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ERP II: NEXT GENERATION ERP

Dr. Suresh Subramoniam1, Nizar Hussain M2,

Dr. Krishnankutty K.V

3

and Dr. Gopalakrishnan Nair K

3

 1College of Business Administration 2Riyadh Community CollegePrince Sultan University, Saudi Arabia King Saud University, Saudi Arabia

3Department of Business AdministrationCollege of Engineering, Trivandrum

Abstract:

Globalization, world class competition, modern business environment and the availability of 

the Internet are the premises which stress the need for ERP. The evolution of ERP to itspresent form has taken place starting with Pay roll and Bill of Materials in the 1960s to Webenabled ERP in the 2000s. The salient features of ERP II which makes it different fromERP are presented here. The results of an international survey pertaining to the embeddingof intelligence and the corresponding evolutionary trends in the modern day ERP are alsopresented.

Keywords: ERP, ERP II, AI, Web-enabled

1. Introduction

ERP is an Enterprise wide system that facilitatesintegrated and real-time planning, production andcustomer response. ERP has multilingualcapability, multi-currency handling ability, and canrecognize legal and tax reporting needs of variousnations across the world. The real need for such anintegrated system has emerged with the onset of Supply Chain Management, e-business and globaloperations which calls for exchange of informationwith other companies and customers directly. Theworld in which we do business is shrinking, andvirtually every enterprise is either marketing or selling to customers in other countries, or simply

using parts or materials that are producedelsewhere. Internet has overcome time anddistance to a great extent. It has become the needof the hour to think globally and to include the samein plans, processes and strategies. Globalizationand Web commerce riding on the development of the Internet have changed traditional businessbehaviors and practices. Leveraging the Internet bythe business has become a need to quicklyestablish a virtual presence. They must usecollaborative technology in order to respond tocustomer’s requirements better and faster. Whenthe operations are scattered through multiple

locations around the world, the need is to gainvisibility across all sites. This enhanced visibilitycan lead to more negotiating power for purchasing

parts and more efficient centralized accountspayable and receivable thereby improving overall

performance. Solutions like ERP, SCM or CRMsolutions provide tools to manage the informationthat is essential to growing business value.Enterprise wide automation alone can addresstransforming relations among suppliers,purchasers, producers and customers. ERP hasfallen short in the following areas that arecritical to today’s business needs [5]. Scope of conventional ERP is limited; conventional ERPhelps automate individual departments and did notintegrate its back-office benefits into the front-officeto help businesses manage people, workloads andsupply-chain issues; it could not establish

consistent control of all the processes of thebusiness. Competitive pressures and globalizationhave made it clear that the business world is still inneed of more effective, total enterprise solutions.

2. ERP II

The need for e-business, Internet readiness in theInternet era and a situation which prevailed to tideover Y2K problems in the late 90s and early 2000spushed ERP into the market. Average price of setting up a commercial website for a large or midsize organization was kept at $ 1 million as

reported by Research agencies like Gartner Research Group [2]. Most of the websitesdeveloped during this period were not having

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backend support and could only accept shoppingcart details from customers, print them out and dothe rest of the processing manually. This meansthat only front-end website existed which made itappear as if everything was integratedelectronically. Modules in the suite supplied byOracle and SAP had sufficient functionality toattract a good majority of any business wanting toimplement the e-way. Companies had to spent lotsof money on maintaining the interfaces among thecomponents after implementing the system duringthis early stage of e-business proliferation. With thedevelopment of the middleware called EnterpriseApplication integration (EAI), most of the integrationissues remained within limits. The differencesbetween ERP, new-generation applicationpackages and e-business started vanishing beyondrecognition at the boundaries. ERP of the past canbe thought of as fully integrated modules whichprovided automated support for various functions.

In 1999, ERP by major vendors startedincorporating Internet technologies to performtransactions through a browser and these vendorsrenamed themselves as e-business vendors. By2000, the market saw the proliferation of e-businesssuites which could even engulf other functions likeCustomer Relationship Management (CRM) andSupply Chain Management (SCM) which were notpresent in traditional ERP. This made the ERP in

the Internet era really support the e-business waveand the palm top for ERP connectivity from remotelocations really changed the way how the businesswas carried out. Real time connectivity andcentralized data repository became features of theERP system. Moreover, ERP vendors maintainedthe various versions of the system and its interfacesdeveloped were by them thereby relieving the userswho go for best-of-the-breed. E-business and ERPintegration really boosted the concept of digital firmwhich was catching the wave during that time.Digital firm in terms has to have a digitally enabledenvironment for the interaction and processing

among customers, employees, employer and thestakeholders [1].

ERP II superseded ERP and its two lesser knowniterations called extended ERP  and Enterprise Application Suite (EAS) [7]. The most apparentchange from ERP to ERP II is a change in focusfrom one that is totally enterprise-centric andpreoccupied with internal resource optimization andtransactional processing to a new focus on processintegration and external collaboration. ERP IIapplication deployment strategies relates to

information that is exchanged between two or morebusinesses over the Internet. This exchange of information electronically via the Internet is known

as collaborative commerce or c-commerce. So itcan be concluded that ERP II has c-commercefeatures. ERP II has also expanded to includeareas such as Supply Chain Management  (SCM),Customer Relationship Management  (CRM),Knowledge Management (KM), businessintelligence (BI), and inventory optimization (IO).The features in ERP II is very much in line with theGartner research paper which predicted that ERP IIwould take ERP foundation and extend it outwardto position the enterprise in the supply chain [6].The following are the notable differences betweenERP and ERP II [4]:

i. ERP II is web enabled where as ERP wasnot;

ii. ERP was giving selected intensive

coverage or wide extensive coverage in itsmodules. But ERP II gives the right mix of the macro and the micro and providesusers with remedial measures after detecting the error;

iii. ERP was targeted more towardsmanufacturing and the problem isovercome in ERP II by offering solution for all industries and sectors as well;

iv. ERP could not integrate different functionsfrom different departments but ERP II couldintegrate different functions acrossdepartments as well as from different

industries;v. ERP II has embraced CRM & SCMfunctionality in addition to being web andWAP enabled;

vi. ERP II revolutionalized the function to anexternal one and facilitated better networksthan remaining as internal application.

3.0 Survey on the evolution of ERP

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An international survey was floated by the authorsto study the status of the use of latesttechnologies like Artificial Intelligence (AI) andtools in building intelligence in the modern dayERP [3]. Some of the newer disruptivetechnologies like managed code, extensiblemark-up language and componentarchitecture, born out of Object Orientedprogramming, are worth studying to establishthe level of exploitation in developing andusing such technologies in building ERPsystems. The survey response analysis basedon responses from 92 subjects helps toconclude that 84.8% agreed that ERP requiresintelligence for making use of ERP systems instrategic decision making which confirms theexistence of a reengineering path throughincorporation of AI techniques in ERP. It canbe inferred that ERP is already in the path of evolution since 75% disagreed that ERP isgood for transaction processing alone. In theera of web-enabled systems only web-enabledsoftware can survive and the same is depictedin the result since 80.1% agreed that web-enabled ERP helps the evolution of ERP.Though it is found that ERP is in itsevolutionary path, it is evident that sufficientscope exists for the application of AItechniques as 71.7% disagreed thatwidespread use of AI techniques are available

in present day ERP. Evolution is inevitable for ERP since 87.5% disagreed that ERP willremain only as a transaction processingsystem. Majority (79.3%) disagreed thatdifficulty in building intelligence in ERP is dueto lack of availability of web tools which gives aclear indication that technology is ready for building intelligent ERP. Also it may be notedthat 75% disagreed that intelligence is notintegrated in ERP due to security reasonswhich implies that no security related issuesimpedes incorporating intelligence in ERP.About half the respondents (48.9%) disagreed

that major ERP vendors does not want to riskby developing intelligent ERP in the market.The real reason for lack interest of ERPvendors in developing intelligent ERP can beattributed to some other reason other thanfinancial risk since 36.96% were unsure of thiscause. Majority (85.9%) disagreed that ERPbeing a mission critical real time system,intelligence should not be integrated whichmeans mission criticality of the real time ERPsystem does not stand in the way of makingintelligent ERP. Relatively good percentage of respondents (59.8%) disagreed that AI

techniques and web tools are not ripe enoughfor integration in ERP indicating that AI

techniques and web tools are ripe enough for integration in ERP.

4.0 Conclusions

The world class competition, modern businessenvironment and the availability of the Internet arethe premises which stress the need for ERP. Theevolution of ERP is presented briefly starting withPay roll and Bill of Materials in the 1960s to Webenabled ERP in the 2000s. The salient features of ERP II which makes it different from ERP arepresented in addition to presenting some of thedisruptive technologies which help reengineer ERPsystems fast. The results of an international surveypertaining to the embedding of intelligence in themodern day ERP are also presented.

References

1. Laudon, K C and Laudon, J P., ManagingInformation Systems: Managing the digital firm,7th Edition, Prentice Hall of India, New Delhi,2002.

2. Shields, Murrell G., E-business and ERP,John Wiley & Sons, USA, 2001.

3. Suresh Subramoniam, Shehzad Ghani, K. and

Krishnankutty, K V. (2006), “Current trends inenterprise information systems”, AppliedComputing and Informatics, Saudi Computer Society Journal, Vol.5, No. 2.

4. www.erpwire.com/erp-articles/erpII-vs-erp.htm

5. www.exactamerica.com

6. www.gcis.ca/english/cdne-077-aug-16-2001.html

7. www.vendor-

showcase.com/Research/ResearchHighlights/Erp/2004/06/research_notes  /TU_ER_XSW_06_18_04_15.asp