ERP Systems: The Game Changers

If a large company could be likened to a human body, an enterprise resource planning (ERP) system would be akin to the nervous system, carrying information up and down the entire body, aiding decision-making.

So, in case the hand is reaching out for a hot plate, and the brain is aware of that, it takes the tactile shock out of the sensation and instructs the hand to, well, handle the plate with care. Similarly, through a well-implemented ERP package, a large corporation would know early enough if raw materials are running out of one production unit while they lie idle at another.

Then, instead of blocking money by buying more, it could move the raw materials to the unit that needs it. Of course, this is the simplest of problems that an ERP system or package can handle. Such systems aid strategic thinking, if implemented successfully. But it does illustrate one way in which it can help companies save money, which is just one resource to watch while running an enterprise - materials, human resources and tangible assets being the others.

Implementing an ERP system - comprising various components such as financials, customer relationship management, human resources, supply chain management, warehouse management and management dashboard - is no mean feat.

The decision involves crores of rupees, and a significant effort from everyone in the company. Part of this effort is required to set work processes, or change them, to suit the software package chosen (SAP, PeopleSoft, and Oracle are some companies that make ERP systems). This is commonly referred to as business process re-engineering and it is just that - re-engineering processes so that the process facilitates information flow as required by the ERP package.

Awareness of power structures within a company is crucial during the re-engineering process because these structures are shaken up when the implementation process is rolled out, reducing or taking away the decision-making powers of the people in question as the functioning of the company gets streamlined.