Chapter 12

Integrating The Organization From End to End
- ENTERPRISE RESOURCE PLANNING

ENTERPRISE RESOURCE PLANNING (ERP)

      It serves as the organization’s backbone in providing 

fundamental decision making support. It enables people 

in different business areas to communicate. ERP system 

helps an organization to obtain operational efficiencies, 

lower costs, improve supplier and customer relations, 

and increase revenues and market share.

      The heart of an ERP system is a central database 

that collects information from and feeds information into 

all the ERP system’s individual application components 

(called modules), supporting diverse business function 

such as accounting, manufacturing, marketing, and 

human resources. ERP automates business processes 

such as order fulfillment- taking an order from a customer, 

shipping the purchase, and then billing for it. 

BRINGING THE ORGANIZATION TOGETHER

     ERP enables employees across the organization to share
information across a single, centralized database.
With extended portal capabilities, an organization can
also involve its suppliers and customers to participate in
the workflow process, allowing ERP to penetrate the entire
value chain, and help the organization achieve greater
operational efficiency.

THE EVOLUTION OF ERP

      Although ERP solutions were developed to deliver
automation across multiple units of an organization, to
help facilitate the manufacturing process and address
issues such as raw materials, inventory, order entry, and
distribution, ERP was unable to extend to other functional
areas of the company such as sales, marketing, and shipping.
It could not tie to any CRM capabilities that would allow
organizations to capture customer-specific information, nor
did it work with websites or portals used for customer service 

or order fulfillment.

INTEGRATING SCM, CRM, AND ERP

      Integration of SCM, CRM, and ERP is the key to
success for many companies. Integration allows the
unlocking of information to make it available to any user,
anywhere, anytime. Two main competitors in ERP market: 

• Oracle
• Sap

PRIMARY USERS AND BUSINESS BENEFITS OF STRATEGIC INITIATIVES

Integration Tools:An integrated enterprise infuses support areas, such as
finance and human resources, with a strong customer orientation. 
Integration are achieved using: 

• Middleware - several different types of software that sit
  in the middle of and provide connectivity between two
  or more software applications. It translates information
  between disparate systems.

• Enterprise Application Integration (EAI) middleware
  - represents a new approach to middleware by packaging
  together commonly used functionality, such as providing
  prebuilt links to popular enterprise applications, which
  reduces the time necessary to develop solutions that
  integrate applications from multiple vendors.

INTEGRATION BETWEEN SCM, CRM, AND ERP APPLICATIONS


      Companies run on independent applications, such as
SCM, CRM, and ERP. If one application performs poorly, the
entire customer value delivery system is affected.



ENTERPRISE RESOURCE PLANNING’S EXPLOSIVE GROWTH


Reasons of ERP being proven to be such a powerful force:

• ERP is a logical solution to the mess of incompatible
  applications that had sprung up in most businesses.
• ERP addresses the need for global information sharing
  and reporting.
• ERP is used to avoid the pain and expense of fixing
  legacy systems.

To qualify as a true ERP solution, the system not only must
integrate various organization processes, but also must be:

• Flexible- an ERP system should be flexible in order to
  respond to the changing needs of an enterprise.
• Modular and open- an ERP system has to have open
  system architecture, meaning that any module can be
  interfaced with or detached whenever required without
  affecting the other modules. The system should support
  multiple hardware platforms for organizations that have a
  heterogeneous collection of systems. It must also support
  third- party add-on components.
• Comprehensive- an ERP system should be able to support
  a variety of organizational functions and must be suitable
  for a wide range of business organizations.
• Beyond the company- an ERP system must not be confined
  to organizational boundaries but rather support online
  connectivity to business partners or customers.

Everyone involved in sourcing, producing, delivering the
company’s product works with the same information, which
eliminates redundancies, cuts wasted time, and removes
misinformation.