ERP (Enterprise Resource Planning) has been defined as an enterprise-wide information system designed to coordinate all resources, information, and activities needed to complete business processes and measure performance. ERP is the foundational layer that provides information structure, knowledge capture and business control . ERP systems are packaged enterprise systems that cover most core business functions including finance, accounting, sales, operations management, purchasing, and human resource management .
SAP Business Suite components.
MRP and MRP II
ERP systems are an extension of prior Materials Requirements Planning (MRP) and Manufacturing Resource Planning (MRP II) systems. MRP systems form the base of many ERPs and are used to plan production and raw materials purchases for future periods. Information used in MRP runs would include supplier lead times and finished product recipes or bills of material (BOMs).
Yet ERP systems are often referred to as “back-office” software and as “a label that may no longer be appropriate for evolving enterprise and inter-enterprise systems” . Hence the product and other definitions have evolved.
In ERP II or second generation ERP, the system moves beyond the enterprise boundaries (or a basic ERP system) and into the customer and supplier space including the supply, design, and engineering collaboration area . In the SAP Business Suite product this included adding extra modules such as supply chain management (SCM), customer relationship management (CRM), supplier relationship management (SRM) and product lifecycle management (PLM) to the SAP ERP software.
In ERP III or third generation ERP, marketplace fans and critics are integrated into the extended ERP organisations. This is through collaboration, direct contact, social media, and various data streams . This brings customer input, needs, wants, and insight into the enterprise.
ERP vendors and solutions
ERP vendors have undergone substantial consolidation over the last decade. The current top ERP vendors in terms of license revenue include SAP, Oracle, Sage, Infor and Microsoft. There are also many open-source ERP products available such as Compiere and ERP5. The market has increased from mainly large organisations to include small and medium sized organisations and many ERP vendors are targeting niche vertical segments with ERP products. Some of the products in this space include software as a service (SaaS) ERP solutions which are attracting growing interest in the marketplace .
In the ESEFA curriculum we are teaching enterprise systems using the SAP ERP system.
References and Further Reading
1. Faasen, J., Seymour, L. & Schuler, J. (2013). SaaS ERP adoption intent: Explaining the South African SME perspective. Sixth International Conference on Research and Practical Issues of Enterprise Information Systems (CONFENIS) 2012. Editors: Poels, G. IFIP LNBIP 139, pp 35-47. Available http://link.springer.com/book/10.1007%2F978-3-642-36611-
2. Freyermuth, J & Shepherd, J. (2010) The Enterprise Resource Planning (ERP) Market: Potential Buying Window Beginning to Close? AMR Research. Available http://i.zdnet.com/whitepapers/IBM_GBS_MM_ERP.pdf
3. Jansen van Vuuren, I., & Seymour, L. F. (2013, November). Towards a model for user adoption of enterprise systems in SMEs. In Enterprise Systems Conference (ES), 2013 (pp. 1-9). IEEE.
4. McGaughey, R. E., & Gunasekaran, A. (2007). Enterprise resource planning (ERP): past, present and future. International Journal of Enterprise Information Systems (IJEIS), 3(3), 23-35.
5. Wood, B. (2010). ERP vs. ERP II vs. ERP III Future Enterprise Applications Available http://www.r3now.com/erp-vs-erp-ii-vs-erp-iii-future-enterprise-applications