Comparison of ERP Systems - Essay Example

Comparison of ERP Systems ERP ERP (Enterprise Resource Planning) is a mode of integrating all the data and procedures of an organization into a single system. ERP systems use an integrated database in which data is stored for various processes that exist in the organization. The writers at Tech-FAQ.com stated in one of their article that it is a commercial software package that promotes smooth flow of information throughout the organization. Importance of ERP Business-Software.com (2008) stated that an ERP system consists of a set of modules that are linked together by a database. ERP enables several departments or units such as HR department, Finance department, Supply chain management etc to coordinate activities by sharing information through this platform. ERP systems help in faster completion of daily routine tasks and with more accuracy. It reduces the overhead costs and enables better strategic planning since the needs can be assessed in a better manner. History of ERP The team at ERP.com (2009) stated in one of their articles that the term ERP has originated from MRP (Material Requirement Planning) that later became Manufacturing Resource Planning and it also came from CIM (Computer Integrated Manufacturing). This term was originally used to refer to the extent the organization had planned to use their organization wide resources. Earlier, ERP systems were mainly used in large organization, industrial types of companies. In the late 70’s, the main idea behind MRP originated; it was meant for the management of the raw materials needed to fulfill the order from large companies and enterprises. After some time, the companies moved to a different approach “just in time” inventory planning. This step proved to cut warehousing and inventory costs because of better production planning. In these times, sales forecast started gaining a prominent name in business and hence began generating at weekly basis instead of monthly. This need evolved into a desire for a new dynamic enterprise system that could be used to manage company wide resources and data. A decade later, the need for a system that would enable the managers to streamline the processes and existing data throughout the organization evolved into Enterprise Resource Planning. ERP are now used in almost every organization, whether large or small. Types of ERP ERP are used to address a diverse range of areas in an organization; manufacturing, supply chain management, finances, project management (PM), customer relationship management (CRM). There are many service providers who offer reliable and efficient ERP systems, some of the +common ones are; Oracle OpenMFG SAP WebERP Compiere Three ERP systems shall be discussed in details and a comparative analysis shall also be conducted regarding these systems. The systems that have been chosen for the analysis are Compiere, Oracle and SAP. ERP Systems 1. Vendor Info: Compiere Inc. is a private company which is based in Monroe, Connecticut. Compiere Inc (2009) claims to deliver the most commonly used open source enterprise resource planning, it has been recorded to have more than 1.4 million software downloads. Open Source Initiative (2009) gives the definition; Open source systems are software for which the source code and other rights that are usually protected by copyright, are allowed for access under a software license that is according to the Open Source Definition. This allows the users to modify, improve the software and it is their decision to redistribute it whether in the modified or unmodified form. Compiere is changing the way ERP are implemented and utilized by their respective companies; these systems are easier to get, easier to modify, easier to implement. They state on their website that their open source ERP community is driven by a constant cycle of improvements and enhanced features of the product The aim of Compiere Inc (2009) is to take advantage of the dynamic concept of open source software and bring the advantages of ERP to organizations of all sizes. 2. Vendor Info: According to the official website of Oracle Corporation (2009), it was founded in 1977; it has established a good name in the market by supplying software for information management. The annual revenues for Oracle have been recorded as more than 10.9 billion USD. The products of this company range from its database tools to application products, from consulting services to support services. They have made a global presence for the past 30 years by providing their customers reliable, secure and integrated technologies to manage their information and processes. They have their headquarters in Redwood Shores, California in the United States of America. Oracle offers software which are internet-enabled; these kind of products are incorporated with database, enterprise business applications and application development. Oracle implements efficient global e-business solutions that manage the front office CRM as well the back office procedural operations. The writers at Oracle Corporation (2009) further state that they have always been involved in innovating ideas in the field of software development and implementation. One of such ideas that has been maturing at the offices of Oracle is “Cloud Computing”. Cloud computing is an emerging concept which will facilitate the delivery of software and hardware as service on the internet. It will give its customers the choice of running the business software in private clouds or public clouds. 3. Vendor Info: According to the official website of SAP (2009); SAP was founded in 1972 and can be considered the world’s leader in providing business software as it offers a wide range of solutions and services for companies of all sizes. Their customers can find solutions for more than 25 types of industries. It has subsidiaries in more than 50 countries, where over 48,500 employees work for them. By the aid of their ERP platform- mySAP, companies around the world are able to improve their customer and partner relationships, streamline operations and achieve significant improvements in planning their supply chains. The vision of SAP is for companies to become efficient and best-run businesses, irrespective of the size of the company. SAP (2009) claims that by the usage of their products, the customers will be able to reduce costs and maximize performance. These solutions shall also provide the customers with the aid to close any gap that might exist between strategy and thus execution of their business. Some of their ERP systems include supply chain management, CRM and supplier relationship management. Evaluation of ERP Systems The definition for a good ERP might be different for different people since the needs and requirements differ from one organization to another. However the definition of a good ERP stated by Compiere (2009); is that a good ERP is correctly implemented and is capable of bringing about great improvements to operational efficiency of the organization. It should facilitate to strengthen the relationships with customers and suppliers, also helps cut down organizational costs due to efficient raw material and supply management. All of these features should bring about exponential growth in the company. ERP system evaluation is a very important step for companies as many resources will be invested on the deployment of an ERP in an organization. A common happening that takes place in the process of analysis and evaluation of an ERP system is that the people assigned with the respective job choose an ERP because they like the look of a specific solution. Software Evaluation.com states that with the advent of so many business solutions, this approach seems clearly wrong. On the contrary, the mode of evaluation of an ERP system should be scientific and measured to facilitate the choice of an efficient system. A good practice that is proposed by Software Evaluation.com; is to make a checklist of all the important features that are needed in the ERP system to fulfill the needs. The decision on the ERP system can truly affect the way business is run and failure to choose the correct system can have adverse effects. The three ERP systems that have been chosen by the vendors mentioned before are: Compiere Open Source ERP And CRM from Compiere mySAP ERP from SAP E-Business Suite from Oracle These systems shall be c with respect to the following factors; Product Background Compiere Open Source ERP & CRM: Compiere (2009) states that Compiere Open Source ERP & CRM is considered to be a complete business solution for small to medium sized organizations. Due to the fact that it is an open source system, it can be implemented in an organization without any costs. ERP Wire.com (2009) states that another advantage is that modifications can be done to the system without any help from any vendor. This way the system can modify the system according to their needs rather than changing the direction of their business for the system. There are two user interface choices offered in the Compiere Professional Edition, which are; Platform Independent Client application Interactive Web Interface : Alpha Media, (2006) Fig.1: Graphical Display of Web Interface of Compiere: Compiere (2009) mySAP ERP: SAP (2009) states that mySAP ERP is an adaptive and open technology platform that can facilitate and integrate other SAP systems and even non-SAP systems. It is one of the most widely financial solutions used in the organization. E-business Suite: IT Software Vendors (2007) stated in a comparison between E-business Suite and mySAP ERP; this system offers the most comprehensive, integrated and global applications that makes it very adaptable to other systems. Oracle claims that the applications strategy of this system is very customer focused. Product Features and/or Functions Endurance America states that a very important thing to observe is that the scope of the ERP system matches with all the requirements of the organization. Since ERP products are considered as an investment, therefore it is important to ensure that all the required features and functions are being covered by the product. Compiere Open Source ERP & CRM: Alpha Media (2006) stated in a comparison between Compiere and mySAP ERP; this ERP system is appropriate for any small to medium size organization; especially the ones in the service and distribution industry. Whether the organization manages retail or wholesale; both can be managed well. This ERP system has now integrated Web Store; which covers material management, CRM, purchasing and sales. Some of its main features are related to the call center service, email manager, finance and accounting, human resources, product life cycle management (PLM) etc. Considering the fact that this is not such an old company on the market, it has come up with ERP systems which offer features in a diverse range of functional areas. It has earned a good name in the market of open source ERP system in a considerably short duration. mySAP ERP: SAP (2009) states that mySAP ERP is the platform that supports finance and accounts management, human capital management and operations. It also offers features for corporate services functionalities. Some of the other features that are not offered by Compiere are; advanced planning and scheduling (APS), sales force automation (SFA), sales order management, business intelligence (BI)/enterprise performance management (EPM) etc. E-business Suite: Oracle (2009) states that this ERP system offers the maximum number of features and functions as compared to the two mentioned above. It offers the email manager, operations support system and workflow manager; which are not available in mySAP ERP. However these features are present in Compiere. The functions of E-business Suite that are not available in Compiere are advanced planning and scheduling (APS) and business intelligence (BI)/enterprise performance management (EPM). Industries Served by the Product Before choosing an ERP system it is very necessary to make sure that the respective system supports the industry of the business it is being chosen for. If the system does not support the respective industry then the needs will not be completely fulfilled with its implementation. IT Software Vendors (2007) stated in a comparison between E-business Suite and mySAP ERP that there are a vast range of industries that are served by both the products of mySAP ERP and E-business suite, because of this they are the most well-known products among the consumers. However the limited number of industries that are served by Compiere Open Source ERP & CRM are: Associations/Non-Profit Electronics/High-Tech Retail Service Provider Warehousing/Distribution Whereas E-business suite and mySAP ERP cater to a whole list of industries ranging from banking to engineering and construction, from forestry to mining, from health care to higher education etc. Product Platform This is one of the most important things to ensure when choosing an ERP system. The company should check if the platform of the new ERP system has already been implemented successfully in their environment. Even if the platform is new for the company’s environment, it should be ensured comprehensively that there are no compatibility issues. This helps to increase the comfort level of the employees, psychologically and technically. This will help in acceptance of the new ERP by the people in the organization. ERP Wire.com (2009) states in an article of what should be considered in choosing the appropriate platform; if an ERP system is chosen whose platform is not compatible with the existing IT structure of the organization then a big problem shall arise for the IT professionals and might even have to alter their existing system to become compatible with the new ERP platform. If changes have to be made for the new platform, then the company needs to ensure that the platform can be implemented for a considerable period of time so that the costs incurred in the activity prove to be beneficial. Another important thing that has to be considered is that the respective platform of the ERP should allow free flow data between the existing networks of the organization. Another thing to judge about the required system is if a desktop application is needed or a web-hosted application. The latter is usually preferred by most. Compiere Open Source ERP & CRM: IT Software Vendors (2009) states that Compiere supports the following platforms: sIBM mainframe Linux (such as SUSE, Red Hat) Novell Netware Windows Server (such as NT/2003/Vista) Unix (such as Solaris or AIX) mySAP ERP: IT Software Vendors (2009) states that mySAP ERP has been developed to provide support for the following platforms:  IBM iSeries (AS/400)  Unix (such as Solaris or AIX)  IBM mainframe Linux (such as SUSE, Red Hat, or Debian/Ubuntu) E-business Suite: IT Software Vendors (2009) states that the platforms that are supported by E-business Suite are the same as Compiere ERP and CRM. Number of Employees Supported by the Product Every ERP has a maximum number of employees that it guarantees to manage efficiently. In the process of choosing an ERP system, it holds great relevance to choose the system that supports the number of employees in that organization. It is also a good practice to forecast the number of new employees till such time this system will be run in the organization and consider a system while keeping this number in mind. IT Software Vendors (2009) states mySAP and E-business Suite are both meant for all types of organizations ranging from small to medium to large size organizations. These two systems can even support organizations who have more than 10,000 employees. While Compiere ERP and CRM is only meant for small to medium size organizations as 10,000 is the maximum number of employees it can efficiently manage. Availability and Quality of Support Manuals Comprehensive support and installation manuals are very important for the customer to ensure a smooth implementation and execution of the system. It is not one of the criteria that will decide the choice of a system; however, it will develop a customer’s point of view about the vendor’s company. If the manuals and customer support satisfies the customer then he will gladly provide the vendors with more business. Localization of the Product Another thing to be considered is if the product is available in the company’s respective local area. If the product is not offered in a specific country then it will be difficult to get after-deployment support and effective customer service. IT Software Vendors (2009) states that the three products are available in more over the same places, which are;  Africa Europe (west and north, including the United Kingdom) North America (Canada and the United States)  Asia Latin America (Mexico, Central America, and South America) Southeast Asia (including the Far East and Japan) Australia Middle East Europe (east, central, and south) Conclusion Different systems prove to be best in different situations for example; according to an article by Neil Stolovitsky (2007), it can be concluded that E-business Suite proves to be the best system when e-commerce is critical to the organization. It also provides great functionality in financial and manufacturing industries. It has commendable integration between its applications and its database. Compiere ERP and CRM is considered to be a very good system for small to medium size organizations. Due to the open source nature of the system, it can be easily modified to its requirements without any vendor intervention and helps the organization save a lot of cost. In the end it can be stated that SAP has proved to be the most reliable ERP provider over the past years, as compared to the other systems. SAP takes the lead because of their internal growth and continued focus on the business user. Its effective partnerships and strategic planning has earned it the No.1 position, above Oracle. SAP has stronger momentum than Oracle and it has been found that mySAP ERP is a flexible system that can be configured easily to support the organization specific business processes, without any need for coding. My research concludes that SAP products and modules are well integrated and stable. Annotated Bibliography Several sources have been consulted to get comprehensive details about the three ERP systems, chosen for the comparative analysis. Here is a review of some of the main sources during my research. Neil Stolovitsky wrote an article with the title, “ERP Showdown!”, the writer has given a comparison of two very successful products of Oracle; JD Edwards Enterprise One and E-Business Suite. He took six ERP modules to provide a basis of comparison between the two systems; which were supply chain management, distribution process management, e-commerce, HR, financial solutions and product technology. This article was chosen to gain an insight in the E-business Suite and gain knowledge about the different formats in which systems can be compared. IT Software Vendors is a website that provides a comprehensive analysis about different systems. It was found that this website contained a significant comparison on the three chosen systems. The comparison ranged from the type of industries the system was suitable for to the number of employees it supported. These comparisons provided a good basis of comparison for the report. An article was found on ERP Wire.com, with the title “What are the points to be kept in mind while choosing the appropriate ERP platform?”. The writer provides an insight of the factors relating to system platforms, that should be kept in view while choosing an ERP system. He states that it is very important to choose the platform that is compatible with the existing structure and system of the organization. Endurance America.com provides a similar paper with the title “Selecting an ERP system: A facts and figures case study” that outlines the elements one should be looking for in an ERP system. The paper also provides a comparative analysis between Oracle, SAP and some other two systems. The writers have conducted the analysis of the systems with the aid of tables and charts. This paper proved helpful to outline a list of considerations that one should remember while choosing an ERP. References Alpha Media, (2006), Compiere ERP and CRM, http://www.alphamedia.co.id/jm/index.php?option=com_content&task=view&id=3&Itemid=1 Business-Software.com, (2008), Top 12 ERP Software Vendors – 2009, http://www.compareerp.com/erp-reports/top-10-erp-software-vendors Compiere, (2009), http://www.compiere.com/company/index.php ERP Wire.com, (2009), What are the points to be kept in mind while choosing the appropriate ERP platform?, www.erpwire.com/erp-articles/choosing-erp-platforms.ht Endurance America, Selecting an ERP system: A facts and figures case study, http://www.enduranceamerica.com/consulting/pdf/SelectingAnERPSystem.pdf ERP Wire.com, (2009), What distinguishes an Open Source ERP from a commercial one? http://www.erpwire.com/erp-articles/commercial-and-open-source-erp.htm ERP.com, (2009), ERP- What is ERP- Enterprise Resource Planning? http://www.erp.com/component/content/article/324-erp-archive/4407-erp.html IT Software Vendors, (2007), Comparison ComPieres Compiere Open Source ERP And CRM vs mySAP ERP by SAP, www.it-software-vendors.com/VS/...ERP/ComPiere-Compiere-Open-Source-ERP-And-CRM-vs-mySAP-ERP-SAP.asp IT Software Vendors, (2007), Comparison Oracles E-Business Suite vs mySAP ERP by SAP Neil Stolovitsky, (2007), ERP Showdown! http://www.technologyevaluation.com/Research/ResearchHighlights/ERP/2007/09/research_notes/VS_ER_NS_09_12_07_1.asp Open Source Initiative, (2009), Open Source Software Definition, www.opensource.org/docs/definition.php Oracle, (2009), http://www.oracle.com/us/corporate/index.html SAP (2009), http://www.sap.com/index.epx Software Evaluation.com, Software Evaluation Form & Checklist for Business Software Comparison, http://www.software-evaluation.co.uk/ Tech-FAQ, What is ERP? http://www.tech-faq.com/erp.shtml Read More