Although ERP has been the cornerstone of the success stories of most companies from several years, there has not been a unified definition for the term ERP. The absence of a single definition is due to the intrinsic complexity of the motive behind ERP implementation. According to the PC Magazine, "ERP is a concept that aims at utilizing an integrated IT system, which serves all departments within an enterprise" (PC Magazine, 2007). The definition implies that an ERP system is not a custom software, but a packaged software that a company can configure to interface with its own IT systems and business processes (finance, logistics, HR, manufacturing etc). Some of today's leading ERP vendors are SAP, Oracle and Microsoft.
Although its implementation has taken various forms, the essential concept of ERP has remained the same. Today ERP has become a worldwide industry standard term for the broad set of activities supported by multi-module application software that helps a manufacturer or other business manage the important parts of its business, including product planning, parts purchasing, maintaining inventories, interacting with suppliers, providing customer service, and tracking orders. ERP can also include application modules for the finance and human resources aspects of a business (EC Council, 2002).
ERP is a standaERP Customization: The First Step to Success
ERP is a standard software package, and like any other standard software package aimed at automating an anonymous industry; it must be tailored to the specific requirements of the business domain in which it is being used. According to Gartner Group (1997), the scale of Business Process Re-Engineering and customization account for the maximum reasons for ERP implementation failures. Therefore customization of the ERP software is a primary and a critical step in ERP implementation. Two types of tailoring methods can be applied to customize the ERP software to the specific business.
Customize the ERP package to suit the business process.
Business Process Re-Engineering: Customizing the Business Process to suit the ERP package.
In the first scenario, the company buys the off-shelf ERP package, and customizes the software based on the business rules and policies defined by the company.
The second scenario is the one that is most commonly applied. In this customization strategy, the company re-engineers its business processes to match the vendor's ERP logic. It is not essential that all the business processes of the company be re-engineered. The company performs BPR on only those business processes that are currently not in tandem with the philosophy of the ERP package. ERP implementation and BPR activities should be closely connected. ERP implementation should involve the analysis of current business processes and the chance of reengineering, rather than designing an application system that makes only the best of bad processes (Scheer & Habermann, 2000).
Current ERP Technology
Most current ERP software packages are based on 3-Tier Client Server Architecture. The 3 tiers of this architecture are:
User Interface: Contains the GUI that receives user input.
Business Logic: These are servers