In 1990 Gartner Group first employed the acronym ERP[4] as an extension of mater ial requirements planning (MRP), later

manufacturing resource planning[5][6] and computer-integrated manufacturing. Enterprise resource planning (ERP) integrates internal and external management i nformation across an entire organization, embracing finance/accounting, manufact uring, sales and service, customer relationship management, etc. ERP systems aut omate this activity with an integrated software application. Its purpose is to f acilitate the flow of information between all business functions inside the boun daries of the organization and manage the connections to outside stakeholders. Advantages The fundamental advantage of ERP is that integrating the myriad processes by whi ch businesses operate saves time and expense. Decisions can be made more quickly and with fewer errors. Data becomes visible across the organization. Tasks that benefit from this integration include[29]: Sales forecasting, which allows inventory optimization Order tracking, from acceptance through fulfillment Revenue tracking, from invoice through cash receipt Matching purchase orders (what was ordered), inventory receipts (what arrive d), and costing (what the vendor invoiced) Disadvantages Customization is problematic. Re engineering business processes to fit the ERP system may damage competitive ness and/or divert focus from other critical activities ERP can cost more than less integrated and/or less comprehensive solutions. High switching costs increase vendor negotiating power vis a vis support, ma intenance and upgrade expenses. Overcoming resistance to sharing sensitive information between departments c an divert management attention. Integration of truly independent businesses can create unnecessary dependenc ies. Extensive training requirements take resources from daily operations.

The largest vendors worldwide in 2005 according to Gartner Dataquest: Market share 2005 according to Gartner Dataquest. (million $)? Market share 1 2 3 4 5 SAP 1949 Oracle Applications 1374 The Sage Group 1121 17.44 Microsoft Dynamics 916 SSA Global Technologies[2] 30.33 21.38 14.25 464 7.22

What does an ERP System do? ******************************** Integrates information across all departments Facilitates the flow of information among the different functions and processes of an enterprise

- functions: manufacturing, finance, HR - processes: order entry Tracks a wide range of events in the enterprise in an integrated fashion Plans future activities based on these events Supports analysis of trends in these events, to improve the performance of the enterprise. Allows users to - input data in one location, that can be processed with other data and accessed as informational reports in a real-time environment - share common data and practices across the entire enterprise - reengineer the majority of its processes.

ERP Components: ******************* 1. Financials General ledger Accounts receivable Accounts payable Asset management Treasury management Controlling 2. Human Resources Human resources administration Payroll Self-service Planning - personnel development - workforce - shift 3. Sales and Distribution Prospect and customer management Sales order management Billing, invoicing and dispatch Sales history 4. Manufacturing Bills of materials, routings Different planning functions - production planning - capacity planning - shop floor control - production scheduling Project management Plant maintenance Quality management Multi-mode manufacturing functionalities - make-to-stock - make-to-order - assemble-to-order - engineer-to-order - JIT Industry-specific solutions - discrete manufacturing: automotive, high tech

- process industries: chemicals, oil & gas - services: public services, banking, insurance 5. Materials Management Procurement - generate purchase orders - know the prices - measure vendor performance - receive goods into inventory - pass invoices to accounts payables Inventory management - where is all stock - what is it worth - stock movement tracking 6. Logistics Warehouse management - maintains records of warehoused goods - process movement of products through warehouses Transportation management - manages delivery of products to customers - produces legal documents for tax, customs, shipping agents 7. Reporting Information is made available to particular users in the form of specific report s. In addition, there are other approaches to generating data from the system, including database queries. Recently, ERP reporting capabilities have begun to evolve as ERP vendors have tried to increase the accessibility and ease of use of the ERP software