Enterprise Resource Planning (ERP)

Overview

• ERP Definition: Integrated management of main business processes, often in real-time, using software and technology.
• Purpose: Collect, store, manage, and interpret data from various business activities.
• Deployment: Can be local-based or cloud-based.

Key Components

• Modules:
  • Financial Accounting: General ledger, fixed assets, payables, receivables, cash management.
  • Management Accounting: Budgeting, costing, billing.
  • Human Resources: Recruiting, training, payroll, benefits.
  • Manufacturing: Engineering, scheduling, quality control.
  • Order Processing: Inventory, shipping, sales analysis.
  • Supply Chain Management: Planning, purchasing, warehousing.

Historical Context

• Originated from material requirements planning (MRP) and manufacturing resource planning (MRP II).
• The acronym ERP was first used in the 1990s by the Gartner Group.
• Initially focused on large enterprises but now used by smaller enterprises.

Evolution

• ERP II: Emerged in 2000, providing web-based software with real-time access for collaboration with partners.
• Postmodern ERP: Mix of cloud-based and on-premises applications, more loosely coupled and flexible.

Implementation

• Process Changes: Requires changes in existing business processes.
• Customization vs. Configuration:
  • Customization can improve user acceptance but increase maintenance costs.
  • Configuration involves setting up system rules and structures.
• Two-Tier ERP: Allows for multiple ERP systems at corporate and subsidiary levels.

Benefits

• Integration of business processes leads to efficiency and faster decision-making.
• Provides real-time data visibility and standardization across the organization.
• Enhances data security, collaboration, and decision-making capabilities.

Challenges

• Implementation can be costly and time-consuming.
• High switching costs and extensive training requirements.
• Resistance to sharing sensitive information.
• Customization can hinder future software upgrades and integration.

Future Trends

• Increased focus on cloud solutions and mobile integration.
• More flexible ERP systems to support collaborative initiatives.
• Continued evolution to meet globalization needs and regional strategies.

Application in Public Sector

• Government Resource Planning (GRP) is equivalent to ERP for the public sector.
• Adapted for government agencies to improve productivity and compliance.