ERP spins into the front office
- By J.B. Miles
- Apr 16, 2003
Enterprise resource planning software has been around for about a decade as a tool to help both government and businesses streamline their business processes. If used wisely, it can help agencies meet their goals while squeezing more out of static or shrinking budgets.
ERP actually is a spin-off of the manufacturing industry, and since its early days has attempted to combine the needs of all departments and functions of a company into a single, integrated software program that runs off a single database. Various departments, whether they are involved in finance, accounting, human resources, supply chain management, warehouse management or sales, can more easily share information and communicate with each other than if they were all working from standalone software or paper-based systems.
Government organizations aren't always interested in the full complement of functional modules'in some cases more than 50'that come with a comprehensive ERP suite. This is where separate but integrated modules of product suites come into play.
For example, your agency might have little interest in manufacturing but a huge interest in improving finance and HR services. Suite vendors have made it easy to cherry pick modules that meet your agency's requirements and integrate them as you see fit. Typical ERP modules used in government would cover such functions as finance, budget, accounting, procurement, HR, purchasing and payroll.
While some users might be satisfied with these classic back-office functions, vendors are now focusing on more comprehensive enterprise design features that incorporate front-office features such as customer relationship management. Many of the vendors listed in the accompanying chart have developed or are developing CRM and other front-office components to go with their ERP suites.
Other developers of full-scale ERP suites have developed specialized components, particularly for aerospace and defense contractors.
There is little doubt that the integrated approach of ERP has payback potential for organizations if the software is installed correctly and the entire organization has bought into changes ERP brings about.
But there are some pitfalls.
For example, ERP got bad grades from users at the end of the 1990s, when organizations worldwide rushed to complete their year 2000 software upgrades with the help of ERP consultants.
In the general haste to complete foolproof Y2K solutions in time, compromises were made in ERP programs for the sake of speed and on-time performance. If in-house administrators and executives didn't understand the implications of these short-term concessions on future system performance, they wound up frustrated that their long-term goals for ERP weren't being met.
Partly because, in the past, some vendors promised more than they could deliver, ERP is still a hard sell in some quarters. Even its most ardent supporters admit that, in the early stages, ERP planning takes a large degree of control from the organization and puts it in the hands of third-party ERP providers.
And, there's no question that by its very nature ERP forces significant changes in the ways organizations do business. It forces people and their departments to change how they do their jobs. Change of this magnitude doesn't always get a warm welcome.
ERP is by no means a quick-fix solution; it can take years to transform your enterprise into a smooth-functioning entity in which in all departments and personnel can glean productive information from other departments without a glitch.Spending boom
Despite the caveats, ERP has made a strong comeback since 2000. International Data Corp., an industry market researcher in Framingham, Mass., predicts that spending for ERP software will jump by 6 percent this year and increase at a compounded rate of 13 percent to 14 percent through 2006, outpacing the expected growth rate of the overall software market.
If ERP systems are used to integrate and optimize an organization's internal financial, distribution and human resource functions, then the next-generation of ERP software, ERP II, addresses the integration processes that extend across an enterprise and its trading partners, according to Gartner Inc., a high-tech consulting company in Stamford, Conn.
Gartner, which coined the phrase ERP II, says it will form the basis of Internet-enabled e-business and collaborative commerce. J.B. Miles of Pahoa, Hawaii, writes about communications and computers. E-mail him at j[email protected].