Monday, February 12, 2001		Article

Road to ERP being built
By Harsh Sadawarti

ENTERPRISE Resource Planning (ERP) has been around for over two decades, but in came in India with a bang three to four years ago. Why it is considered more efficient than the earlier traditional application systems is because it takes into account all aspects of business. The ensuing data becomes the part of a composite whole. Multiple users for multiple uses can avail of it at multiple places.

Traditionally companies used to prefer IT solutions to satisfy their information needs. The companies developed separate computer applications for each of their segments, such as accounts, purchase, inventory and planning. Such systems grew as inconsistent islands of information and hence their consolidation was not possible when a need was felt for doing so.

The main objective of ERP package is to integrate various functions, departments, divisions within an organisation to enable them to operate optimally so as to reduce the cost, increase profitability and achieve highest customer satisfaction.

While the Web stampede and the Net "gold rush" have hogged most of the media spotlight, the business world’s steady embrace of the ERP models may be one of the most significant events of the 1990s. ERP applications are reshaping the business structure because they appear to solve the challenges posed by portfolios of disconnected, uncoordinated applications that have outlived their usefulness.

E-commerce and other business drivers are compelling companies to replace the homegrown, industry-specific applications with ERP applications. The key business drivers forcing structural migration include replacing legacy systems, gaining greater control, managing globalisation, handling regulatory change, and improving integration of functions across the enterprise.

To find a good fit between the ERP models and an organisation’s business requirements, mangers must ask: "What kind of company do we want to be?" rather than "What features are in each application?" ERP applications are defining the overall corporate architecture. An application affects the whole corporation; therefore, the decision to build versus buy is very strategic. A combination of better products, time-to-market-urgency, and thin in-house technical skills ensures that mainstream firms will embrace packaged ERP software. Each ERP application suite has its own architecture, customisation features, installation procedures and level of complexity.

The ability to respond to the new customer needs and seize market opportunities as they arise is crucial for a company. Successful companies today recognise that a high level of co-ordination and interaction along the supply chain will be a key ingredient of their continued success. In this new business paradigm there is a need for an infrastructure that will provide information across all functions and locations within the organisation. ERP fulfils this need. "The road to excellence is always under construction" likewise, the ERP solution is also "Under construction". The long-term goal is to achieve more flexibility in operations.