ERP vs. CRM and SCM

CRM (Customer Relationship Management) and SCM (Supply Chain Management) are two other categories of enterprise software that are widely implemented in corporations and non¬profit organizations. While the primary goal of ERP is to improve and streamline internal business processes, CRM attempts to enhance the relationship with customers and SCM aims to facilitate the collaboration between the organization, its suppliers, the manufacturers, the distributors and the partners.
ERP Definition - A Systems Perspective
ERP, often like other IT and business concepts, are defined in many different ways. A sound definition should several purposes:
  It provides a base for defining more detailed concepts in the field - ERP software, ERP systems, ERP implementation etc.
  It provides a common ground for comparison with related concepts - CRM, SCM etc.
  It helps answer the basic questions in the field - benefits of ERP, the causes of ERP failure etc.

A definition of ERP based on Systems Theory can serve those purposes. ERP is a system which has its goal, components, and boundary.  The Goal of an ERP System - The goal of ERP is to improve and streamline internal business processes, which typically requires reengineering of current business processes.  The Components of an ERP System - The components of an ERP system are the common components of a Management Information System (MIS).  ERP Software - Module based ERP software is the core of an ERP system. Each software module automates business activities of a functional area within an organization. Common ERP software modules include product planning, parts purchasing, inventory control, product distribution, order tracking, finance, and accounting and human resources aspects of an organization.  Business Processes -Business processes within an organization falls into three levels strategic planning, management control and operational control. ERP has been promoted as solutions for supporting or streamlining business processes at all levels. Much of ERP success, however, has been limited to the integration of various functional departments.  ERP Users - The users of ERP systems are employees of the organization at all levels, from workers, supervisors, and mid-level managers to executives.  Hardware and Operating Systems - Many large ERP systems are UNIX based. Windows NT and Linux are other popular operating systems to run ERP software. Legacy ERP systems may use other operating systems.  The Boundary of an ERP System - The boundary of an ERP system is usually small than the boundary of the organization that implements the ERP system. In contrast, the boundary of supply chain systems and ecommerce systems extends to the organization's suppliers, distributors, partners and customers. In practice, however, many ERP implementations involve the integration of ERP with external information systems.
Enterprise resource planning (ERP) is the industry term used to describe a broad set of activities supported by multi-module application software that helps a manufacturer or other business manage the important parts of its business. These parts can include product planning, parts purchasing, maintaining inventories, interacting with suppliers, providing customer service, and tracking orders. ERP can also include application modules for the finance and human resources aspects of a business.  Some of the bigger players in the ERP outsourcing market are SAP, People soft, and J. D. Edwards. New comers include Oracle, IBM, and Microsoft. ERP stands for Enterprise Resource Planning ERP is a way to integrate the data and processes of an organization into one single system. Usually ERP systems will have many components including hardware and software, in order to achieve integration, most ERP systems use a unified database to store data for various functions found throughout the organization. The term ERP originally referred to how a large organization planned to use organizational wide resources. In the past, ERP systems were used in larger more industrial types of companies. However, the use of ERP has changed and is extremely comprehensive, today the term can refer to any type of company, no matter what industry it falls in. In fact, ERP systems are used in almost any type of organization - large or small. In order for a software system to be considered ERP, it must provide an organization with functionality for two or more systems. While some ERP packages exist that only cover two functions for an organization (QuickBooks: Payroll & Accounting), most ERP systems cover several functions. Today's ERP systems can cover a wide range of functions and integrate them into one unified database. For instance, functions such as Human Resources, Supply Chain Management, Customer Relations Management, Financials, Manufacturing functions and Warehouse Management functions were all once stand alone software applications, usually housed with their own database and network, today, they can all fit under one umbrella - the ERP system
Integration is Key to ERP
Integration is an extremely important part to ERP's. ERP's main goal is to integrate data and processes from all areas of an organization and unify it for easy access and work flow. ERP's usually accomplish integration by creating one single database that employs multiple software modules providing different areas of an organization with various business functions. Although the ideal configuration would be one ERP system for an entire organization, many larger organizations usually create and ERP system and then build upon the system and external interface for other stand alone systems which might be more powerful and perform better in fulfilling an organizations needs. Usually this type of configuration can be time consuming and does require lots of labor hours.
The Ideal ERP System
An ideal ERP system is when a single database is utilized and contains all data for various software modules. These software modules can include:
  Manufacturing: Some of the functions include, engineering, capacity, workflow management, quality control, bills of material, manufacturing process, etc.
  Financials: Accounts payable, accounts receivable, fixed assets, general ledger and cash management, etc.
  Human Resources: Benefits, training, payroll, time and attendance, etc
  Supply Chain Management: Inventory, supply chain planning, supplier scheduling, claim processing, order entry, purchasing, etc.
  Projects: Costing, billing, activity management, time and expense, etc.
  Customer Relationship Management: sales and marketing, service, commissions, customer contact, calls center support, etc.
  Data Warehouse: Usually this is a module that can be accessed by an organizations customers, suppliers and employees.

ERP Improves Productivity
Before ERP systems, each department in an organization would most likely have their own computer system, data and database. Unfortunately, many of these systems would not be able to communicate with one another or need to store or rewrite data to make it possible for cross computer system communication. For instance, the financials of a company were on a separate computer system than the HR system, making it more intensive and complicated to process certain functions. Once an ERP system is in place, usually all aspects of an organization can work in harmony instead of every single system needing to be compatible with each other. For large organizations, increased productivity and less types of software are a result. Enterprise resource planning (ERP) is a company-wide computer software system used to manage and coordinate all the resources, information, and functions of a business from shared data stores.  An ERP system has a service-oriented architecture with modular hardware and software units or "services" that communicate on a local area network. The modular design allows a business to add or reconfigure modules (perhaps from different vendors) while preserving data integrity in one shared database that may be centralized or distributed.


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