Introduction to ERP system
The enterprises are called to face a lot and important challenges in a new competitive and continuously altered environment. The spectrum of challenges is extended by the globalization of marketing to the competitiveness that the development of Computer Science and the use of new technologies cause. In such a state of competition and continuous changes, the enterprises are interested not only in the free trading of capital and products, but also in something that can support their competitiveness on the one side, and on the other side, it can ensure their protection from probable dangers and crises of enterprising environment. Thus, the last two decades, a new frame of business dexterity has been developed, that not only is supported by the Sciences of Administration and Economy, but also by the development of Enterprise Resources Planning Systems (ERP). The ERP systems cover a wide spectrum of internal operations of enterprise as well as processes of interaction with the exterior environment. Taking into consideration that such a system can be developed-be selected and implemented with right strategy, can lead to the establishment of operational processes that enhance the efficiency of enterprise.
The purpose of this assignment is to introduce the reader to the meaning of ERP system. The assignment is organized into nine chapters.
- Chapter 1 begins with a brief introduction, followed by the purpose and the organization of this assignment.
- Chapter 2 describes the evolution of MRP, MRP II and ERP Production Management Systems
- Chapter 3 presents the ERP implementation in two different companies and the benefits from this action.
- Chapter 4 defines the procedure of a successful ERP selection and the phases of ERP implementation.
- Chapter 5 focuses on small ERP systems and compares them with the big one.
- Chapter 6 examines the application of ERP on service industries.
- Chapter 7 gives some information of the most famous ERP vendors on the market.
- Chapter 8 provides conclusions and recommendations for the future of ERP.
- Chapter 9 includes a concentrated table of figures and tables that have been used in the assignment.
The evolution of Production Management systems. MRP-MRPII-ERP systems
Evolution of each sector of current society have led the modern enterprises to be computerized, which includes hardware that is allocated and software that each company uses in order to control not only the internal functions but also the relations with its environment (customers, suppliers, etc). Years ago, the term of computerization was vague enough. Since then, things changed with the growth of Information Systems and Technology, which have influenced the requirements of modern enterprising world.
In the decade 1960, the enterprises turned their attention to their complicated operations supported by the computer. In particular, some special information programmes were developed in order to assist basic processes of financial management such as the Accounting, Payroll as well as special technical applications that facilitate the application of analytic methods.
At the end of decade 1960 and at the beginning of decade 1970, MRP systems were presented (Material Requirements Planning), which translated the basic Plan of Production (Master Production Schedule) of the final products into temporally distributed requirements of production of components and into requirements of supply of raw material. Mainly, the MRP theory was the computerization of order processing actions that in the past have been done by hand. "Its flaws were system-immanent and could not be deleted by modern data base methods, user interfaces and faster computers. The major flaws to be criticized were:
- The medium-term aggregated production planning which aimed at the management of sales and operations planning was not supported. Frequently, the production plan was equated to the sales plan. With limited resources, however, these both plans should differ.
- The production lot sizes were computed for each item separatively, without considering the interdependencies between predecessor and successor items in a multi-level BOM structure. The antagonism of items for resources was neglected, which lead to infeasible production plans. In addition, the cost-related interdependencies between a parent item and its components were not measured. Within the MRP planning phase, a successive planning of the items was performed (first requirements computation, then lot sizing), based on an ordering of the items according to their low level codes.
- In the MRP period and in the Capacity Requirements Planning time, so-called "planned lead times" were used. These were stored as a resource-independent characteristic of an item in the production data base and were often not changed for years. The planned lead time included assessment of transportation times and of waiting time due to lack of production resources. However, it is clear that the waiting time for a resource depends on the workload of the resource. As the workload and, consequently, the bottleneck status of a resource changes over time, it does not make sense to store the waiting time (as part of the planned lead time) in a data base. The lead times are a result of the planning and not a given.
- All planning period suffered from the rigorous flaw, that the limited capacities of the resources were entirely ignored in the planning. Only before the start of the production operation on the job shop level, the infeasibility of a production schedule was documented. But at this point, it was too late. Delivery delays and unnecessary inventory were the outcome."
However, the appearance of MRP II (Manufacturing Resources Planning), at the end of decade 1970, connected altogether the planning of production, control of production, cost accounting and supplies. "MRP II was a substantial system where a common database was shared by all functions and any changes and updates by one functional area directly became evident to the rest of the organization. With the arrival of faster and cheaper computers, it became feasible to provide MRP II systems with the capacity to simulate and provide a "what-if" capability. Therefore, contemporary MRP II systems can be used to simulate what would occur if different decisions were implemented, without changing the actual database. This makes it feasible to see the impact of changes in the schedule on capacity requirements, the impact of schedule changes on material requirements and/or the impact of design changes on customer responsiveness.
As already mentioned, MRP II systems are an evolution of MRP systems. One of the goals was to take a resource-based view of the enterprise. That is to say, engineering, marketing, manufacturing, distribution and finance are all resources that must be managed in a rational way to guarantee consistency of purpose over time. This enhanced coordination among the different functions. Furthermore, MRP II ensures the capacity- feasibility of material plans. This happens in two levels, first in the MPS level and again after the application of detailed material plans.
Almost at the same time, the computer hardware and software technologies have been making rapid advances via faster and cheaper processors, barcodes scanners, computer graphics, networking, electronic mail, internet and the world wide web.
The net result of the new era was the change of focusing from plant level to an enterprise wide view. This means an even tighter integration of the diverse business functions such as marketing and sales, accounting and finance, human resources, purchasing, distribution and design and engineering with the conventional operation activities of the entire enterprise. The ability to handle several languages and currencies also became vital in view of the global nature of operations. This led to what is now called ERP systems."
The phenomenon of ERP was presented at the end of decade 1980. In few years, a lot of enterprises of western enterprising world began to integrate ERP systems in order to reorganize traditional computer systems. The first results showed that ERP systems reorganized the enterprising structure because they appeared to give solutions in the challenges of various applications / systems, of which the usefulness has been saturated.
The main goal of ERP systems was to enforce business processes that support customer needs. ERP accomplished this goal by developing and presenting an integrated view of the supply chain. Such a view exposed system bottleneck and constraints. The core view of ERP systems, however, remained resource-based. That is to say, ERP systems consider the business as a compilation of interconnected resources, whose optimization produces a better performance. In turn, this approach enabled precise forecasting and realistic planning.
At the end of decade 1990, enterprises had to remain competitive with the emerging environment of electronic trade. Moreover, enterprises faced challenges continuously in order to decrease the time of production, to improve the quality of production, to decrease the cost of production and the required time so as to satisfy the customers' orders. These challenges could not be faced through individual changes in concrete functional sectors, but on the contrary, were supported by the relations and the interdependences between different sectors, as sales, production and distribution.
In conclusion, the science and practice of manufacturing, planning and control has evolved over the years from MRP to MRP II to ERP systems. This evolution has been necessary in order to meet the changing needs of businesses, perhaps due to changing economic and market conditions and to bring the state-of-the art technology to the work place.
ERP Implementation. Case studies
Nowadays, more and more enterprises turn their attention to the ERP software vendors in order to choose the most appropriate for them ERP software. The ERP vendors have noticed that their annual revenue has increased up to 20 % and not only big enterprises but also small businesses are interested in integration of an ERP system. Two of the enterprises that adopted famous ERP software are Airbus S.A.S and a Greek engineering company.
CASE STUDY 1: Application of ERP system (SAP) on Airbus S.A.S 
Airbus S.A.S., headquartered in Toulouse, France, has an annual travel budget of €260 million. With more than 55,000 employees, a global network of over 200 customers, and more than 1,500 suppliers worldwide, this appears to be normal. The budget covers 180,000 business trips made by Airbus employees each year.
With increasing business needs - including the decision to create the world's largest commercial aircraft, the A380 - Airbus's travel costs began to raise exponentially at the beginning of the 21st century. Airbus required an overall cost-cutting plan for travel management. It was a significant goal in order to reduce the travel budget by at least 10%. To do this, Airbus decided to implement the SAP® Travel Management application, which comes with the SAP ERP application.
Fragmented Travel Organization
Airbus operates in four European countries: France, Germany, the United Kingdom and Spain. Years ago, Airbus suffered from a fragmented travel organization. Responsibilities were distributed locally; as a result travel activities were not standardized. One target of the travel management project was to make one central travel management organization and define a single Airbus travel policy for all employees in all countries. Implementing SAP Travel Management enabled Airbus to do just that.
Leveraging the Buying Power of Airbus
It is usual to assume that Airbus, shored up by a €260 million travel budget, was in a strong position to negotiate with its travel suppliers - airlines, hotels, and rental car companies. But before the SAP solution was adopted, Airbus had inadequate data on how much work had been done with any one of its suppliers. A wealth of information and reports are now available in real time due to the implementation of SAP Travel Management and the integration with the SAP NetWeaver® Business Intelligence component.
Making Business Travelers Happy
Considerably, reducing the Reimbursement cycle - an issue that receives top management attention at Airbus - was a key objective of the travel management project. The open architecture of the SAP Travel Management application made it simple to connect newly contracted travel expense payment providers based in Dublin, Ireland, Bremen and Germany, with the solution. The result of the streamlined process was a dramatic reduction in the reimbursement cycle from 15 days down to less than 10 days.
Cost Savings of €4 Million
Cutting cost was another objective in the competitive aircraft manufacturing industry. The cost savings Airbus achieved since the beginning of the travel management project in March 2005 comes to €4 million.
Harmonized and Streamlined Processes
SAP Travel Management made it possible for Airbus to cut costs while increasing the productivity and satisfaction of its employees. Everyone now adheres to a harmonized travel policy and compliance to that policy can be efficiently supervised with the software. The software enables a harmonized approach to travel management as being flexible enough to incorporate country-specific officially permitted and tax rules.
CASE STUDY 2: Application of ERP system on ****** company
The company activates itself in the space of products of shading and of sun-protection. It occupies 35 employees in permanent base and has annual turnover 3,5 € millions. The rapid development of the company in the past few years created a fundamental increase of the client list. Consequently, the need for more consistent, more efficient and more professional cover of customers' orders appeared. Thus, the company decided to adopt an ERP system, investing on modern software.
Until then, the enterprise used certain applications that did not cover completely the processes of production and customer's satisfaction. The management of orders was taking place with handwritten forms which were sent from one department to another until they reach the department of distribution. In this process, daily various problems and errors were recorded (delay in the production, errors of pricing of final products, e.t.c])
The enterprise implemented a complete ERP system which became the basic enterprising tool of daily operation and development. Via the ERP, the orders were registered electronically and they were distributed in the appropriate apartment. The phase of production became more controllable, less time-consuming and the waiting time of customers was shrunk. Moreover, the inventory control became more efficient and more reliable. Finally, the enterprising information was faster via analytic statistical models.
ERP Selection and Implementation
The selection of an appropriate ERP system is not an easy process as it will have significant consequences on the entire enterprise. Here is a process that employers must follow in order to choose the most efficient ERP system.
- Start with an understanding of Critical Success Factors (CSFs)
- Identify measurements of success
- Don't be ambiguous in the classification of requirements
- Don't waste time on basic functionality
- Manage scope, budget and timing
- Get employee involvement
- Assign an internal champion
- Manage the risks
- Ensure management buy-in
- Identify possible vendors
- use internet searches
- contact an accountant
- contact colleagues
- contact consultants
- contact industry associations
- look at trade journals for articles and advertisements
- attend trade shows
- Find a good reseller
- Issue a Request for Proposal (RFP)
- Attend demonstrations
- Prove that the system will work for you
- Negotiate the price and the contract
- Know the Total Cost of Ownership (TCO)
- Do a Boardroom Pilot
CSFs are defined as those things that employers must do well in order to be successful.
Ahead of starting any project, it is supposed to know how to measure success in terms of saving money by streamlining operations, increasing revenues, increasing market share.
Focus only on the requirements that are unique or could vary by vendor.
Recognize the important amount of employee knowledge and the potential contribution of the employees.
Even the hardest projects can become successful when there is an internal champion who is ready to do whatever it takes to get the job done.
Look for potential risks, their impact, and their possibility to occur.
Communicate scope of project and get sign off at dangerous steps along the way.
To have a look of potential vendors:
An RFP is a good way to communicate the needs consistently to vendors and to make a short list of vendors.
The vendors should now know the Critical Success Factors and key requirements, and should be given an agenda so that time is allocated properly.
Prepare a script that contains sample transactions that should be processed through the entire system. The script is a day at the company and will contain the most important business processes with sample documents and reports.
It is important to understand all the costs including license fees, implementation, support, hardware, networks and communications before making a decision.
There is a need to work with the system to understand the many options. Use the boardroom pilot as a way for the vendor to recognize company's requirements and for the employers to better understand the system before signing a contract and purchasing the software.
The implementation of ERP system can be completed in 3 steps:
Step 1: Preparation - Design of Strategy
This step involves the creation of Implementation Team and the development of Implementation programme.
The implementation team must include
- The Project Sponsor, who will offer all the resources
- The Project Manager, who will manage the implementation of ERP
- The Steering Committee, who will be focused and execute basic parts of the project.
As far as the Implementation programme is concerned, it is worked out in collaboration with the exterior Consultant.
Step 2: Planning and Parameterization
It is the most critical phase and includes:
- Installation of equipment, software
- Training of the members that will implement the ERP software
- Business process mapping
- Process analysis
- Process synthesis/ adaptation
- Design and implementation of screens
- Design and implementation of levels of access and individualization of user's environment
Step 3: Preparation for full implementation and trials, Pilot application
This step includes:
- Data Migration
- Education of users
- Documentation of processes and systems
- Pilot application
- Acceptance of the system
- Initial installation of the system
- Planning of Full support phase
Step 4: Implementation, integration
This step includes:
- Test of complete operation of the system
- Analysis of the results of complete operation
- Optimization of ERP system
Examples of Downsized ERP systems
The characteristics of ERP solutions differ according to the requirements of business operation and scale. Larger companies equipped with adequate internal IT skills integrate numerous software products for manufacturing, supply chain management, human resource, customer relationship, financial transactions, data warehouse, access control etc. The complexities are limited for a small business that has lesser point of sales. For better results, by the way, there are small ERP solutions. These software function as the common ERP software but they are adapted to the needs of small businesses. Both of them guarantee suitable communication among different departments of the business and improve productivity and efficiency. Moreover, they facilitate the design engineering and enhance the production. To end with, they focus on smooth functioning and growth of a business.
On the contrary, small ERP systems are easier to use and cheaper. They include only the subscription cost. Opposing to this, big ERP systems have more capabilities, they include SLA (Service Level Agreement), TCO (Total Cost of Ownership) and information security.
In the following lines, there is some downsized ERP software that is available on the market.
Ecorama is a small business ERP solution that is addressed in tradesmen, in retail shops and in general in the modern businessmen that want to have complete control of their enterprise. It is flexible and easy to use. The small cost in combination with its easy maintenance makes it as the best enterprising tool for a company. With Ecorama the employer has complete computerization of the enterprise in all levels beginning from the pricing and the supply management up to the promotion of sales via the marketing tools.
Ecorama has many software programmes that can be adapted to all different types of companies. The table below describes some of them.
Ecorama Small Ideal for commercial enterprises with sales retail.
It includes: Communication with multiple companies, dealing Management, Inventory Management, Sales Management, Marketing management, Costing, Introduction of Bar-Codes.
Price: 320,00 €
Ecorama Small Prime
Ideal for commercial enterprises with sales retail and wholesale
It includes: Communication with multiple companies, dealing Management, Inventory Management, Sales Management, Marketing management, Costing, Introduction of Bar-Codes, Service Management, M.I.S Level 1
Price: 440,00 €
Established in 1972, SAP is the world's leading supplier of business software, offering applications and services for companies of all sizes and in more than 25 industries.
SAP Business ByDesign is a downsized ERP system geared toward small and midsized businesses. It is an integrated business solution that supports financials, customer relationship management (CRM), human resource management (HRM), supply chain management (SCM), project management (PM), supplier relationship management (SRM), compliance management, and executive management support.
"Intuitive, a Consona ERP solution, is supported by the comprehensive resources of Consona Corporation—a leading provider of software and services that enable organizations to achieve continuous business process improvements."
"The Intuitive Enterprise Solution is an ERP software application that helps small and mid-size manufacturing businesses to achieve increased productivity and at the same time, lower costs. Intuitive ERP focuses to build flexibility and control, organizes information and also automates business processes across an enterprise. This product offers a total integration of planning, materials management and procurement. It also facilitates reduction in cost of manufacturing and financial business processes and thereby improves productivity, quality and control."
Microsoft Dynamics NAV is ERP software from Microsoft.
The product is part of the Microsoft Dynamics family and intended to assist with finance, manufacturing, customer relationship management, supply chains, analytics and electronic commerce for small and medium-sized enterprises. Value-added resellers (VAR)s can have full access to the business logic source code, and it is famous for being easy to customize.
Application of ERP systems on industries
ERP system is used for diverse operations and applications in different industries. Each industry has its own drawbacks and advantages dealing with the enterprise applications. A comparative study will help in analyzing them precisely.
ERP has enhanced the efficiency and quality of the manufacturing process. Until then, the manufacturing process faced a lot of problems because of inappropriate communication, miscommunication, wrong communication and even lack of contact. ERP provided solutions in order to cope with these difficulties by coordinating the sectors of supply chains, warehouse and logistics.
It also helped very much in functions like tracking down the status of the product. Formerly, customers had to go to the company themselves to ask for the status of product or for enquiring a technical problem. The customer service representative would not be able to reply to these queries immediately. In the opposite side, he would ask the person from the concerned department, e.t.c. This process was time-consuming and worthless. The longer the chains of communication, the greater are the chances of making mistakes. CSC ERP finance is software meant for accounting purposes.
The manufacturing sector has been rated as the most common user of ERP. Nevertheless, the software sector can be located as the one who uses ERP easily because it is a product from its variety. ERP industry will also reveal that it is easier to train and make people work in this sector than anywhere else.
Enterprise Resource Planning has played a fundamental role in this sector by covering three vital areas. First of all, it has provided a common policy for insurers and their agents. This has helped in easing the transactions and keeping an eye on the performance of the agent. This has addressed the difficulties of both the agents and insurers and thus facilitated coordination in the interests of the business.
Secondly, it has contributed in limitation of delays and inefficiencies for which the sector is famous for. Of course bureaucracy and red tape are uncontradictable features in a state's set up but their presence in an insurance industry can do more harm because it requires immediate dispensing information during lawsuits and pending claims. IBM ERP Insurance is a famous player in this sector.
The sharing of databases among hospitals seemed to be a great advantage for doctors and patients. Nevertheless, it seemed as an exaggeration that a person need not maintain a collection of his medical problems provided that his/her choice of hospital/hospitals has a database of patient records. Even though, it is not practical to follow those practices. ERP has been a lifesaving way for patients who are admitted in a hospital in an emergency condition because doctors are aware of his medical history as ERP provides everything. In Greece there is diverse ERP software appropriate for the Healthcare sector.ERP Atlantis Health of ALTEC Company, MEDISIGN SRP of Medisign, YGIA 2000 plus of DATAMED are the most famous.
ERP has contributed in the reduction of the operational costs and coordination of individual departments. Hotels are famous for the segregation of functions. Thus, there is the Warehouses of Food & Beverage, Sales Management, Services, Financial Management and e.t.c. Even though these segregations sound small they have a large impact on the organizational structure. ERP offers a common way to coordinate these functions. In Greece, the most common Hospitality ERP is PROT@ERP of Entersoft -HIT.
ALTEC Company is classified in the bigger companies of high technology in south Europe. It is activated in computer equipment, software, networks and communications, education and services. One of its products is Atlantis II ERP software, well-known in the Greek enterprising world.
ATLANTIS II ERP
It is a completed informative system for big commercial and industrial enterprises, service enterprises and for private and public sector. ALTEC ATLANTIS II ERP manages unlimited volume of data in a safety way and supports the simultaneous operation of unlimited number of users. The exceptionally ergonomic and friendly working environment that it uses facilitates the process of education and operation of application. Atlantis II ERP can be adapted to all different types of companies because it has been created in different versions. The following table presents the most common applications of this software and the according costs.
For almost 30 years, Oracle has been helping customers manage their business systems and information with reliable, secure, and integrated technologies. Today, Oracle is the largest business software company in the world, with more than 320,000 customers—including 100 of the Fortune Global 100—and supports these customers in more than 145 countries. Some of the most famous products are depicted in the Table 4. Table 5 presents some indicated prices of Oracle Applications.
Founded in 2002 by very experienced professionals and investors, it is one of the few companies worldwide with a full range of Integrated Enterprise Applications developed exclusively on Microsoft .NET®. Entersoft CRM® and Entersoft e-Commerce ® are also provided as standalone products with interfaces to other ERP systems.
Entersofthas increased the financial income, number of customers and number of partners. Its distribution network covers various cities in Greece. Recently the company has been expanded in South East Europe and already has subsidiaries in Bulgaria and Romania.
ENTERSOFT BUSINESS SUITE
It is an integrated ERP, CRM, e-Commerce software, appropriate for medium sized businesses and departments of large enterprises, developed fully on Microsoft .NET. Moreover, it integrates the activities of manufacturing, inventory and financials with the activities of sales, marketing and customer service. Entersoft Business Suite includes an e-Commerce subsystem for B2B and Web stores. "Main features include:
- Rich ERP, CRM and e-Commerce functionality
- Multi - Company organization in one Database.
- Sites Management per company and automatic MIS analysis per Site.
- Multiple Business Dimensions Management that provide the possibility of "partitioning" the company into many different departments or activities.
- International Accounting Standards (IAS) support simultaneously with any National Accounting Standards.
- Unique CRM capabilities for Sales, Service and Marketing integrated to the ERP functionality.
- Integrated e-Commerce supporting both B2B and B2C functionality with real-time access to back office data.
- Embedded Workflow System unifies and automates the flow of business documents and applies company policies for managing stock, controlling credit etc. Own company processes can be defined.
- Ready-made implementation scenario for many verticals (e.g. Wholesale, Electronics, Fashion and Footwear, Retail, Food and Drinks etc) speed-up implementation projects and lower costs.
- Unicode support.
- Multi country allows operations and data analysis on a single on-line database.
- Shadowing technology provides the ability to simultaneously have Product and Customer Customization Settings and preserves all customization from version upgrades.
- Use of .NET Remoting allows the use of ADSL, GPRS, and 3G etc. without any intermediate technologies for fast (almost local network) remote access.
- Internet Live Update & Automatic Upgrade. EBS is upgraded through the Internet (Live Update) without any intervention or complex upgrade projects, and without further installation costs, thus reducing significantly Total Cost of Ownership (TCO)."
The future of ERP
As the time goes by, customers, shareholders and suppliers are becoming more and more exigent and press the manufacturers to develop and enhance products quickly and efficiently. The last have to convert their factories into quick to respond, demand-driven, profitable enterprises by optimizing their operations. Their competitive improvement and critical endurance depends on the use of information systems and technology.
Necessity of ERP
Strong global competition and mass customization have created the need for better systems that can provide quick and reliable information. Enterprise Resource Planning (ERP) systems became equal to competitive advantage, particularly through the 1990s. Using single, packaged software, ERP systems integrated all conventional company's functions like financials, human resources, manufacturing & logistics. Started with an IT application to handle the inventory problems of enterprise in 1960, the ERP systems brought a common information database which helped business functions of the organization to alter their way of thinking.
Many companies have implemented ERP applications, hoping to become more responsive to the customer needs and enhance themselves.
Investment in ERP
Although ERP systems resolved the internal issues of an enterprise, the industry did not really recognize their complete benefits, as these systems could not understand the external parameters that could influence the enterprise. Vendors started creating strategic applications around ERP and called them Extended ERP or ERPII. ERP II was created in order to give to the manufactures the opportunity to have a real-time collaboration with partners, suppliers and customers. Consequently, enterprises became more agile and started reacting immediately to changes in the market place. Applications like supply chain management (SCM), supplier relationship management (SRM), customer relationship management (CRM), and product life-cycle management (PLM) contributed to collaborative planning and scheduling, collaborative forecasting, collaborative product development and so on. The complete value chain—supplier-manufacturer-customer—has become more dynamic and responsive to the needs of end-customers.
Even though packaged ERP systems provide off-the-shelf best practice solutions, they may not provide 100 percent support to all the features required. Moreover, there would be some regulatory requirements that need to be addressed in the applications as and when they are introduced by the regional or global authorities. In addition, the customers will have some practices which they want to retain, and therefore customize the packaged ERP applications to their needs.
That is why ERP vendors continuously face demands from their customers for handling general, specific and regulatory requirements in their next releases. One of the key challenges for most of the ERP vendors is to provide the value addition to their active customers by providing these enhancements, both functional and usable, in their upcoming releases.
Complexity of integration
Most of the customers, at present, have disparate applications on many technology platforms, built with different tools, purchased from different vendors, and not working flawlessly. One of the major challenges of the IT managers is to make these applications integrate well.
Enterprises should not only re-look into the process capabilities at every stage but also into technology infrastructure, that helps them get real-time information across their supply network. Analysts point out that half of the companies do not have a clear visibility across their supply network in spite of having IT systems like ERP, SCM, PLM, CRM, and SRM as they are short of appropriate integration of all of them. But within the next three years, 30 percent of the companies will move towards making their technologies work in collaboration with that of their business partners.
Therefore, the most important challenge to ERP vendors is to provide faultless integration between all their extended ERP applications.
Service Oriented Architecture
One of the trends is the technology alteration to service oriented architecture (SOA) which will have the biggest effect on redefining the ERP market. As indicated by analysts, SOA will transform software from an inhibitor to an enabler of business change by 2015. SOA will change income from packaged software to subscription services and from monolithic suites to composite applications. Most vendors today are in the process of transforming their technology architecture into SOA.
Another important market tendency that will occur is the vendor consolidation. Providing a strategic product direction, vendors will increase their comfort level as far as r their existing customers and new accounts is concerned.
The ambition of most ERP vendors is to provide better installed systems and increase the number of new customers through the introduction of features that are useful, technical and usable. The technology alteration to SOA will bring more flexibility to the users in view of their ever-changing needs. Lowering the Total Cost of Ownership of ERP applications and reducing the complexity of IT infrastructure will become the primary focus both for vendors and customers.
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