Enterprise Resource Planning (ERP) plays a critical role in business, requiring people to have a general understanding of the key components of ERP to function well in any organization. Businesses have been transitioning to computer technology at an increasing rate since the advent of the desktop computer in the early 80’s. The focus of computer technology in business has always been to increase productivity through information management. Since the introduction of the Internet and advances in networking technologies and software, businesses must implement some form of computer technology to automate common tasks like word processing, accounting, and Internet access by employees, to more advanced software applications covering all or most of an organization’s business processes. These advanced software applications, generally known as ERP, capitalize on computer technology and enable businesses to have detailed perspectives into a wide range of business operations, allowing them to share information quickly between organizations, departments and personnel for better management.
ERP is a loosely used term primarily describing software but encompasses hardware and software systems Edwin Urrutia used by an enterprise to gather, store, retrieve, and use information flows through an enterprise. The term ERP, therefore, can apply to a single microcomputer using an accounting package (Quick Books for example) to track sales, inventory, billing and accounting, to more complex ERP systems that automate business processes across the supply chain from manufacturing, distribution, retail, service and, ultimately, the customer, who may be either downstream or upstream in the supply chain. These functional abilities of ERP are generally grouped into software categories known as Supply Chain Management (SCM) and Customer Relationship Management (CRM) and can be implemented in small, medium, or large businesses using various hardware and software configurations. Complex ERP systems can be designed (hardware and software architecture) to service large multi-national corporations using the Internet, Intranets, and Extranets in their business operations. An Intranet functions like the Internet; however, it is limited to the organization and its users and denies access to the public. An Extranet, on the other hand, is a mechanism that allows authorized persons to access portions of an enterprise’s Intranet (over the Internet) with a username and password. For example, a manufacturer may allow dealers to access their Extranet to view product and pricing data, proprietary information limited to authorized dealers only.
ERP is an extremely complex subject best understood by looking at the major components of an ERP system including hardware, software, and primary areas of concern for business owners and managers. By looking at these major components from a conceptual viewpoint, we can side step technical jargon allowing for a greater understanding of the purpose of ERP and its importance in business and the workplace.