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ERP: Enterprise Resource Planning

* Manmeet Kaur, Varnika, Sahil ** Sushil Kamboj

* Student in SUSCET, Tangori ** Lecturer in SUSCET, Tangori

1. ABSTRACT:

Globalization, world class competition, modern business environment and the availability of the Internet are the premises which stress the need for ERP. The evolution of ERP to its present form has taken place starting with Pay roll and Bill of Materials in the 1960s to Web enabled ERP in the 2000s. The salient features of ERP II which makes it different from ERP are presented here. The results of an international survey pertaining to the embedding of intelligence and the corresponding evolutionary trends in the modern day ERP are also presented. Keywords: ERP, ERP II, AI, Web-enabled

2. INTRODUCTION

ERP is an Enterprise wide system that facilitates integrated and real-time planning, production and customer response. ERP has multilingual capability, multi-currency handling ability, and can recognize legal and tax reporting needs of various nations across the world. The real need for such an integrated system has emerged with the onset of Supply Chain Management, e-business and global operations which calls for exchange of information with other companies and customers directly. The world in which we do business is shrinking, and virtually every enterprise is either marketing or selling to customers in other countries, or simply using parts or materials that are produced elsewhere. Internet has overcome time and distance to a great extent. It has become the need of the hour to think globally and to include the same in plans, processes and strategies. Globalization and Web commerce riding on the development of the Internet have changed traditional business behaviors and practices. Leveraging the Internet by the business has become a need to quickly establish a virtual presence. They must use collaborative technology in order to respond to customers requirements better and faster. When the operations are scattered through multiple locations around the world, the need is to gain visibility across all sites. This enhanced visibility can lead to more negotiating power for purchasing parts and more efficient centralized accounts payable and receivable thereby improving overall performance. Solutions

like ERP, SCM or CRM solutions provide tools to manage the information that is essential to growing business value. Enterprise wide automation alone can address transforming relations among suppliers, purchasers, producers and customers. ERP has fallen short in the following areas that are critical to todays business needs [5]. Scope of conventional ERP is limited; conventional ERP helps automate individual departments and did not integrate its back-office benefits into the front-office to help businesses manage people, workloads and supply-chain issues; it could not establish consistent control of all the processes of the business. Competitive pressures and globalization have made it clear that the business world is still in need of more effective, total enterprise solutions.

3. ERP II

The need for e-business, Internet readiness in the Internet era and a situation which prevailed to tide over Y2K problems in the late 90s and early 2000s pushed ERP into the market. Average price of setting up a commercial website for a large or midsize organization was kept at $ 1 million as reported by Research agencies like Gartner Research Group [2]. Most of the websites developed during this period were not having backend support and could only accept shopping cart details from customers, print them out and do the rest of the processing manually. This means that only front-end website existed which made it appear as if everything was integrated electronically. Modules in the suite supplied by Oracle and SAP had sufficient functionality to attract a good majority of any business wanting to implement the e-way. Companies had to spent lots of money on maintaining the interfaces among the components after implementing the system during this early stage of e-business proliferation. With the development of the middleware called Enterprise Application integration (EAI), most of the integration issues remained within limits. The differences between ERP, new-generation application packages and e-business started vanishing beyond recognition at the boundaries. ERP of the past can be thought of as fully integrated modules which provided automated support for various functions.

In 1999, ERP by major vendors started incorporating Internet technologies to perform transactions through a browser and these vendors renamed themselves as e-business vendors. By 2000, the market saw the proliferation of e-business suites which could even engulf other functions like Customer Relationship Management (CRM) and Supply Chain Management (SCM) which were not present in traditional ERP. This made the ERP in the Internet era really support the e-business wave and the palm top for ERP connectivity from remote locations really changed the way how the business was carried out. Real time connectivity and centralized data repository became features of the ERP system. Moreover, ERP vendors maintained the various versions of the system and its interfaces developed were by them thereby relieving the users who

go for best-of-the-breed. E-business and ERP integration really boosted the concept of digital firm which was catching the wave during that time. Digital firm in terms has to have a digitally enabled environment for the interaction and processing among customers, employees, employer and the stakeholders [1].

ERP II superseded ERP and its two lesser known iterations called extended ERP and Enterprise Application Suite (EAS) [7]. The most apparent change from ERP to ERP II is a change in focus from one that is totally enterprise-centric and preoccupied with internal resource optimization and transactional processing to a new focus on process integration and external collaboration. ERP II application deployment strategies relates to information that is exchanged between two or more businesses over the Internet. This exchange of information electronically via the Internet is known as collaborative commerce or c-commerce. So it can be concluded that ERP II has ccommerce features. ERP II has also expanded to include areas such as Supply Chain Management (SCM), Customer Relationship Management (CRM), Knowledge Management (KM), business intelligence (BI), and inventory optimization (IO). The features in ERP II is very much in line with the Gartner research paper which predicted that ERP II would take ERP foundation and extend it outward to position the enterprise in the supply chain [6]. The following are the notable differences between ERP and ERP II [4]:

i. ERP II is web enabled where as ERP was not; ii. ERP was giving selected intensive coverage or wide extensive coverage in its modules. But ERP II gives the right mix of the macro and the micro and provides users with remedial measures after detecting the error; iii. ERP was targeted more towards manufacturing and the problem is overcome in ERP II by offering solution for all industries and sectors as well; iv. ERP could not integrate different functions from different departments but ERP II could integrate different functions across departments as well as from different industries; v. ERP II has embraced CRM & SCM functionality in addition to being web and WAP enabled; vi. ERP II revolutionalized the function to an external one and facilitated better networks than remaining as internal application. 4. SURVEY ON THE EVOLUTION OF ERP An international survey was floated by the authors to study the status of the use of latest technologies like Artificial Intelligence (AI) and tools in building intelligence in the modern day ERP [3]. Some of the newer disruptive technologies like managed code, extensible mark-up language and component architecture, born out of Object Oriented programming, are worth studying to establish the level of exploitation in developing and using such technologies in building ERP systems. The survey response analysis based on responses from 92 subjects helps

to conclude that 84.8% agreed that ERP requires intelligence for making use of ERP systems in strategic decision making which confirms the existence of a reengineering path through incorporation of AI techniques in ERP. It can be inferred that ERP is already in the path of evolution since 75% disagreed that ERP is good for transaction processing alone. In the era of web-enabled systems only web-enabled software can survive and the same is depicted in the result since 80.1% agreed that web-enabled ERP helps the evolution of ERP. Though it is found that ERP is in its evolutionary path, it is evident that sufficient scope exists for the application of AI techniques as 71.7% disagreed that widespread use of AI techniques are available in present day ERP. Evolution is inevitable for ERP since 87.5% disagreed that ERP will remain only as a transaction processing system. Majority (79.3%) disagreed that difficulty in building intelligence in ERP is due to lack of availability of web tools which gives a clear indication that technology is ready for building intelligent ERP. Also it may be noted that 75% disagreed that intelligence is not integrated in ERP due to security reasons which implies that no security related issues impedes incorporating intelligence in ERP. About half the respondents (48.9%) disagreed that major ERP vendors does not want to risk by developing intelligent ERP in the market. The real reason for lack interest of ERP vendors in developing intelligent ERP can be attributed to some other reason other than financial risk since 36.96% were unsure of this cause. Majority (85.9%) disagreed that ERP being a mission critical real time system, intelligence should not be integrated which means mission criticality of the real time ERP system does not stand in the way of making intelligent ERP. Relatively good percentage of respondents (59.8%) disagreed that AI techniques and web tools are not ripe enough for integration in ERP indicating that AI techniques and web tools are ripe enough for integration in ERP.

5. CONCLUSIONS

The world class competition, modern business environment and the availability of the Internet are the premises which stress the need for ERP. The evolution of ERP is presented briefly starting with Pay roll and Bill of Materials in the 1960s to Web enabled ERP in the 2000s. The salient features of ERP II which makes it different from ERP are presented in addition to presenting some of the disruptive technologies which help reengineer ERP systems fast. The results of an international survey pertaining to the embedding of intelligence in the modern day ERP are also presented.

6. REFERENCES

1. Laudon, K C and Laudon, J P., Managing Information Systems: Managing the digital firm, 7 th Edition, Prentice Hall of India, New Delhi, 2002.

2. Shields, Murrell G., E-business and ERP, John Wiley & Sons, USA, 2001. 3. Suresh Subramoniam, Shehzad Ghani, K. and Krishnankutty, K V. (2006), Current trends in enterprise information systems, Applied Computing and Informatics, Saudi Computer Society Journal, Vol.5, No. 2. 4. www.erpwire.com/erp-articles/erpII-vs-erp.htm 5. www.exactamerica.com 6. www.gcis.ca/english/cdne-077-aug-16-2001.html 7. www.vendor-showcase.com/Research/ResearchHighlights/Erp/2004/06/research_notes /TU_ER_XSW_06_18_04_15.asp