The Processes involved are:
- Financials - accounts receivable,accounts payable,etc.
- Human Resource - involves all the people related to the business such as payroll, benefits adminstration.
- Logistics - the rigmarole we need to get the stuff eg. sales,transport,manufacturing,etc.
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Bowled by a googly... xD
lets understand the above terms with a simple example...
Suppose we researched in our town for business and realised that we are lacking for a good car service station.(plz pardon for my english :-s)
Lets plan to open a car service station.
we'll be needing a large variety of tools n machines with skilled mechanics who can service cars from different brands.
Now with all the machines and mechanics setup,we have to manage some crucial things. :
- firstly,the salary given to each mechanic(i.e. payroll) - {Human Resources}
- then we have to calculate the number of cars being serviced in 1 day - {Financials}
- also we need to advertise ourself so dat people will knw abt our business - {Logistics}
The other set of applications like Customer Resource Management abbreviated as CRM or Product Lifecycle Management abbreviated as PLM has evovled overtime and became the part of ERP
Lets wind the clock 40yrs back.
The ERP was created in 1970s. Essentailly,SAP presided at the birth. It was created by 5 former IBM employees,who thought the future of computing for bussiness was at the enterprise level.
Think back to early 70s, the software landscape was mainly dominated by mainframe computers..
Basically fast calculating machines which use punch cards for input.
In 1973, SAP was created . A basic financial and logistic system called R/1 system. It was not an ERP software but a predecessor of ERP.
In 1981, SAP launched its 2nd generation of application software,SAP R/2,which was to installed on main frame computers,implemented on an enterprise wide basis. It automated financials,accounting,human resources,sales,manufacturing functions that are cardinal for survival of any large company.
Adding to the mix,SAP got on board with benefits of client-server architechture and brought the next generation of SAP software, SAP R/3 in 1992.
In SAP R/3,enterprise application essentially grew to automate the core business process in all directions.As businesses developed need of common business process,new ERP module came into light.
eg. PLM and SRM(Supplier Relationship Management) came into scene in 2000s.
Part of success for ERP was due to adoption of Unix platform and the use of Client/Server Architecture for the applications.
Client/Server Architechture offered a three tier model that made the system more scalable and made some changes easier. These tiers were essentially layers namely :-
- User Interface Layer.
- Business Logic Layer
- Database Layer
One of the big wins of SAP R/3 was that all the data for a particular application was integrated.
like for eg. in financial area,the various database for account payble,accounts recieved and every other account type thing came together,both physically and logically.SAP R/3 was tightly integrated with centralised data. As the other applications developed such as CRM or SCM, they filled the functionality gaps in useful way..but functionality came with a price.
Since the applications used centralised data repository,these applications became silos of data,somewhat isolated from each other.
With a lot of coding and something called point -to-point integration,we were able to connect the stovepipes in differnt applications so that data could flow back n forth.
So ERP solved many big problems for the enterprise, but there was still a ways to go.
