Rationale for ERP:
ERP packages were originally targeted at large corporations operating in multiple lines of business in several countries. Such companies employ a wide range of business management applications that often run on heterogeneous technology platforms. These applications may have been either developed in-house or purchased from multiple suppliers in the form of package applications. Package applications are ready-to-implement solutions. They are purchased by companies because they offer broad functionality and serve a specific business need. However, the applications purchased from different vendors are not easily integrated with other enterprise systems and pose problems in day-to-day operations. The applications serve as information islands and make it hard to move data from one system to another. Business managers find it difficult to get a composite view of the business, as they cannot obtain information from different systems at one place. Sometimes, the data of one system is re-entered in another system. The process is prone to errors. As a result, the quality of information deteriorates and business management becomes less effective.
ERP solves these problems by facilitating integration between various functions. ERP software eliminates the need to obtain a different application for each of the business needs. It offers applications that consist of different functional modules that are well integrated and run on a single technology platform (for example, a client/server architecture utilizing a UNIX-based server platform combined with MS Windows on the desktop). The integration facilitates real-time updation across all the enterprise systems.
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