Even the fully qualified name is a bit meaningless and needs some unpacking.
ERP is best described as a massive unified software product that runs a huge portion of a business's operations, usually including two or more of the following areas:
- HR
- Accounting (Receivables/Payables)
- CRM
- Business Intelligence / Reporting
- Business Process Management (e.g. form processing/approvals
across front- and back-office functions)
(not that edw519 needs it explained-- more for the original parent)
The roots of ERP are in logistics and bills-of-materials (BOM). Say you wanted to build... A space shuttle. The BOM is a hierarchical database that breaks it down into major components, then each of their components, and so on all the way down to individual nuts and bolts. These all need to be assembled in a particular order, they come from different vendors, they have different lead times, and so on. Classic ERP is about saying, OK, if we want to fit the wings on this date, we will need to have ordered the bolts by that date from this supplier, or if the wndscreen is a day late, how will that affect the rest of the work on the cockpit. Think of it as a huge Makefile.
All that crap about HR and payroll and so on was bolted on afterwards.
The original acronym was MRP, Material Requirements Planning, a perfect candidate for business software. It answered the question, "If I need to deliver 9 helicopters on these 9 dates, then what components will I need on which dates?" Believe it or not, this was all hand calculated at one time.
MRP was very complex and difficult to implement because it required absolute precision and discipline, rare back then and still rare today. If your base data (inventory balances, lead times, quantities per, etc.) were the least bit off, the resulting automated explosions would be way off. So an industry of software vendors and consultants was born to attack all of these issues.
The problem with MRP was that it didn't work well at all for products with few components but complex processes, (think chemicals, energy, distilleries, food processors, etc.) So CRP, Capacity Requirements Planning was born to plan and manage factories with high capital expenditure requirements. (It doesn't matter if we have exactly the components we need if we have nowhere to work on them.)
Before you know it, everyone wanted in on the act of expensive software and consulting, even in disciplines that didn't require them (why should SAP make all the profits). So along came accounting, sales, HR, and everyone else, and now we're stuck with ERP, a cow that's ripe to be milked for a long time.
oops, forgot supply chain. That said, I'd venture that a majority of "ERP" installations these days are more about all the other crap, and the folks who need supply chain management get a best-of-breed for that 'silo'.
Which then they have customized to integrate with their ERP. :-P
ERP is best described as a massive unified software product that runs a huge portion of a business's operations, usually including two or more of the following areas:
(not that edw519 needs it explained-- more for the original parent)