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Chapter 2
Chapter Summary
44 • Several developments in business and technology allowed ERP systems to evolve to their
current form:
• The speed and power of computing hardware increased exponentially, while cost and
size decreased.
• Early client-server architecture provided the conceptual framework for multiple users
sharing common data.
• Increasingly sophisticated software facilitated integration, especially in two areas:
Accounting and Finance and material requirements planning.
• As businesses grew in size, and the business environment became more complex and
competitive, business managers began to demand more efficient and competitive
information systems.
• SAP AG produced a complex, modular ERP program called R/3. The software could
integrate a company’s entire business by using a common database that linked all
operations, allowing real-time data sharing and streamlined operations.
• SAP R/3, now called SAP ERP, is modular software offering modules for Sales and
Distribution, Materials Management, Production Planning, Quality Management, and
other areas.
• ERP software is expensive to purchase and time consuming to implement, and it
requires significant employee training—but the payoffs can be spectacular. For some
companies, however, the ROI may not be immediate or even calculable.
• Experts anticipate that ERP’s future focus will be on applications for mobile devices
and providing instant access to large volumes of data.

Key Terms

Advanced Business Application open architecture
Programming (ABAP) Plant Maintenance (PM) module
Asset Management (AM) module Production Planning (PP) module
best practice Project System (PS) module
client-server architecture Quality Management (QM) module
Controlling (CO) module R/3
database management system (DBMS) return on investment (ROI)
electronic data interchange (EDI) Sales and Distribution (SD) module
Financial Accounting (FI) module SAP ERP
Human Resources (HR) module Scalability
legacy system silo
material requirements planning (MRP) tolerance group
Materials Management (MM) module Workflow (WF) module
module

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