On October 9, I ran a contest asking readers to define ERP in their own words. Why? Because there are so many different definitions floating around on the Web that I wondered if users really know what they’re getting into when selecting an ERP system.
This problem was really brought home to me a few months ago, when I was asked to write a brief history of ERP (for an organization who will remain nameless).
It didn’t start well—throughout our first two meetings I couldn’t help feeling that we were talking at cross purposes. It finally turned out that they weren’t interested in ERP at all, but in SCM systems! “ERP” was just the organization’s generic way of referring to any enterprise system…
Here are your entries to the “Real ERP Challenge” (I’ve edited them very lightly):
Manuel Ortiz: “An ERP when chosen correctly is a tool that allows the company to be more efficient, increasing productivity and profits. When chosen incorrectly it can be an expensive proposition.”
My thoughts: This is an interesting comment, because it raises the point that an ERP system is only as efficient as the selection process behind it. Even the best ERP system in the world (hypothetically assuming that there is such a thing, because there isn’t—more on that in a later blog post) won’t help your organization if your selection process does not address your organizational change management needs as well.
Carlos Lian: “ERP is the integrated software application(s) a business needs to support mainly its core business processes from end to end. ERP is the opportunity for an organization to improve its reliability in its operation and the decision making process. ERP is the means to change culture in an organization.”
My thoughts: Excellent. ERP will undoubtedly change an organization’s culture, but how it changes is an open question: an unstructured (or otherwise flawed) selection process can certainly change it for the worse. Disgruntled users? Rampant spreadsheet-based workarounds? A CIO on the verge of a nervous breakdown? Check, check, and check.
Wigneiswar: “One solution that integrates all your business functions.”
My thoughts: I like this description, since in 8 words it describes the promised land of ERP. Contrast this with our discrete ERP RFP template, which contains 33,694 words.
Guus Krabbenborg: “An ERP system is a COMPASS that tells you where you are, how you’re doing and where your company is moving to.”
My thoughts: I like this too, although I’d argue that there’s some overlap between this definition and the description of a BI system.
Atul Shrivastava: “An ERP system is an integration system which not only integrates different organization systems and functions like HCM (Human Capital Management), Financials, Manufacturing (if applicable), and reporting from end to end in a transparent way by aligning these functions to organizational goals and policies; it also makes the information available at finger tips, helping stakeholders with better control and planning.”
My thoughts: Nice, very nice. Again, though, organizational transparency is the result of a best-practice selection methodology, rather than a result of the ERP system itself… which brings one organization in particular to mind: This organization followed an unstructured selection process and landed itself with an ERP system that was supposed to integrate its processes and data… a few years later, it found itself struggling with no less than 40 different silos of information (I’ll tell you who it was in July 2009, with the launch of our new blog series, “ERP Selection Insider”).
… and the winner is…
Simon Fisher: ERP is a term that represents the sum total of activities involved in the planning of the resources of an enterprise. Nowadays these activities are frequently supported by the use of integrated computer systems which when operating together can be considered as a single “ERP” system.
My thoughts: Nicely put! I like this definition because it makes a distinction between ERP (the grouping of activities) and ERP (the software system). Also, I like the touch of uncertainty suggested by the phrase “can be considered”… after all, there’s a reason the ERP selection process is fraught with risk: it’s because the boundaries of what ERP does and how it can help (or hinder) your organization are constantly shifting.
Simon, please contact me to claim your prize!
And now for our new contest!
Has your company ever gone through an ERP selection process? Tell me about your highs and lows in the comments section below… the funniest (or just plain weirdest) story gets a $100 rebate for the RFP template of your choice. Feel free to tell me about oddball sales pitches, demonstration glitches, selection snafus, or any other face-to-palm moment…
The rule: It has to be true.
Note: For blogging purposes, we operate on the honor system.
Hint: The honor system may not always be entirely appropriate for software selection purposes.
[…] which when operating together can be considered as a single “ERP” systemRead more here……http://blog.technologyevaluation.com/blog/2009/05/06/and-the-real-erp-is%e2%80%a6/#more-468 Published: Sunday, May 10, 2009, 12:48 […]
It is a pity ERP’s are so yesterday - both conceptually and architecturally. They claim to do so much, are loved by CFO’s in many organisations and nobody else. People only know what they know.
[…] Read more here……http://blog.technologyevaluation.com/blog/2009/05/06/and-the-real-erp-is%e2%80%a6/#more-468 […]
pl send this article asap
Good definitions clearing business requirements.
Good article to know ERP.
Right ERP product, right people (implementation partner), clear processes (identifying areas and various processes with clarity for mapping on ERP system), participatory management, are key factors for success of any ERP project and these are not new to anyone and known to many people. Having involved in an ERP Roll-out project, new release/version migration project and having exposure over implementing a fresh ERP project completely for various major modules such as MM,SD,PP,QM,FICO, my confidence level over such projects are very high. The reason for this confidence level would also attribute towards; IT exposure over in-house developed applications, infrastructure, networking, handling various IT projects in India and in abroad (5 countries) over the last 19 years in the areas of application support, development, system analysis, Software Quality, Manager and head of IS function in an organization where things are handled on end-to-end basis on current ERP implementation in an organization where process manufacturing and marketing/sales are effectively handled in a process driven manner.
As it holds good for any project, planning is an important phase and a good amount of time must be spent on this such that things become very easy during implementation phase. Last but now least, doing appraisal of any product during implementation stage is very important and this has to happen very effectively and in a honet manner through out till go-live / sign off phase and project closure.
Bye for now.
As the name implies the acronym ERP stands for Enterprise Resource planning(ERP). The integrated suite of software applications that address these requirements for any organisation has to combine the information requirements for the different resources used such as People, customers, materials, monies, manufacturing and distribution facilities in order to manage them in an optimal manner.
“ERP works only in the right blend of People, Process and Technology. ERP is not an IT project but a Cultural Project”. “ERP (software + Haraware ) is Science. But implementing ERP is an ART”.
ERP is standardized and configurable business software to integrate, plan and manage all of organizational resources based on customer requirements and response to the market. This system must include best practices in data flow for the industry that the organization works.
Too bad none of the contestants thought it would be worthwhile to explain what ERP stood for.
We have many promises from 60’s. ERP is another promise for the total accounting automatic system. For me it’s a expensive accounting system. Of course.. any company in the world turn around the money. But are the process-persons mature for use and discipline for adopt the rules?
I think many companies have a big issue in the implementation of an ERP (expensive accounting system) the change management of the people and process.
An ERP is an integral part in an organisation which simmers all processes into a whole end.
An ERP integrates all departments and functions across an organization into a single computer system that aims to serve practically everyone’s particular needs,helps the business to plan well. It eases the exchange of data and facilitates communication among departments.
thanks for this initiative towards ERP
ERP is all that has been told about and more. As someone has said, ERP implementation is more an art. ERP is all about planning the resources of an Enterprise with reference to the policies and procedures followed by the Enterprise and in that respect it has to be tuned or worked around to meet the expectations.