Table of Contents
The Enterprise Resource Planning systems have undergone evolution in the business world since the early 1990s. These systems began on a smaller level where they were only used in the manufacturing application. The systems had in the initial times gone beyond manufacturing, but they were concentrated on back office functions. This excluded front office functions, customer relations, e-commerce applications, e-telecom application, e-finance, and supplier relationship management. However, with the passage of time, these systems have come to be seamlessly integrated into business operations that adopt the enterprise resource planning systems (Hamilton 2003).
This paper gives a discussion of the evolution of the enterprise resource management systems from the stand alone legacy systems to what we know at present. In the paper, there is a discussion relating to the legacy system and associated variables, definition and structure of the enterprise resource planning system, features of the enterprise resource planning system, and value which the use of enterprise resource planning bestows on a business (Ptak & Schragenheim 2003).
Evolution of the ERP Systems
The ERP system has evolved from the old technology and application programs that were in use and used to operate in singularity without any integration. Even though the legacy systems are still in use, it has not been as relevant as it used to be in the past before the introduction of the ERP systems. Nonetheless, systems still remain of significance to organizations (Ptak & Schragenheim 2003).
Legacy System and the Associated Variables
In terms of the computer discourse, a legacy is a computer system, programming language, or an application that remains in use despite that there are upgraded versions to be used. It also refers to processes that do not seem important in the business technology because of compatibility issues, lack of support, or obsolescence (Shields 2002).
Definition of the legacy system is not necessarily confined to the age of its existence in the technology market. In more expanded terms, the legacy system may mean a lack of vendor support or the incapability of the system to satisfy the business requirements. This definition is apt to explain the evolution of the enterprise resource planning systems. An example of a legacy system is a main frame computer that is using a Java of 62 bits with a platform of Linux. This system will be difficult to integrate into other functions of the organizations. It may not meet the demands of using a memory card, a flash disk, or even a read only compact disc (Shtub & Karni 2010).
In more precise terms, a legacy system is a data management platform, which contains custom-designed software that is often proprietary. This database management system runs on main frames or on minicomputers. This is opposed to new solutions offered in the technology that use personal computer based systems.
Definition and Structure of ERP Systems
The ERP system is a web based software, which allows employees, organizational management, and its partners to have an access to systems in the real time. The role of this system is expansive where it begins with the optimization of resources to the processing of transactions up to leveraging the information which encapsulates the resources. The newest versions of the ERP system do not confine information within an organization. It goes beyond the walls of the organization so as to integrate other external systems. The newest development has seen the emergence of a two tier ERP which has the software and the hardware that allows organizations to run an equivalent of two ERP systems at the same time. One can be at the corporate level while the other at the divisional level (Hamilton 2003).
In the ERP system application, there is a holistic view of the subject at hand. This is opposed to traditional systems that used to treat each transaction in separate terms. Traditional systems are generally built around the confines of specific functions that need specific applications. ERP systems can be looked at as data manipulation tools. These systems store data, process data, and present it in the most appropriate manner whenever it is wanted by the user. This data is interlinked in different departments where diverse transactions are. The integration is done in a way that there is a speedy and accurate generation of required results. The results get generated for multiple purposes, multiple users, multiple times, and multiple sites (Shtub & Karni 2010).
Structurally, the ERP architecture must be designed with use of advanced information technology systems and environment. The client server environment is the platform on which an ERP system is launched. The structure is therefore divided basically into the client and server components. The client part of the system uses functions of the server while the server part is centralized. The client is spread in different locations where it gets accessed (Shields 2002). For the client server environment to work well in order to realize the usefulness of the ERP systems, there are certain characteristics that should be assumed. First, it should be flexible to respond correctly to the changing demands of an enterprise. Second, the system should have a modular application architecture. Under this, various functionalities should be logically clubbed into differing processes of the business and then built into a module that can be easy to interface or detach at required times without having an interference with the module. In the same breadth, the system should have multiple platforms of the hardware for companies that have a heterogeneous system collection (Hamilton, 2003).
As well as two mentioned characteristics, an ERP system should be in a position to support different organizational functions and should be suitable for a wider range of business organizations. Under this, an ERP system should be comprehensive. In fortification of the argument, an ERP system should not only be confined to one company. It must go beyond the boundaries of the organization which it is serving. Online connectivity with other business partners is a case that elaborates this desired characteristic (Top 5 client/server ERP Software Application n.d.).
The Main Features of Present Day ERP Systems
The reality of globalization has necessitated the evolution of different features of the ERP systems. An example can be given of a manufacturing company that has ERP systems for the management of its daily activities across the organization. Such a company could have global suppliers, production centers, and other service providers who do business with them. All these are business partners who operate as independent companies with different processes and workflows (Hamilton 2003).
All these companies can be tied to the manufacturing company’s systems and processes through the use of a two-tier ERP system. From multiple locations, they can still access systems of their business partners. Systems have various features that enable them to perform their functions well. They have an integrated system, which is capable of operating in real time and does not rely on periodic updates. The present day ERP systems have a common source of database. This database supports all applications. Each and every module of the system has a consistent outlook as well as a consistent feel. In the present day ERP systems, there is an easy way of installing the system without necessarily looking for data integration services from the information technology department (Ptak & Schragenheim 2003).
The Business Value ERP Systems Compared to Separate Legacy Systems
As opposed to the traditional standalone business management systems, the ERP systems confer a lot of benefits to the organizations. The systems have a lot of benefits, which span from the human resource department, marketing, finance, sales, technical, supply chain, and overall administration.
Adoption of the ERP is important for the integration in a company. ERP systems are beneficial to organizations, especially if the company entails vast areas of operation. The solution of integrating system components in terms of efficiency in the operation lies in use of the ERP’s software (Shtub & Karni 2010). The information technology will be able to combine different numbers of large elements that turn the business into a single unit.
The finance tools in the ERP system allow the company to maintain the financial information, which should include that of liabilities, accounts, budgets, cash, and assets. Apart from prudent financial management, the enterprise resource planning assists to rid companies of the paper work. Here, the system assists the company to study all its processes, it earnings, its performance, and its productivity by merging information about operations with that about financial performance (Shields 2002).
In terms of the materials maintenance, the system is helpful in making the company adopt an automated process of buying materials and maintaining the same. This is done by the use of modules, which track purchased supplies, calculate how materials will be distributed, and predict demand by the use of forecasts, which are based on statistics (Shtub & Karni 2010).
Globalization and advance in the business technology has necessitated most companies to adopt the use of ERP systems. This paper has done an analysis of the evolution of the ERP systems with a strong emphasis on transition from the legacy systems to the present day ERP systems and their differences. In the analysis, the paper has realized that the ERP systems are of major benefit to business organizations as compared to old legacy systems.