Monday, December 1, 2003		Guest Speak

Get ready for ERP, Part II
Anil Bakht

Anil Bakht — Chairman & Managing Director Eastern Software Systems

Over the years, enterprise management systems have become the backbone of business. Enterprise Resource Planning (ERP) implementation in business can provide a synergistic fusion of marketing, purchase, R&D, production, quality control, distribution and other cross functional activities.

An ERP solution helps an enterprise to integrate all information across many functional areas. With ERP, most information flow problems are solved. The implementation requires inspecting every link in the operational and decision-making chains and then modifying them to take advantage of the new systems. The biggest advantage of implementing an ERP solution is that it forces an enterprise to institute a proven set of business processes rather than reinvent the wheel.

ERP is focused on getting the raw data and internal company information, processing it and creating solutions for the problems. Today, after a series of multiple iterations, ERP has entered the next stage of its evolutionary cycle. Quite simply, it has mutated into ERP II. And this has been primarily brought about because of shifting market forces coupled with the dynamics of the Internet as a business medium.

Simply stated, ERP II = SCM + CRM + ERP.

Before the implementation of the ERP, the information flow was hierarchical. That is, the information flowed from the top management to middle managers and then to the executives, but with the coming of the ERP, information flow became a common platform for all.

The same information is available through the Internet to all employees of an organisation. With the coming of ERP II, the platform has widened from employees of an organisation to the customers and suppliers. Now the same information can be shared by all organisation employees, customers and suppliers, thereby forming a community.

ERP II, can be defined as the next generation of enterprise resource planning strategies and applications. ERP II focuses not just on using information, but on delivering it to the individual who requires it, and in a way that best suits their needs.

ERP II takes data outside the enterprise and places it within the boundaries of the participating community. With ERP II, the role of ERP systems expands, from an attempt to optimise enterprise resources to a focus on exposing the information involving those resources to other enterprises within a community of shared common interest.

Initiatives to improve enterprise performance must include ERP II as a key element of most business processes. ERP II models will provide a suitable framework to refocus application efforts for greater enterprise integration and opportunities for collaboration. The role of ERP II coupled with the need for better integration and specialised functions increases the complexity of managing the enterprise technology portfolio.

ERP II is an application and deployment strategy to integrate all things in an enterprise centrally. It is expected that ERP II would take the ERP foundation and extend it outward, to position the enterprise in the supply and value chain. Deployment of ERP II could take place through a single vendor or a variety of best-of-breed application providers.

A cornerstone of ERP II is an open architecture of components. That means the monolithic systems of the past will have to change. ERP II will be more componentised. Instead of having to do that big upgrade every two years in time, you’ll be able to upgrade components as you need them.

The basic point is as companies open their systems up to other companies, be they suppliers or customers, the inward looking nature of core ERP systems, and ‘one vendor owns everything’ philosophy, breaks down. Core systems now have to be redefined and extended to embrace the Internet, new virtual supply chain models, customer relationship management (CRM) systems and the new business-to-business (B2B) and business-to-consumer (B2C) e-commerce models.

While ERP began in the world of manufacturing and distribution, ERP II involves all business sectors. The Web-centric, designed-to-integrate architectures of ERP II products are so different from ERP architectures as to eventually require a complete transformation.

User organisations will still want the broad, cross-sector functionality of ERP such as accounting and costing capabilities, but they are going to want much better and advanced functionality. This means adding fine-grained, front-office capabilities such as CRM and various applications strengths such as billing for utility companies.

By using ERP II technology to their advantage, an enterprise can securely place themselves in the new economy and extend their reach to the global market. The benefits of effectively meeting customer demand through the Internet technologies and enterprise resource planning include sustaining the company, increased profitability and happy customers. Thus, using the Internet to connect an enterprise’s customers, suppliers, employees and automating its back office functions using the ERP II would result in e-enabling an enterprise.