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Chapter 1 • Introduction to Enterprise Systems for Management 7

Users

Clients Employees Vendors

Internet

GUI Tools (Web enabled)

HRM FIN AR/AP IM Other Module Integration

ERP System
FIGURE 1-2 Integrated Systems—ERP

An ERP system, however, combines them all together into a single, integrated software environ-
ment that works on a single database, thereby allowing various departments to share information
and communicate with each other more easily. To achieve this high level of integration, however,
departments may sometimes give up some functionality for the overall benefit of being integrated.
The central idea behind data integration is that clean data can be entered once into the system and
then reused across all applications.
In summary, ERP systems are the mission-critical information systems in today’s business
organization. They replace an assortment of systems that typically existed in those organizations
(e.g., accounting, finance, HR, transaction processing systems, materials planning systems, and
management information systems). In addition, they solve the critical problem of integrating
information from various sources inside and outside the organization’s environment and make it
available, in real time, to all employees and partners of the organization. We will discuss further
ERP systems and their implications to organizations both before and after their implementation
later in this book.

Evolution of ERP
During the 1960s and 1970s, most organizations designed silo systems for their departments.
As the production department grew bigger, with more complex inventory management and
production scheduling, they designed, developed, and implemented centralized production