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6 Chapter 1 • Introduction to Enterprise Systems for Management

Today’s competitive business is cross-functional, dynamic, and global. Since the early
1990s, most organizations have tried to remove the functional barriers that had existed for
decades. The business process reengineering gurus and others have convinced management that
compartmentalization is inefficient and ineffective in today’s interconnected world. To compete
effectively in today’s market, organizations have to be customer focused and cost efficient. This
demands cross-functional integration among the accounting, marketing, and other departments
of the organization. This has led to the creation of business units (BU) within organizations that
integrate personnel from the various functional units to work together on a variety of projects
within an organization. Business units are dynamic suborganizations created and eliminated
depending on need. BUs can be in existence for a few weeks or a few years, which makes it
impossible physically to locate the personnel in an adjacent geographical space. This demands
that the information systems be flexible and fluid across the departmental boundaries. In addi-
tion, it requires that systems are accessible anyplace and anytime. These business requirements
ultimately created the need for enterprise systems to support the multifunctional needs of the
organization.

ENTERPRISE RESOURCE PLANNING SYSTEMS
What Is An ERP?
Enterprise resource planning (ERP) systems are the specific kind of enterprise systems to
integrate data across and be comprehensive in supporting all the major functions of the organiza-
tion. In this book, enterprise systems are referred to as ERP systems mainly because the term ERP
is more popular and commonly understood in the IT industry. ERPs, shown in Figure 1-2, are
basically integrated information systems that support such enterprise functions as accounting,
financial, marketing, and production requirements of organizations. This allows for real-time data
flows between the functional applications.
ERP systems are comprehensive software applications that support critical organizational
functions. As shown in Figure 1-2, they integrate both the various functional aspects of the
organization and the systems within the organization with those of its partners and suppliers.
Furthermore, these systems are “Web enabled,” meaning that they work using Web clients,
making them accessible to all of the organization’s employees, clients, partners, and vendors
from anytime and anyplace, thereby promoting the BUs’ effectiveness.
ERP system’s goal is to make information flow be both dynamic and immediate, therefore
increasing the usefulness and value of the information. In addition, an ERP system acts as a
central repository eliminating data redundancy and adding flexibility. A few of the reasons
companies choose to implement ERP systems is the need to “increase supply chain efficiency,
increase customer access to products and services, reduce operating costs, respond more rapidly
to a changing marketplace, and extract business intelligence from the data.” 2
Another goal of ERP system is to integrate departments and functions across an organiza-
tion onto a single infrastructure that serves the needs of each department. This is a difficult, if not
an impossible, task considering that employees in the procurement department will have very
different needs than will employees in the accounting department. Each department historically
has its own computer system optimized for the particular ways that the department does its work.

2 Robinson, S. (December 10, 2004). A Developer’s Overview of ERP. www.developer.com/design/print.php/3446551
(accessed February 15, 2006).