The term 'enterprise resource planning' has become a catchall for a group of business software programmes that help companies run themselves better. But, argues Immo B"ohm, managing director of Afresh Consult, that can in itself be misleading, since ERP applies evenly to completely integrated systems and to those which are cobbled together using software from a number of different vendors.
He believes the term 'integrated business platform' is perhaps more appropriate for the completely integrated systems. He also believes that these types of systems are more suitable for the vast majority of businesses - and especially, for businesses which fall into the small to medium category. Here's why.
The real integration, which is built into an IBP, means many things, the most important of which is that information can be created, shared, accessed and exchanged without any inhibitions or limitations. That integration not only includes the data and applications common to business software systems, it also incorporates the communications that characterise every company. Phones, faxes, e-mails, SMS - all these are sources of information and incidences of information exchange that have relevance to the company. They therefore should come under the information management umbrella.
While integration of disparate products has come a long way, and delivers a degree of fluid information exchange, it remains limited. There is a bigger problem, too, one to which every small to medium business is sensitive.
Cost
Not only is the acquisition cost of various modules from various vendors likely to be more substantial, but there is the cost of implementation, which is certainly going to be much more complex, to consider. Integrating various modules also takes time; the more time which is spent implementing the system, the greater the cost.
Then there is the difficulty of dealing with the different upgrade schedules of several vendors. Security patches, software upgrades, new versions, bug fixes - a constant stream of updates is typical of most software. Change one element of the patchwork, and the whole system could comes tumbling down. This introduces the need for a parallel testing environment, in addition to the 'live' environment. It also introduces additional risk and - you guessed it - even more cost.
Those, then, are the limitations of an ERP system created from a variety of products to address the operational, transactional and information needs of the company. Let's look at the IBP approach, where just about every module you would need is included in a single-vendor system. That includes communication layers as well as the 'traditional' data layers associated with an ERP system.
Most significantly, perhaps, until now most systems have completely ignored the 'communications' layer. That means many of the information analysis and insight applications (notably business intelligence and customer relationship management) have only been getting half of the picture. Adding in communications means including full records of client contacts, discussions, exchanges of e-mails and SMS messages, and more.
Where the accounting function was once central to ERP, in the IBP its role is reduced to perhaps 10% of what the system does. Through tight integration, the IBP not only handles traditional functions such as logistics, warehousing, manufacturing and supply chain, it becomes a complete information conduit, which can show exactly what the business is doing and when, how it is performing and where any bottlenecks or problems may lie. It alerts people to focus their attention where it delivers the most value.
The IBP not only delivers real integration out of the box. It is also designed to run somewhat independently of the operating system, meaning it is suitable for multiple platforms (PCs, Macs, mobile devices, netbooks, iPads and more), which are commonly encountered even within a single small business.
The time of ERP is, perhaps, over. As such systems advance and are capable of doing more, they have become the IBP. And it is only truly integrated systems which will deliver a higher level of performance.
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