How does an ERP system make it all happen?
The essence of it is the fundamental premise that the whole being greater than the sum of its parts. The traditional application systems, which the organizations generally employ, treat each transaction separately. For an ERP, it stops treating these transactions separately as stand-alone activities and considers them to be the part of the inter-linked processes that make up the business.
Almost all the typical application systems are nothing but the data manipulation tools. They store data, process them and present them in the appropriate form whenever requested by the user. An ERP system also does the same thing, but in a different manner. There are hundreds of such data tables, which store data generated as a result of diverse transaction, but they are not confined to any departmental or functional boundaries, rather integrated to be used by multiple users, for multiple purposes and at multiple places.
An ERP system is not only the integration of various organization processes. Any system has to possess few key characteristics to qualify for a true ERP solution. These features are:
Flexibility: An ERP system should be flexible to respond to the changing needs of an enterprise. The client server technology enables ERP to run across various data base back ends through Open Data Base Connectivity (ODBC).
Modular & Open: ERP system has to have an open system architecture. This means that any module can be interfaced or detached whenever required without affecting the other modules. It should support multiple hardware platforms for the companies having heterogeneous collection of systems. It must support some third party add-ons also.
Comprehensive: It should be able to support variety of organizational functions and must be suitable for a wide range of business organizations.
Beyond The Company: It should not be confined to the organizational boundaries, rather support the on-line connectivity to the other business entities of the organization.
Simulation of Reality: Last but not the least, it must simulate the reality of business processes on the computers. In no way it should have the control beyond the business processes and it must be able to assign accountabilities to the users controlling the system.