ERPs are said by their fans to have a Midas touch when it comes to improving company performance in all (or at least the significant majority of) operating activities. This is largely due to the enhanced visibility that information integration gives, but also as a result of the discipline that they demand. This discipline gives but also takes away. On one hand, it 'sharpens up' the management of process within an organisation, allowing best practice (or at universal consistent practice) to be implemented and adhered to throughout. No longer will individual idiosyncratic behaviour by one part of a company, or even one individual within the company, cause disruption to all. On the other hand, the rigidity demanded can be both difficult to achieve and disadvantageous to some parts of the business. This is why ERP needs to be implemented whilst considering the iLunga philosophy of forgiving and tolerating the imperfections where they are integral to the core ethos, fundamentals and competitive advantage. Allow statistical analysis to influence but not to have absolute power.
The generally accepted benefits of ERPs are that they:
- Offer comprehensive visibility of what is happening in all parts of the business
- The discipline of directed business process is an effective mechanism for achieving and maintaining efficiencies
- Defined procedural practice enables quicker fault discovery and correction thus being the basis for continuous improvement
- Enhanced communication with all stakeholders, allowing you to give more accurate and up to date information
- Introduces the capability of effecting robust complete supply chain integration
The heart of ERP's power lies in the integration of several databases. This is difficult to achieve in practice, and is the primary reason ERP installation can be particularly expensive. Attempting to get new systems and databases to talk to old legacy systems can be problematic. Not surprisingly, many companies choose to replace most, if not all, of their existing systems simultaneously. New common systems and relational databases help to ensure the smooth transfer throughout the organization.
In addition to the integration of systems, ERP usually offers features that make it a powerful planning and control tool:
- Capacity to expand access to business information systems outside of the company, e.g. for customers, suppliers, investors, removing / minimising manual reporting
- Live data decision-support facilities that allowing operations decision makers to react quickly to market movements
- Linkage to external extranet systems, such as the electronic data interchanges, thus synchronising data between the company and its supply chain partners
- Easily interfaced with existing standard applications