2.2 Enterprise Resource Planning (ERP)
Enterprise Resource Planning software and systems have evolved from resource and materials planning in organisations to automate the management of activities that often span the many functional areas of an organisation. According to Wikipedia, the free encyclopedia, ERP :
are management information systems that integrate and automate many of the business practices associated with the operations or production aspects of a company. These typically include manufacturing, logistics, distribution, inventory, shipping, invoicing, and accounting. Enterprise Resource Planning or ERP software can aid in the control of many business activities, like sales, delivery, billing, production, inventory management, and Human Resource Management Systems
(Source: http://en.wikipedia.org/wiki/Enterprise_resource_planning )
The following reading gives an excellent overview on what ERPs are, what they can do, and their weaknesses.
Reading 1
Koch, C (March, 2002) 'The ABCs of ERP', CIO Magazine , Enterprise Resource Planning Research Centre, 6 pages. Sourced November 2004, at http://www.cio.com/research/erp/edit/erpbasics.html .
Activity 1
Access and analyse the read from Koch on ERPs. Now please compete the following questions.
- What value-added benefits do ERPs bring to an organisation (i.e. What do they fix and why)?
- What are some of the problems Koch suggests ERPs may have?
- Are ERPs completing all aspects of resource planing within an organisation? If not, why not?
- What are the hidden costs of ERPs?
- Given Koch's view on ERPs why do you think the promise held by ERPs is still sought by some organisational executives?