ERP (determination of TAdviser)

Today the concept "ERP System" or "system of the class ERP" is seriously indistinct – not only that it, in fact, is marketing, it is used for designation of enough integrated information systems which are strongly differing among themselves now. Worse a situation only in the market of CRM systems – developers so strongly abuse this term that Thomas Sibel (even before absorption from Oracle) somehow said: "The Siebel company does not deliver CRM systems any more...". At this conjuncture there was a task to define a technique of "recognition" of ERP systems among the solutions applying for "membership in club" and departments of "grains from a ryegrass".

According to analysts of the TAdviser Center, this task is quite solvable. When developing a similar technique of "recognition of ERP systems" it is necessary to decide on the following questions accurately:

• What key signs of ERP systems?
• What minimum feature set of the ERP system? 
• By what criteria it is necessary to judge: the information system belongs to the class ERP or not?

What is ERP?

Proceeding from the analysis of publications on this perspective, key signs of ERP systems can be subdivided into technology and functional. At the technology level the commonly accepted requirements are: existence of the three-level system architecture including the database server, the application server and client ^chast1, the single database (or distributed with the involved data replication engine) ², openness of systems, use of relational DBMS and means of CASE for design and development of these systems. Among production requirements call also graphical user interface, but systems without it today extremely ^malo3.

As for functional filling of ERP systems, it is described in determinations of APICS (American Production and Inventory Control Society, now – Association for Operations Management) and Gartner. According to APICS in the ERP system the following functional units should be implemented:

• control automation by production resources (Manufacturing Resource Planning – MRPII)
• control automation by supply chains (Supply Chain Management – SCM)
• in development of Distribution Resource Planning – DRP)
• automation of expanded volume scheduling (Advanced Planning and Scheduling – APS)
• control automation by design-technology documentation (Product Data Management – PDM)
• automation of final resource planning (Finite Resource Planning – FRP)
• e-commerce (Electronic Commerce – the EU)
• control automation by customer relations (Customer Relationship Management, CRM, earlier – Sales Force Automation – SFA)
• business analysts (Business Intelligence – BI)
• configuring of a system (Standalone Configuration Engine – SCE).

The financial block as it is included in MRPII (Financial Planning) is not mentioned in this list.

As for "mother" of an abbreviation of ERP as such – Gartner company – that, according to its version, the ERP system should include the following blocks: 

• MRPII;
• supports of all types of productions;
• financial accounting and planning;
• sales management; 
• logistics managements;
• purchase managements;
• personnel managements.

At the same time the central block connecting among themselves all others is financial, including and all accounting functions here (unlike MRPII).

Key signs of ERP

According to analysts of the TAdviser Center, proceeding from the specified provisions and that fact that ERP systems are development of the MRPII systems their basic functions are: integration of corporate data and optimization of use of available factors of the enterprise ^{proizvodstva5}. Respectively, these two "global" functions are also key signs of ERP systems. As for specific functional units, their structure can vary.

The minimum set of the ERP systems blocks, according to us, should provide accomplishment of the sounded higher than two "global" functions by it. It is possible to carry to them: block of financial accounting and planning, MRPII block and supports of all types of productions, control block by personnel, control block purchases and control block logistics and also control blocks sales and business analysts. At the same time the MRPII block and supports of all types of productions is necessary only for automation of the enterprises of the industrial sector, in other industries it is not used. At the same time, a number of functional units has quite accurate correlation with specifics of business of the specific company, for example, the control block logistics is most demanded at the enterprises having own transport division, and control block by sales – the companies having own retail network.

From all variety of the "ERP systems" presented only at the Russian market complete functional filling according to requirements of APICS and Gartner products only of the companies have SAP and Oracle. Solutions of other developers implement different combinations of the functional units of a "ideal" ERP system described above. At the same time, market participants carry them to the class ERP that confirms once again advisory nature of the stated above descriptions.

Proceeding from these reasons, experts of the TAdviser Center defined "a living wage of the ERP system" – the minimum set of criteria at which the business application can be carried to the class ERP. Considering the aforesaid about roles of the financial block, the specified minimum set of functional units following: "A block/circuit of financial accounting and planning", "A block/guidance loop personnel", basic functionality of SCM (regarding commodity accounting, management of warehouse stocks and purchases), basic functionality of CRM (management of order processing and sales) and also "A business intelligence block/circuit".

Selection criteria

Thus, there is a question of criteria of reference of this or that information system mentioned in the beginning of article to the class ERP. We offer the following approach to its permission. As the technique of "recognition" of ERP systems should be applicable in practice and not to be too difficult for implementation, it is necessary to compare to each functional unit (most likely, from determination of APICS with the separate indication of the financial block and control block by personnel) a certain number of points and just a system "" has the right to define "lowest passing score", having gained which to be considered belonging to the class ERP. Except a possibility of separation of ERP systems from "NEERP-systems", similar approach will allow to group ERP systems in levels of functional completeness also accurately.

Use of a 100-mark rating scale is represented to experts of the TAdviser Center rational. Thus, a "ideal" ERP system will have assessment in 100 points (score for implementation of all functional units), and systems implementing only a part of the "estimated" functions, respectively, will receive estimates lower than 100 points. Depending on the put-down estimates and realities of the market "lowest passing score" will be defined. By our these estimates in the amount it makes 71 points. At the same time, as the block of financial accounting and planning is central for the ERP system, mark assessment of its implementation should exclude as a possibility of receiving total point "through passage" without existence of this block in the estimated system, and in the presence in a system only it.

The technique can be expanded for the account of completeness of implementation of the estimated Enterprise resource planning functions (for example, as a percentage) with multiplication of the points given for implementation of functional unit by a completeness indicator. Thus, it will be possible to exclude systems in which implementation of these functional units is executed nominally. At the same time, similar expansion of a technique will demand to define the structure of subfunctions corresponding to 100% completeness of implementation of this or that functional unit of the ERP system that is impossible without carrying out a separate research and systematization of its results.

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According to analysts of the TAdviser Center, the offered technique can provide substantial assistance in classification of attendees in the Russian market of information systems and ensuring unity of approach to their assessment today. ATTENTION! For increase in efficiency of the offered technique, the TAdviser Center invites all market participants and the interested players to take part in discussion of a technique for creation of the most useful tool.

¹ On this sign, for example, the 1C: Enterprise 8.0 platform was carried to ERP systems.

² Development of integration platforms and service-oriented architecture and experience of application of the relevant decisions demonstrate that the ERP system can be constructed of the diverse business applications using the isolated databases. However similar means implement the mechanisms very close to replication of data so the serious contradiction does not arise.

^3B the main, the text user interface is used for the organization of the automated jobs on outdated ADP equipment.

⁴ Generally speaking, control blocks and purchase managements are integrated by logistics in subsystems of planning of supply chains today (Supply Chain Management – SCM) and are often complemented with functionality on management of warehouse transactions (Warehouse Managament System – WMS).

⁵ From the economic theory it is known that production factors only three: work, earth and capital. Now, as far as we know, ERP systems allow to optimize use of labor resources and the capital (including the fixed and revolving funds) while for optimization of use of the earth (for maximizing a rent) ERP systems use quite seldom.

See Also

ERP systems

"What is that" in the market of ERP: Glossary of TAdviser

Enterprise management systems (ERP market of Russia)

ERP systems (world market)