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What is ERP?
Enterprise Resource Planning (ERP) is a systematically approach that attempts to bring
together systems application on one platform for the effective and efficient operation of an
organization. While ERP is not ideal for all types of businesses as it pertain to size and
business type, businesses that apply an ERP model in the organization realize vast benefit
in the long run.
How does ERP create value
The values that are created in an organization by utilizing an ERP system varies from
businesses to business, while not all the functional module within an organization can be
incorporated within an ERP, where ERP are applied the values far outweigh the cost for
implementing the system.
In a white paper published by Intel IT (Seaman 2012), Senior Integration Architect for
Enterprise Seaman stated that the implementation of their new ERP resulted in an
“increase in business value through increased agility and velocity, improved reliability and
support provided a better user experience, and enhanced cost efficient.
Seaman argument of value creation with the implementation of ERP is reinforced by
(O'leary 2000) when he states that legacy system do not take into consideration integration
of information across multiple locations or functional areas, information he said is
captured multiple times in multiple places within the organization and is not available real
time, as a result of this method of capturing and storing information, some information
never made it out of the area in which it was received as such, only the persons having
access to that area will have access to this information, information which should be made
available to all to other parties to whom the information is relevant. O'leary further went
on to state that when this information is made accessible to others, often there are different
informational reports of the same event or thing. Thus creating information asymmetries
between the parties to whom the information is relevant.
As a result of the integration across locations and functional areas that an ERP provides,
organization that implement this system saw an improvement in decision making, that
resulted in decreased inventory, reduction in personnel, expedited financial closing
process, reduction in wastage among others. Therefore it is fair to say that ERP can be
used to create value for the organization.
The Evolution of ERP
Manufacturing and inventories were handled on the premise that organization had to hold
adequate stock to satisfy customers demand, and were of the belief that customers would
