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Unit 1: ERP Overview

notes

Did u know? After successful implementation of ERP in any organization it reduces cycle
time and also reduces cost.

ERP are cross-functional and enterprise wide. All functional departments that are involved
in operations or production are integrated in one system. In addition to manufacturing,
warehousing, logistics, and information technology, this would include accounting, human
resources, marketing, and strategic management.
Prior to the concept ERP systems, departments within an organization (for example, the human
resources (HR) department, the payroll department, and the financials department) would have
their own computer systems. The HR computer system (often called HRMS or HRIS) would
typically contain information on the department, reporting structure, and personal details of
employees. The payroll department would typically calculate and store paycheck information.
The financial department would typically store financial transactions for the organization. Each
system would have to rely on a set of common data to communicate with each other. For the
HRIS to send salary information to the payroll system, an employee number would need to be
assigned and remain static between the two systems to accurately identify an employee. The
financial system was not interested in the employee-level data, but only in the payouts made
by the payroll systems, such as the tax payments to various authorities, payments for employee
benefits to providers, and so on. This provided complications. For instance, a person could not be
paid in the payroll system without an employee number.
ERP software, among other things, combined the data of formerly separate applications. This
made the worry of keeping numbers in synchronization across multiple systems disappear.
It standardised and reduced the number of software specialities required within larger
organizations.

figure 1.8: integrated Business models

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