. | last3=Mylopoulos | first3=J. |title=Conceptual Modeling – ER 2011 |chapter=Establishing Regulatory Compliance for Software Requirements |pages=47–61 |year=2011 |doi=10.1007/978-3-642-24606-7_5|series=Lecture Notes in Computer Science |isbn=978-3-642-24605-0 }}</ref><ref name="MSITSys">{{cite web |url=https://www.metricstream.com/insights/insights_sox_compliance.htm |title=IT Systems Validation for SOx and Regulatory Compliance |work=Insights |publisher=MetricStream, Inc |access-date=9 May 2018}}</ref> | ||
==Connectivity to plant floor information== | ==Connectivity to plant floor information== | ||
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==Implementation== | ==Implementation== | ||
ERP's scope usually implies significant changes to staff work processes and practices.<ref name="tech-faq.com">{{cite web|url=http://www.tech-faq.com/erp.shtml |title=ERP (Enterprise Resource Planning) |publisher=Tech-faq.com |date=March 5, 2014 |access-date=July 14, 2015}}</ref> Generally, three types of services are available to help implement such changes: consulting, customization, and support.<ref name="tech-faq.com" /> Implementation time depends on business size, number of modules, customization, the scope of process changes, and the readiness of the customer to take ownership for the project. Modular ERP systems can be implemented in stages. The typical project for a large enterprise takes about 14 months and requires around 150 consultants.<ref name="carl.sandiego.edu">{{cite web |title=Critical Issues Affecting an ERP Implementation |url=http://carl.sandiego.edu/gba573/critical_issues_affecting_an_erp.htm |publisher=Auerbach Publications |work=Information Systems Management |volume=16 |issue=3 |page=7 |year=1999 |access-date=January 10, 2013 | ERP's scope usually implies significant changes to staff work processes and practices.<ref name="tech-faq.com">{{cite web|url=http://www.tech-faq.com/erp.shtml |title=ERP (Enterprise Resource Planning) |publisher=Tech-faq.com |date=March 5, 2014 |access-date=July 14, 2015}}</ref> Generally, three types of services are available to help implement such changes: consulting, customization, and support.<ref name="tech-faq.com" /> Implementation time depends on business size, number of modules, customization, the scope of process changes, and the readiness of the customer to take ownership for the project. Modular ERP systems can be implemented in stages. The typical project for a large enterprise takes about 14 months and requires around 150 consultants.<ref name="carl.sandiego.edu">{{cite web |title=Critical Issues Affecting an ERP Implementation |url=http://carl.sandiego.edu/gba573/critical_issues_affecting_an_erp.htm |publisher=Auerbach Publications |work=Information Systems Management |volume=16 |issue=3 |page=7 |year=1999 |access-date=January 10, 2013 |archive-url=https://web.archive.org/web/20130103032912/http://carl.sandiego.edu/gba573/critical_issues_affecting_an_erp.htm |archive-date=January 3, 2013 |df=mdy }}</ref> Small projects can require months; multinational and other large implementations can take years.<ref name="SankarImplement06">{{cite book |url=https://books.google.com/books?id=sVS9AQAAQBAJ&pg=PA8 |title=Implementation Strategies for SAP R/3 in a Multinational Organization: Lessons from a Real-World Case Study |last1=Sankar |first1=C. |last2=Rau |first2=K.-H. |publisher=Cybertech Publishing |page=8 |year=2006 |isbn=978-1-59140-778-2 |access-date=9 May 2018}}</ref><ref name="PelphreyDirecting15">{{cite book |url=https://books.google.com/books?id=KJO9BwAAQBAJ&pg=PA92 |title=Directing the ERP Implementation: A Best Practice Guide to Avoiding Program Failure Traps While Tuning System Performance |author=Pelphrey, M.W. |publisher=CRC Press |pages=92–111 |year=2015 |isbn=978-1-4822-4842-5}}</ref> [[Mass customization|Customization]] can substantially increase implementation times.<ref name="carl.sandiego.edu" /> | ||
Besides that, information processing influences various business functions e.g. some large corporations like [[Walmart]] use a [[Just in time (business)|just in time]] inventory system. This reduces inventory storage and increases delivery efficiency, and requires up-to-date data. Before 2014, Walmart used a system called Inforem developed by [[IBM]] to manage replenishment.<ref>{{cite web|url=http://www.thecitywire.com/node/31165 |title=Wal-Mart slow to roll out new replenishment system |work=Business, Political, and Cultural News in Fort Smith and Northwest Arkansas |publisher=Thecitywire.com |location=Arkansas |date=January 8, 2014 |access-date=July 14, 2015}}</ref> | Besides that, information processing influences various business functions e.g. some large corporations like [[Walmart]] use a [[Just in time (business)|just in time]] inventory system. This reduces inventory storage and increases delivery efficiency, and requires up-to-date data. Before 2014, Walmart used a system called Inforem developed by [[IBM]] to manage replenishment.<ref>{{cite web|url=http://www.thecitywire.com/node/31165 |title=Wal-Mart slow to roll out new replenishment system |work=Business, Political, and Cultural News in Fort Smith and Northwest Arkansas |publisher=Thecitywire.com |location=Arkansas |date=January 8, 2014 |access-date=July 14, 2015}}</ref> | ||
=== Project methodology === | |||
The outcome of the implementation process will be significantly impacted by the skills and experience of the implementing team combined with a tried and tested implementation methodology that provides guardrails to drive the project to success. ERP implementations are a specific sub-type of project however there is no industry-specified standard methodology.<ref>{{Cite web |last=Diaz |first=A.E. |date=October 2006 |title=Methodologies to implement ERP systems |url=https://www.pmi.org/learning/library/methodologies-erp-systems-pmbok-8166}}</ref> Implementation methodologies are created by the ERP vendors or the specialist ERP consulting firms, generally known as Value Added Resellers (VARs), who carry out the implementations. Each implementer's methodology can be assessed as to how well it meets the principles and practices outlined in the guides of the project management peak industry bodies such as [[Project Management Institute]]. | |||
===Process preparation=== | ===Process preparation=== | ||
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* Understanding existing automated solutions<ref>King. W., "Ensuring ERP implementation success," ''Information Systems Management'', Summer 2005.</ref><ref>Yusuf, Y., A. Gunasekaran, and M. Abthorpe, "Enterprise Information Systems Project Implementation: A Case Study of ERP in Rolls-Royce," ''International Journal of Production Economics'', 87(3), February 2004.</ref> | * Understanding existing automated solutions<ref>King. W., "Ensuring ERP implementation success," ''Information Systems Management'', Summer 2005.</ref><ref>Yusuf, Y., A. Gunasekaran, and M. Abthorpe, "Enterprise Information Systems Project Implementation: A Case Study of ERP in Rolls-Royce," ''International Journal of Production Economics'', 87(3), February 2004.</ref> | ||
ERP implementation is considerably more difficult (and politically charged) in decentralized organizations, because they often have different processes, business rules, data semantics, authorization hierarchies, and decision centers.<ref>{{cite web |title=Requirements Engineering for Cross-organizational ERP Implementation: Undocumented Assumptions and Potential Mismatches |first1=Maya |last1=Daneva |author2=Roel Wieringa |author2-link=Roel Wieringa |publisher=University of Twente |url=http://www.vital-project.org/papers/Daneva-Wieringa-Camera-Ready-RE-Paper.pdf |access-date=July 12, 2008 |archive-date=5 July 2010 |archive-url=https://web.archive.org/web/20100705020710/http://www.vital-project.org/papers/Daneva-Wieringa-Camera-Ready-RE-Paper.pdf | ERP implementation is considerably more difficult (and politically charged) in decentralized organizations, because they often have different processes, business rules, data semantics, authorization hierarchies, and decision centers.<ref>{{cite web |title=Requirements Engineering for Cross-organizational ERP Implementation: Undocumented Assumptions and Potential Mismatches |first1=Maya |last1=Daneva |author2=Roel Wieringa |author2-link=Roel Wieringa |publisher=University of Twente |url=http://www.vital-project.org/papers/Daneva-Wieringa-Camera-Ready-RE-Paper.pdf |access-date=July 12, 2008 |archive-date=5 July 2010 |archive-url=https://web.archive.org/web/20100705020710/http://www.vital-project.org/papers/Daneva-Wieringa-Camera-Ready-RE-Paper.pdf }}</ref> This may require migrating some business units before others, delaying implementation to work through the necessary changes for each unit, possibly reducing integration (e.g., linking via [[master data management]]) or customizing the system to meet specific needs.<ref name="Thomas H. Davenport 1998">Thomas H. Davenport, "Putting the Enterprise into the Enterprise System", ''Harvard Business Review'', July–August 1998.</ref> | ||
A potential disadvantage is that adopting "standard" processes can lead to a loss of [[competitive advantage]]. While this has happened, losses in one area are often offset by gains in other areas, increasing overall competitive advantage.<ref>Turban et al. (2008). ''Information Technology for Management, Transforming Organizations in the Digital Economy''. Massachusetts: John Wiley & Sons, Inc., p. 320. {{ISBN|978-0-471-78712-9}}</ref><ref>[[Bruce Dehning|Dehning, B.]] and T.Stratopoulos, 'Determinants of a Sustainable Competitive Advantage Due to an IT-enabled Strategy,' Journal of Strategic Information Systems, Vol. 12, 2003</ref> | A potential disadvantage is that adopting "standard" processes can lead to a loss of [[competitive advantage]]. While this has happened, losses in one area are often offset by gains in other areas, increasing overall competitive advantage.<ref>Turban et al. (2008). ''Information Technology for Management, Transforming Organizations in the Digital Economy''. Massachusetts: John Wiley & Sons, Inc., p. 320. {{ISBN|978-0-471-78712-9}}</ref><ref>[[Bruce Dehning|Dehning, B.]] and T.Stratopoulos, 'Determinants of a Sustainable Competitive Advantage Due to an IT-enabled Strategy,' Journal of Strategic Information Systems, Vol. 12, 2003</ref> | ||
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* Manufacturing globalization, the economics of sourcing in emerging economies | * Manufacturing globalization, the economics of sourcing in emerging economies | ||
* Potential for quicker, less costly ERP implementations at subsidiaries, based on selecting software more suited to smaller companies | * Potential for quicker, less costly ERP implementations at subsidiaries, based on selecting software more suited to smaller companies | ||
* Extra effort, (often involving the use of [[enterprise application integration]]) is required where data must pass between two ERP systems<ref>Montgomery, Nigel (2010).[http://www.gartner.com/id=1412121 "Two-Tier ERP Suite Strategy: Considering Your Options."] Gartner Group. July 28, 2010. Retrieved September 20, 2012.</ref> Two-tier ERP strategies give enterprises agility in responding to market demands and in aligning IT systems at a corporate level while inevitably resulting in more systems as compared to one ERP system used throughout the organization.<ref>{{cite journal | last1 = Kovacs | first1 = G. L. | last2 = Paganelli | first2 = P. | year = 2003 | title = A planning and management infrastructure for large, complex, distributed projects — beyond ERP and SCM | url = http://ceit.aut.ac.ir/~sa_hashemi/My%20Teachings/MS-CEIT-Supply%20Chain%20Management/W-Selected%20Papers%20for%20class%20seminars-last/scm-pm-A%20planning%20and%20management%20infrastructure%20for%20large%2C%20complex%2Cdistributed%20projects-beyond%20ERP%20and%20SCM.pdf | journal = Computers in Industry | volume = 51 | issue = 2| | * Extra effort, (often involving the use of [[enterprise application integration]]) is required where data must pass between two ERP systems<ref>Montgomery, Nigel (2010).[http://www.gartner.com/id=1412121 "Two-Tier ERP Suite Strategy: Considering Your Options."] Gartner Group. July 28, 2010. Retrieved September 20, 2012.</ref> Two-tier ERP strategies give enterprises agility in responding to market demands and in aligning IT systems at a corporate level while inevitably resulting in more systems as compared to one ERP system used throughout the organization.<ref>{{cite journal | last1 = Kovacs | first1 = G. L. | last2 = Paganelli | first2 = P. | year = 2003 | title = A planning and management infrastructure for large, complex, distributed projects — beyond ERP and SCM | url = http://ceit.aut.ac.ir/~sa_hashemi/My%20Teachings/MS-CEIT-Supply%20Chain%20Management/W-Selected%20Papers%20for%20class%20seminars-last/scm-pm-A%20planning%20and%20management%20infrastructure%20for%20large%2C%20complex%2Cdistributed%20projects-beyond%20ERP%20and%20SCM.pdf | journal = Computers in Industry | volume = 51 | issue = 2| pages = 165–183 | doi=10.1016/s0166-3615(03)00034-4| citeseerx = 10.1.1.474.6993 }}</ref> | ||
An alternative to a two-tier approach is to use as an ERP system which allows for multiple workflows to be configured for the same function. This allows each operation or division to have its own workflow, say for order entry. This avoids the need to integrate two ERP systems as all divisions and operations are running within the same ERP system.<ref>{{Cite web |url=https://corescholar.libraries.wright.edu/cgi/viewcontent.cgi?article=2168&context=knoesis |access-date=2026-01-21 |website=corescholar.libraries.wright.edu|title=Workflow Management Systems and ERP Systems: Differences, Commonalities, and Applications}}</ref> | |||
===Customization=== | ===Customization=== | ||
ERP systems are theoretically based on industry best practices, and their makers intend that organizations deploy them "as is".<ref>{{cite journal|last=Kraemmerand|first=P.|title=ERP implementation: an integrated process of radical change and continuous learning|journal=Production Planning & Control|year=2003|volume=14|issue=4|pages=228–248|display-authors=etal|doi=10.1080/0953728031000117959|s2cid=108921043}}</ref><ref>{{cite journal|last=Vilpola|first=Inka Heidi|title=A method for improving ERP implementation success by the principles and process of user-centred design|journal=Enterprise Information Systems|year=2008|volume=2|issue=1|pages=47–76|doi=10.1080/17517570701793848|s2cid=3032440}}</ref> ERP vendors do offer customers configuration options that let organizations incorporate their own business rules, but gaps in features often remain even after configuration is complete. | ERP systems are theoretically based on industry best practices, and their makers intend that organizations deploy them "as is".<ref>{{cite journal|last=Kraemmerand|first=P.|title=ERP implementation: an integrated process of radical change and continuous learning|journal=Production Planning & Control|year=2003|volume=14|issue=4|pages=228–248|display-authors=etal|doi=10.1080/0953728031000117959|s2cid=108921043}}</ref><ref>{{cite journal|last=Vilpola|first=Inka Heidi|title=A method for improving ERP implementation success by the principles and process of user-centred design|journal=Enterprise Information Systems|year=2008|volume=2|issue=1|pages=47–76|doi=10.1080/17517570701793848|bibcode=2008EntIS...2...47V |s2cid=3032440}}</ref> ERP vendors do offer customers configuration options that let organizations incorporate their own business rules, but gaps in features often remain even after configuration is complete. | ||
ERP customers have several options to reconcile feature gaps, each with their own pros/cons. Technical solutions include rewriting part of the delivered software, writing a homegrown module to work within the ERP system, or interfacing to an external system. These three options constitute varying degrees of system customization—with the first being the most invasive and costly to maintain.<ref name="Fryling 2010 391–421">{{cite journal|last=Fryling|first=Meg|title=Estimating the impact of enterprise resource planning project management decisions on post-implementation maintenance costs: a case study using simulation modelling|journal=Enterprise Information Systems|year=2010|volume=4|issue=4|pages=391–421|doi=10.1080/17517575.2010.519785|bibcode=2010EntIS...4..391F|s2cid=34298012}}</ref> Alternatively, there are non-technical options such as changing business practices or organizational policies to better match the delivered ERP feature set. Key differences between customization and configuration include: | ERP customers have several options to reconcile feature gaps, each with their own pros/cons. Technical solutions include rewriting part of the delivered software, writing a homegrown module to work within the ERP system, or interfacing to an external system. These three options constitute varying degrees of system customization—with the first being the most invasive and costly to maintain.<ref name="Fryling 2010 391–421">{{cite journal|last=Fryling|first=Meg|title=Estimating the impact of enterprise resource planning project management decisions on post-implementation maintenance costs: a case study using simulation modelling|journal=Enterprise Information Systems|year=2010|volume=4|issue=4|pages=391–421|doi=10.1080/17517575.2010.519785|bibcode=2010EntIS...4..391F|s2cid=34298012}}</ref> Alternatively, there are non-technical options such as changing business practices or organizational policies to better match the delivered ERP feature set. Key differences between customization and configuration include: | ||
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Customization's disadvantages include that it may: | Customization's disadvantages include that it may: | ||
* Increase time and resources required to implement and maintain<ref name="Fryling 2010 391–421"/><ref name="BradfordModern15">{{cite book |url=https://books.google.com/books?id=KZRqCAAAQBAJ&pg=PA107 |title=Modern ERP: Select, Implement, & Use Today's Advanced Business Systems |author=Bradford, M. |pages=107–108 |year=2015 |publisher=Lulu.com |isbn= | * Increase time and resources required to implement and maintain<ref name="Fryling 2010 391–421"/><ref name="BradfordModern15">{{cite book |url=https://books.google.com/books?id=KZRqCAAAQBAJ&pg=PA107 |title=Modern ERP: Select, Implement, & Use Today's Advanced Business Systems |author=Bradford, M. |pages=107–108 |year=2015 |publisher=Lulu.com |isbn=978-1-312-66598-9 |access-date=9 May 2018}}</ref> | ||
* Hinder seamless interfacing/integration between suppliers and customers due to the differences between systems<ref name="BradfordModern15" /> | * Hinder seamless interfacing/integration between suppliers and customers due to the differences between systems<ref name="BradfordModern15" /> | ||
* Limit the company's ability to upgrade the ERP software in the future<ref name="BradfordModern15" /> | * Limit the company's ability to upgrade the ERP software in the future<ref name="BradfordModern15" /> | ||
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===Extensions=== | ===Extensions=== | ||
ERP systems can be extended with third-party software, often via vendor-supplied interfaces.<ref name="BendolyStrat05">{{cite book |url=https://books.google.com/books?id=GAOHQvgpeNYC&pg=PA95 |title=Strategic ERP Extension and Use|author1-link=Elliot Bendoly |last1=Bendoly |first1=E. |last2=Jacobs |first2=F.R. |publisher=Stanford University Press |page=95 |year=2005 |isbn= | ERP systems can be extended with third-party software, often via vendor-supplied interfaces.<ref name="BendolyStrat05">{{cite book |url=https://books.google.com/books?id=GAOHQvgpeNYC&pg=PA95 |title=Strategic ERP Extension and Use|author1-link=Elliot Bendoly |last1=Bendoly |first1=E. |last2=Jacobs |first2=F.R. |publisher=Stanford University Press |page=95 |year=2005 |isbn=978-0-8047-5098-1 |access-date=9 May 2018}}</ref><ref name="LeonERP08">{{cite book |url=https://books.google.com/books?id=95QiBAAAQBAJ&pg=PA171 |title=ERP Demystified |author=Leon, A. |publisher=Tata McGraw-Hill Education |pages=170–171 |year=2008 |isbn=978-0-07-065664-2}}</ref> Extensions offer features such as:<ref name="LeonERP08" /> | ||
* [[product data management]] | * [[product data management]] | ||
* [[product life cycle management]] | * [[product life cycle management]] | ||
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* [[data mining]] | * [[data mining]] | ||
* [[e-procurement]] | * [[e-procurement]] | ||
* [[accounting management]] | |||
===Data migration=== | ===Data migration=== | ||
[[Data migration]] is the process of moving, copying, and restructuring data from an existing system to | [[Data migration]] is the process of moving, copying, and restructuring data from an existing system to an enterprise resource planning (ERP) system. It is a critical component of a successful implementation and requires thorough planning. However, because migration typically occurs near the end of the implementation process, it often receives inadequate attention. The following steps can help structure an effective migration plan:<ref name="RamaswamyData07">{{cite web |url=http://research.ittoolbox.com/white-papers/backoffice/erp/data-migration-strategies-in-erp-4620/ |archive-url=https://web.archive.org/web/20071030160728/http://research.ittoolbox.com/white-papers/backoffice/erp/data-migration-strategies-in-erp-4620/ |title=Data Migration Strategy in ERP |author=Ramaswamy, V.K. |publisher=Information Technology Toolbox, Inc |date=27 September 2007 |archive-date=30 October 2007 |access-date=9 May 2018}}</ref> | ||
* Identify the data to be migrated. | * Identify the data to be migrated. | ||
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===Advantages=== | ===Advantages=== | ||
The most fundamental advantage of ERP is that the integration of a myriad of business processes saves time and expense. Management can make decisions faster and with fewer errors. Data becomes visible across the organization. Tasks that benefit from this integration include:<ref name="MeerBest05">{{cite book |url=https://books.google.com/books?id=9YaMB6tOd5oC |title=Best Practices in ERP Software Applications |author=Meer, K.H. |page=59 |year=2005 |publisher=iUniverse |isbn=978- | The most fundamental advantage of ERP is that the integration of a myriad of business processes saves time and expense. Management can make decisions faster and with fewer errors. Data becomes visible across the organization. Tasks that benefit from this integration include:<ref name="MeerBest05">{{cite book |url=https://books.google.com/books?id=9YaMB6tOd5oC |title=Best Practices in ERP Software Applications |author=Meer, K.H. |page=59 |year=2005 |publisher=iUniverse |isbn=978-0-595-34513-7 |access-date=9 May 2018}}</ref> | ||
* Sales forecasting, which allows [[inventory optimization]]. | * Sales forecasting, which allows [[inventory optimization]]. | ||
* Chronological history of every transaction through relevant data compilation in every area of operation. | * Chronological history of every transaction through relevant data compilation in every area of operation. | ||
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* Facilitates standard [[Product naming convention|product naming/coding]] | * Facilitates standard [[Product naming convention|product naming/coding]] | ||
* Provides a comprehensive enterprise view (no "islands of information"), making real–time information available to management anywhere, anytime to make proper decisions | * Provides a comprehensive enterprise view (no "islands of information"), making real–time information available to management anywhere, anytime to make proper decisions | ||
* Protects sensitive data by consolidating multiple security systems into a single structure<ref>{{cite web |first=Katherine |last=Walsh |url=http://www.csoonline.com/article/216940/The_ERP_Security_Challenge |title=The ERP Security Challenge |work=CSOonline |publisher=[[CXO Media, Inc.]] |date=January 2009 |access-date=January 17, 2008 |archive-date=4 May 2009 |archive-url=https://web.archive.org/web/20090504140508/http://www.csoonline.com/article/216940/The_ERP_Security_Challenge | * Protects sensitive data by consolidating multiple security systems into a single structure<ref>{{cite web |first=Katherine |last=Walsh |url=http://www.csoonline.com/article/216940/The_ERP_Security_Challenge |title=The ERP Security Challenge |work=CSOonline |publisher=[[CXO Media, Inc.]] |date=January 2009 |access-date=January 17, 2008 |archive-date=4 May 2009 |archive-url=https://web.archive.org/web/20090504140508/http://www.csoonline.com/article/216940/The_ERP_Security_Challenge }}</ref> | ||
===Benefits=== | ===Benefits=== | ||
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The basic idea is that there should still be a core ERP solution that would cover most important business functions, while other functions will be covered by specialist software solutions that merely extend the core ERP. This concept is similar to the "best-of-breed" approach<ref>{{cite web|url=https://www.gartner.com/doc/3171517/postmodern-erp-strategy-bestofbreed-approach|title=Postmodern ERP Strategy Is Not a Best-of-Breed Approach|publisher=Gartner Group|access-date=October 31, 2016}}</ref> to software execution, but it shouldn't be confused with it. While in both cases, applications that make up the whole are relatively loosely connected and quite easily interchangeable, in the case of the latter there is no ERP solution whatsoever. Instead, every business function is covered by a separate software solution.<ref>{{Cite web |date=2020-01-27 |title="ERP, the Future of Applications, and the Composable Enterprise" by Mike Guay |url=https://blogs.gartner.com/debbie_wilson/2020/01/27/erp-future-applications-composable-enterprise-mike-guay/ |access-date=2022-12-12 |website=Debbie Wilson |language=en}}</ref> | The basic idea is that there should still be a core ERP solution that would cover most important business functions, while other functions will be covered by specialist software solutions that merely extend the core ERP. This concept is similar to the "best-of-breed" approach<ref>{{cite web|url=https://www.gartner.com/doc/3171517/postmodern-erp-strategy-bestofbreed-approach|title=Postmodern ERP Strategy Is Not a Best-of-Breed Approach|publisher=Gartner Group|access-date=October 31, 2016}}</ref> to software execution, but it shouldn't be confused with it. While in both cases, applications that make up the whole are relatively loosely connected and quite easily interchangeable, in the case of the latter there is no ERP solution whatsoever. Instead, every business function is covered by a separate software solution.<ref>{{Cite web |date=2020-01-27 |title="ERP, the Future of Applications, and the Composable Enterprise" by Mike Guay |url=https://blogs.gartner.com/debbie_wilson/2020/01/27/erp-future-applications-composable-enterprise-mike-guay/ |access-date=2022-12-12 |website=Debbie Wilson |language=en}}</ref> | ||
There is, however, no golden rule as to what business functions should be part of the core ERP, and what should be covered by supplementary solutions. According to Gartner, every company must define their own postmodern ERP strategy, based on company's internal and external needs, operations and processes.<ref name=":2" /> For example, a company may define that the core ERP solution should cover those business processes that must stay behind the firewall, and therefore, choose to leave their core ERP [[On-premises software|on-premises]]. At the same time, another company may | There is, however, no golden rule as to what business functions should be part of the core ERP, and what should be covered by supplementary solutions. According to Gartner, every company must define their own postmodern ERP strategy, based on company's internal and external needs, operations and processes.<ref name=":2" /> For example, a company may define that the core ERP solution should cover those business processes that must stay behind the firewall, and therefore, choose to leave their core ERP [[On-premises software|on-premises]]. At the same time, another company may adopt a hybrid ERP approach, hosting the core ERP solution in the cloud while moving only a few ERP modules as supplementary solutions to on-premises.<ref>{{Cite book |last1=Ploder |first1=Christian |last2=Bernsteiner |first2=Reinhard |last3=Schlögl |first3=Stephan |last4=Walter |first4=Johannes |chapter=Critical Success Factors of Hybrid-ERP Implementations |series=Communications in Computer and Information Science |date=2021 |volume=1438 |editor-last=Uden |editor-first=Lorna |editor2-last=Ting |editor2-first=I-Hsien |editor3-last=Wang |editor3-first=Kai |title=Knowledge Management in Organizations |chapter-url=https://link.springer.com/chapter/10.1007/978-3-030-81635-3_25 |language=en |location=Cham |publisher=Springer International Publishing |pages=305–315 |doi=10.1007/978-3-030-81635-3_25 |isbn=978-3-030-81635-3}}</ref> | ||
The main benefits that companies will gain from implementing postmodern ERP strategy are speed and flexibility when reacting to unexpected changes in business processes or on the organizational level.{{ | The main benefits that companies will gain from implementing postmodern ERP strategy are speed and flexibility when reacting to unexpected changes in business processes or on the organizational level.<ref>{{Cite web |last=Pettey |first=Christy |date=September 27, 2016 |title=5 Ugly Truths About Postmodern ERP |url=https://www.gartner.com/smarterwithgartner/5-ugly-truths-about-postmodern-erp |access-date=2025-08-25 |website=Gartner |language=en}}</ref> With the majority of applications having a relatively loose connection, it is fairly easy to replace or upgrade them whenever necessary. In addition to that, following the examples above, companies can select and combine cloud-based and on-premises solutions that are most suited for their ERP needs. The downside of postmodern ERP is that it will most likely lead to an increased number of software vendors that companies will have to manage, as well as pose additional [[Application Integration Architecture|integration]] challenges for the central IT.<ref>{{cite web|title=The end of enterprise resource planning|url=https://cen.acs.org/business/informatics/end-enterprise-resource-planning/98/i10|access-date=2020-06-02|website=Chemical & Engineering News|language=en}}</ref> | ||
==See also== | ==See also== | ||
{{Portal|Business}} | |||
* [[List of ERP software packages]] | * [[List of ERP software packages]] | ||
* [[Business process management]] | * [[Business process management]] | ||
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*{{Cite book|last=Waldner|first=Jean-Baptiste|title=Les nouvelles perspectives de la production|year=1990|publisher=Dunod|location=Paris|language=fr|isbn=978-2-04-019820-6}} | *{{Cite book|last=Waldner|first=Jean-Baptiste|title=Les nouvelles perspectives de la production|year=1990|publisher=Dunod|location=Paris|language=fr|isbn=978-2-04-019820-6}} | ||
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*{{cite book |last=O'Leary |first=Daniel E | *{{cite book |last=O'Leary |first=Daniel E |date=31 July 2000 |title=Enterprise Resource Planning Systems Systems, Life Cycle, Electronic Commerce, and Risk |location= |publisher=[[Cambridge University Press]] |page=232 |isbn=978-0-52-179152-6}} | ||
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*{{cite book |last1=Shanks |first1=Graeme |last2=Willcocks |first2=Leslie P. | *{{cite book |last1=Shanks |first1=Graeme |last2=Willcocks |first2=Leslie P. |date=11 September 2003 |title=Second-Wave Enterprise Resource Planning Systems |location= |publisher=Cambridge University Press |page=449 |isbn=978-0-521-81902-2}} | ||
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*{{cite | *{{cite book |last1=Odell |first1=Laura A. |last2=Farrar-Foley |first2=Brendan T. |last3=Kinkel |first3=John R. |last4=Moorthy |first4=Rama S. |date=1 February 2012 |title=Beyond Enterprise Resource Planning (ERP):: The Next Generation Enterprise Resource Planning Environment |chapter=The Next Generation Enterprise Resource Planning Environment |publisher=[[Institute for Defense Analyses]] |page=124 |jstor=resrep26969}} | ||
*{{cite journal |last1=Umble |first1=Elisabeth J |last2=Haft |first2=Ronald R |last3=Umblea |first3=M.Michael |date=16 April 2003 |title=Enterprise resource planning: Implementation procedures and critical success factors |journal=[[European Journal of Operational Research]] |publisher=[[Elsevier]] |volume=146 |issue=2 |pages=241–257 |doi=10.1016/S0377-2217(02)00547-7 }} | *{{cite journal |last1=Umble |first1=Elisabeth J |last2=Haft |first2=Ronald R |last3=Umblea |first3=M.Michael |date=16 April 2003 |title=Enterprise resource planning: Implementation procedures and critical success factors |journal=[[European Journal of Operational Research]] |publisher=[[Elsevier]] |volume=146 |issue=2 |pages=241–257 |doi=10.1016/S0377-2217(02)00547-7 }} | ||
*{{cite journal |last1=Hitt |first1=Lorin M. |last2=Wu |first2=D.J. |last3=Zhou |first3=Xiaoge |date=23 December 2014 |title=Investment in Enterprise Resource Planning: Business Impact and Productivity Measures |journal=[[Journal of Management Information Systems]] |volume=19 |pages=71–98 |doi=10.1080/07421222.2002.11045716 |s2cid=18977742 }} | *{{cite journal |last1=Hitt |first1=Lorin M. |last2=Wu |first2=D.J. |last3=Zhou |first3=Xiaoge |date=23 December 2014 |title=Investment in Enterprise Resource Planning: Business Impact and Productivity Measures |journal=[[Journal of Management Information Systems]] |volume=19 |pages=71–98 |doi=10.1080/07421222.2002.11045716 |s2cid=18977742 }} | ||
*{{cite journal |last1=Jacobs |first1=F.Robert |last2=WestonJr.b |first2=F.C. | *{{cite journal |last1=Jacobs |first1=F.Robert |last2=WestonJr.b |first2=F.C.'Ted |date=2007 |title=Enterprise resource planning (ERP)—A brief history |journal=Journal of Operations Management |publisher=[[Elsevier]] |volume=25 |issue=2 |pages=357–363 |doi=10.1016/j.jom.2006.11.005 }} | ||
*{{cite journal |last1=A. |first1=Momoh |last2=R.|first2=Roy |last3=E. |first3=Shehab |date=2010 |title= Challenges in enterprise resource planning implementation: state-of-the-art|journal=[[Business Process Management Journal]] |publisher= Emerald Group Publishing Limited |volume=16 |issue=4 |pages=537–565 |doi=10.1108/14637151011065919 }} | *{{cite journal |last1=A. |first1=Momoh |last2=R.|first2=Roy |last3=E. |first3=Shehab |date=2010 |title= Challenges in enterprise resource planning implementation: state-of-the-art|journal=[[Business Process Management Journal]] |publisher= Emerald Group Publishing Limited |volume=16 |issue=4 |pages=537–565 |doi=10.1108/14637151011065919 }} | ||
*{{cite journal |last1=Chou |first1=Shih-Wei |last2=Chang |first2=Yu-Chieh |date=2008 |title=The implementation factors that influence the ERP (enterprise resource planning) benefits |journal=Decision Support Systems |volume=46 |issue=1 |pages=149–157 |doi=10.1016/j.dss.2008.06.003 }} | *{{cite journal |last1=Chou |first1=Shih-Wei |last2=Chang |first2=Yu-Chieh |date=2008 |title=The implementation factors that influence the ERP (enterprise resource planning) benefits |journal=Decision Support Systems |volume=46 |issue=1 |pages=149–157 |doi=10.1016/j.dss.2008.06.003 }} | ||
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* {{cite journal|title = The panoptic gaze: Analysing the interaction between enterprise resource planning technology and organisational culture|journal = International Journal of Information Management|volume = 28|number = 6|pages = 446–452| | * {{cite journal|title = The panoptic gaze: Analysing the interaction between enterprise resource planning technology and organisational culture|journal = International Journal of Information Management|volume = 28|number = 6|pages = 446–452| | ||
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|title=Setting up an ERP: How to make it the central nervous system of your SME | |||
|date=31 January 2025 | |||
|publisher=Witify | |||
|language=en | |||
|access-date=25 August 2025 | |||
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|last4=Al-Tahat | |||
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|last5=Nazzal | |||
|first5=Muhannad Akram | |||
|title=Effects of effective ERP system utilization on enterprise economic sustainability through product life cycle cost control | |||
|journal=Journal of Business and Socio-economic Development | |||
|year=2025 | |||
|volume=5 | |||
|issue=3 | |||
|pages=240–258 | |||
|doi=10.1108/JBSED-10-2024-0103 | |||
|doi-access=free | |||
|publisher=Emerald Publishing | |||
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*{{Cite journal | |||
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}} | |||
{{Refend}} | {{Refend}} | ||
| Line 282: | Line 345: | ||
[[Category:Computer-related introductions in 1990]] | [[Category:Computer-related introductions in 1990]] | ||
[[Category:Computer-aided engineering]] | [[Category:Computer-aided engineering]] | ||
[[Category:Computational fields of study]] | [[Category:Computational fields of study]] | ||
[[Category:Enterprise resource planning terminology]] | [[Category:Enterprise resource planning terminology]] | ||
| Line 292: | Line 354: | ||
[[Category:Production planning]] | [[Category:Production planning]] | ||
[[Category:Business planning]] | [[Category:Business planning]] | ||
[[Category:Business | [[Category:Business processes]] | ||
[[Category:Customer relationship management]] | [[Category:Customer relationship management]] | ||
[[Category:Financial management]] | [[Category:Financial management]] | ||