Operations Management: An Integrated Approach, 5th Edition

THE BENEFITS OF ERP

One benefit of ERP is that it integrates the complete range of an organization's operations in order to present a holistic view of the business functions from a single information and IT architecture. This single information source improves the organizational information flow. Because of improved information flow, an organization increases its ability to incorporate best practices that facilitate better managerial control, speedier decision making, and cost reductions throughout the organization. The basic architecture of an ERP system builds upon a single database, one application, and a unified interface across the entire enterprise, thus allowing an integrated approach.

A study by Benchmarking Partners for the Deloitte & Touche consulting corporation classifies companies' motivations for implementing ERP systems into two groups: technological and operational. Technological motivation relates to the replacement of disparate systems; improved quality and visibility of information; integration of business processes and systems; replacement of older, obsolete systems; and the acquisition of systems that can support future business growth. For example, ExxonMobil used ERP to replace 300 different systems.

Operational motivation is related to improving inadequate business performance, reducing high-cost structures, improving customer responsiveness, simplifying complex processes, supporting global expansion, and standardizing best practices throughout the enterprise. ...