Wednesday, August 15, 2007


Enterprise Resource Planning Systems (ERP) are commercial software packages that facilitate
the seamless integration of all the information flowing through a company—financial,
accounting, human resources, supply chain, and customer information. ERP systems fundamentally integrate the different processes necessary in a business into a centralized pool that
facilitates data sharing and eliminates redundancy. ERP provides information management
and analysis to organizations.
The major benefits of ERP systems include:
_ On-line/real-time information made available throughout all the functional areas of an organization
_ Improved data standardization and accuracy across the enterprise
_ “Best practices” included in the applications
_ The efficiency gained throughout an organization
_ The analysis and reporting made available for long-term planning
The major players in the ERP software industry are Baan, J. D. Edwards, Lawson, People-
Soft, Oracle, and SAP. Examples of ERP modules are human resource management systems
(HRMS), financials, manufacturing, distribution, and sales. Each ERP module offers different
functionality for different industries.

The German software company SAP AG is the market leader in the ERP arena. Systems, Application and Products in Data Processing (SAP) consists of highly integrated software modules that perform common business functions based on multinational leading practices.
SAP R/3 is the third generation of SAP software. SAP R/3 is based on a client/server architecture
and uses a relational database to track all information related to a corporation.
SAP R/3 runs on several operating systems, including UNIX, Windows NT, and AS/400, and
can use different database management systems, including Oracle, DB2, Informix, and Microsoft
SQL Server.
The SAP R/3 client/server system architecture is built around several modules or applications.
A module is a set of transactions that deal with the same area of business functionality.
The current modules of SAP R/3 include:
_ FI—Finance
_ CO—Controlling
_ MM—Materials Management
_ HR—Human Resources
_ PM—Plant Management
_ PP—Production Planning
_ LO—Logistics
_ SD—Sales and Distribution
One of the reasons for the success of SAP R/3 is the tight integration of the business applications.
One event in one module, such as materials, automatically triggers response in the others,
such as sales, finance, and plant maintenance. For instance, when a customer places an
order, a purchase order is created, an inventory is created, appropriate documents are created,
and so on. This functionality is a major advantage compared to that offered by other vendors
who simply package the business functionality in one box with limited integration.

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