Enterprise resource planning (ERP) software is a set of applications that automate finance and human resources departments and help manufacturers handle jobs such as order processing and production scheduling. ERP began as a term used to describe a sophisticated and integrated software system used for manufacturing. In its simplest sense, ERP systems create interactive environments designed to help companies manage and analyze the business processes associated with manufacturing goods, such as inventory control, order taking, accounting, and much more. Although this basic definition still holds true for ERP systems, today its definition is expanding. Savvy ERP users, increasing customer expectations, changes in manufacturing requirements, and technology's relentless pursuit for innovation are just some of the forces reshaping the definition of ERP. In today's dynamic and turbulent business environment, there is a strong need for organizations to become globally competitive. The survival guide to competitiveness is to be closer to the customer and deliver value-added product and services in the shortest possible time. This, in turn, demands integration of the business processes of an enterprise, which is the stronghold of ERP.

ERP's Underlying Information Systems Characteristics

It is impossible to devise an ERP system without sophisticated information technology (IT) infrastructure. ERP is the epitome of inseparability of business and information technology. Most IT-based descriptions of ERP systems state that these systems exhibit the following characteristics:

• They are based on distributed open systems or, in today's jargon, 'client/server' architecture. This is in marked contrast to yesterday's material requirements planning (MRP) systems that were mainframe or minicomputer-based on proprietary computing architectures, or to stand-alone microcomputer (PC) based systems.
  
  
• They are based on distributed relational database technology. This means the database software must support multiple copies of a production database that are transparent to the user anywhere around the globe. In addition, database access would be through 'standard' structured query language (SQL) inquiries. Furthermore, the database management system (DBMS) should be an integrated design with the application software (e.g., manufacturing, distribution, order entry, procurement, etc.). Only high-end DBMSs can provide the demanding support needed by ERP software. IBM DB2, Oracle, Informix, and Microsoft SQL Server can support most of ERP systems today. Certain DBMSs ‘row-level locking’ and some ERP vendors demand that feature. Until recently, row-level locking has not been a feature of Sybase. Not all vendors have ported their ERP software to be used on all of the most commonly used databases. The market is continuously changing in that regard. As a general guideline, Oracle and Informix have been a preferred choice at the high end of the ERP market, while SQL Server has been prevalent at the medium end.
  
  
• They are based on fourth-generation (4GL) software code, which is in contrast to the third-generation languages, like COBOL, which were used to program older MRP systems. Within the last three years, object-oriented programming (OOP)/componentization has been transitioned from 'nice to have, but not necessary' to 'highly desirable' feature.
  
  
• They possess a graphical user interface (GUI), which is the interface the computer terminal user sees and interacts with in utilizing an application program. GUI refers to an icon-based 'point and click' screen design as initially popularized by Apple's Macintosh and then made ubiquitous by Microsoft's Windows. This is in contrast to the character-based screen ('green screen') that has been the mainstay of the computer user's world for decades. GUIs provide the benefit of requiring much less training for the user to become proficient, and they have been shown to greatly increase user productivity over their predecessors.
  
  
• They are enterprise-wide, and support multi-plant global operations. In addition, the integration is expected to continue its expansion to other vital functions within the enterprise (e.g., product data management, manufacturing execution system, etc.) as well as to the entire global supply chain (customers' and suppliers' systems).