Enterprise Resource planning (ERP) systems are widely used in organizations today. Gartener Group in 1990 defined ERP systems and predicted that they would be the next generation of manufacturing business systems and manufacturing resource softwares. ERP systems enable organizations to manage their operations by integrating both internal and external information. As a result, they enhance visibility of Key Performance Indicators (KPI) so as to meet organizational objectives. According to Bakry and Bakry (2005), ERP systems are used to automate human resources, financial management and manufacturing functions just to mention a few.
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Different ERP systems have similar features to work effectively. Firstly, the systems are componentized so that diverse business functions are designed as different components. The components are usually integrated and scamless data flow between components makes them to collaborate as one function. Different ERP systems are flexible and expandable. As a result, they can work together harmoniously and any changes in business operations are easy to fulfill (Glass, 1998). The systems should be able to work in real-time and batch processing models should be available. Security is essential in any ERP system and it is ensured using security schemas to protect diverse organizational data and information.
The initial ERP systems focused on the automation of back office functions. Customers and the general public in general were not affected by them. Today, they have become “the price of entry for running a business” (Kurma and Hillegersberg, 2000). The ERP systems developed from 2000 are extended ERP systems (Radd, Hossain and Patric, 2002). Thuraisinghan (2006) emphasizes that we are currently in the third wave of ERP systems. Since ERP systems have evolved extensively over the years, they have become sophisticated in effective and efficient data handling and processing. WebTech companies such as Systems, Applications, and Products in Data Processing (SAP), Oracle and Baan embarked on sophisticated suite of applications for ERP systems. For instance, web service and eXtensible Markup Language (XML) are used in ERP applications.
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Electronic Data Interchange (EDI) also known as paperless exchange (Negpal, De Brugnand, Lyfareff, 1999), enable information exchange between organizations between separate computers systems in the modern communication systems. It uses standard structured format (ANSASC.12 developed in the 1970s and EDIFACT developed in the late 1980s). XML is a simplified version of Standard Generalized Markup Language (SGML) used mainly for large scale original publishing and also as a standard for exchanging information on the web. XML enables to present data format using document type dedication (DTD) schema or XML schema unlike HTML. XML-based document exchanges are cheap to implement and also for maintenance cost of changing infrastructure. Recent frameworks such as xCBL (Common Business Libray) and languages such as ebXML (OASIS, 2001; OASIS, 2006) enhance enterprise wide application as they integrate business semantics of EDI terminology. Utilization of web services has enhanced integration and cost reduction. Outsourcing vendors and clients gain seamless access to ERP systems through web services.
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SAP has released a third generation highly integrated SAP R/3 to perform business functions in organizations. This is an advanced version of both SAP R/1 and SAP R/2 application suites. Oracle has also released Oracle general ledger followed by self-service applications, strategic procurement and financial consolidation engine. The main objective is to automate and manage organizational information resources by making use relent and effective Information technology.
In conclusion, ERP systems are essential part of many business operations. The underlying change in ERP systems is to meet dynamic business needs particularly in the management of information resources for a competitive advantage. Information is a critical resource for decision making. Therefore it ought to be timely acquired, stored and disseminated to the users through adoption of assistive technologies. In this case, the ERP systems.