First ERP systems came from MRP II that were developed in the 1980s. MRP II followed stock control and means material requirement planning. The evolution of the software defined the three types of ERP systems like MRP, MRP II, and a modern ERP.
Stock control software was used in the 1960s as a set of information technology and work activities sustaining and monitoring a proper level of stock in the warehouse. Materials requirements planning was aimed to schedule the supply of raw materials and work operations according to the needs of production and other requirements related to the manufacturing of the final goods.
ERP applications followed MRP solutions which were used to coordinate manufacturing processes from product planning to distribution.
It is often presumed that ERP systems work best for large enterprises, however, today, a lot of vendors want to repackage them so that they are suitable for small and mid-size companies. Companies with sufficient in-house IT staff may integrate multiple software products, that’s why they can implement only a part of the ERP system according to their work needs and opportunities. Let’s see, what types of ERP modules can be implemented.
Traditional Types of ERP Modules
Since ERP is a multiple modular application, it offers a lot of useful tools that business people can use to enhance the internal processes in their organizations. Here they are, the most popular modules:
- Supply chain management which includes all the processes related to supply, from planning to calculating the commission.
- Manufacturing is all about the flow of engineering, quality control, expenditure and cost control, etc. Production planning optimizes the utilization of manufacturing capacity, parts, components, and materials.
resources using historical production data and sales forecasting.
- Project management helps handle billing, costing, performance.
- Financials manages all the assets including accounts receivable and accounts payable. The financial module is the core of many resource planning software. It can gather financial data from various functional departments and generate valuable reports such as balance sheets, general ledger, and quarterly financial statements.
- CRM module allows marketing and sales specialists to collaborate with clients in order to improve the relations between an organization and its clients or users as well as to understand the main problems people face when dealing with your organization.
- Human resources module helps HR specialists manage payroll, attendance and time, benefits, and other things related to human resources management. HR modules maintain a complete employee database including contact information, salary details, attendance, performance evaluation and promotion of all employees. The advanced module is integrated with knowledge management systems to efficiently utilize the expertise of all employees.
So, as you can see, ERP application handle a lot of processes like distribution, manufacturing, logistics, shipping, accounting, invoicing, and many other. Since ERP systems are enterprise-wide and cross-functional, departments across the company are able to collaborate in one place.
Types of ERP Architecture
According to Scott Hirst from SAP, ERP can be divided into two categories: monolithic systems and postmodern systems which both possess a certain number of characteristics. So, monolithic applications have the following features:
- Fits to requirements
- Is developed with a single technology stack and a single vendor
- Is not flexible to changes arising in business
- An upgrade is needed to improve the system
Postmodern systems are more user-oriented and simple than their predecessors.
- Is user-centric
- Is not a single product suite
- Driven by social media, information, and clouds)
New types of ERP architecture are user-centric. They are simple to use to any user. Furthermore, these systems are agile which means that they are simplified, not containing redundant tables or other complicated things which were required for scalability in previous versions of different ERP products. Today, you may hear an abbreviation EAS which stands for enterprise application suite that can be used to denote formerly built resource planning systems.
ERP System Examples
SAP is the largest European software enterprise and the 4th largest in the globe, with headquarters in Walldorf, Germany It is best known for its SAP ERP software.
It is one of 5 enterprise applications in SAP's Business Suite. The other four applications are:
- customer relationship management (CRM) - helps companies acquire and retain customers, gain marketing and customer insight
- product lifecycle management (PLM) - helps manufacturers with product-related information
- supply chain management (SCM) - helps companies with the process of resourcing its manufacturing and service processes
- supplier relationship management (SRM) - enables companies to procure from suppliers
Baan was a provider of enterprise resource planning solutions that is currently owned by Infor. The corporation was founded by Jan Baan in 1978 in the Netherlands, with the main objective to deliver administrative and financial consulting services. With the development of the first ERP solution, Jan and his brother Paul entered what was to become the ERP industry. Their company focused on the creation of enterprise-wide applications. The company became popular in the early 1990s. Currently, Baan products are known for their technical architecture and its 4GL language that is still considered to be one of the most efficient and productive among database application development platforms. Today, Baan ERP package is still used by thousands of mid-size companies all over the globe.
Oracle Corporation specializes in creating and marketing enterprise software products which are, in most cases, database management systems. By 2007 Oracle ranked 3rd on the list of largest software companies in the world, after IBM and Microsoft. It became larger than IBM after its acquisition of Hyperion and BEA. The corporation has arguably become best-known due to association with its flagship Oracle database. The company also develops tools for database development, middle-tier software, ERP, CRM, and SCM.
PeopleSoft is a company that provides human resource management systems (HRMS), customer relationship management (CRM), manufacturing, financials, enterprise performance management, and student administration software solutions to large corporations and government. PeopleSoft is also the name of the company's product suite.
PeopleSoft's suite was initially based on a client-server architecture. The entire software suite moved to a web-centric design called Pure Internet Architecture (PIA). The new format allowed all of a company's business functions to be accessed and run on a web browser. One important feature of PeopleSoft's PIA is that no code is required on the client - there is no need for additional downloads of plugins.
Advantages of ERP: Is It Worth Developing a New Software?
There are a number of powerful benefits of enterprise-grade applications and systems. They are used to address the problems faced by a great number of companies of different sizes. Before implementing any of the existing types of ERP systems, note that if you fail to use a new software product, that could make your organization function in a less efficient way than it had to.
There are a lot of areas where the ERP system may become really helpful. For example, a design engineering process. In this process, a good system may help you find the best design approach or trend that will definitely affect the final product. Another example where ERP may be successfully used is order tracking process. With a proper system, employees will be able to track the order, get a detailed information on marketing strategies and customer experience.
Probably, there is one more example of the ERP integration where its usage is of great importance. Accounting modules can integrate the cost, profit, and revenue data which can be further presented in a granular way. How a product is manufactured is also a field of expertise of a well-developed ERP. This is important, because it will allow the company to keep better track of their products, and it can allow the products themselves to be produced with a higher level of quality.
Security is another area where the development and launch of the system can be helpful. It can protect a company against crimes such as embezzlement or industrial-espionage.
With a great number of benefits, business gets from the integration of planning systems, there are also a lot of disadvantages. Surely, the key disadvantage of is the cost. Expensive systems are affordable only to large corporations.
Here are the key benefits of ERP implementation:
Benefit 1 - Operating costs reduction
If you want to unite all the business processes across departments into a unified enterprise-grade system, ERP is a perfect fit. You will improve a coordination across departments and enhance the efficiency of your employees. The immediate profit you can get from implementing a new system is the reduction of costs like lower inventory expenses, marketing costs, production costs, and lower desk support expenses.
Benefit 2 - Facilitation of day-to-day management
Enterprise planning software helps easily access data to make data-driven decisions faster. It also tracks the actual costs of activities and performs activity-based costing.
Benefit 3 - Strategic planning support
Strategy planning processes define targets, objectives, goals according to work needs, assets, and outcomes executives want to see.
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