Enterprise Resource Planning (ERP)
The fact that large enterprises today have the ability to seamlessly move data all the way from manufacturing to human resources, and everywhere in between, is largely due to one of the greatest success stories in linking/ integrating cross-functions within companies: Enterprise Resource Planning (ERP) Systems. But as with many effective systems, ERP is not without its share of weaknesses.Back in the 1970’s, before commercial Internet and web-based communications, ERP made its entrance into the business world. At that time, vendors were still laboriously hand-keying, sending and receiving information on paper via internal systems. When the 1980’s rolled around, outward communications between manufacturers and trading partners was done through electronic data interchange (EDI) systems, requiring extensive testing to ensure security and integration viability to avoid risks.
With the speed that the market changes today, this approach is not only extremely difficult, but virtually impossible, and so it became natural for companies to look to their trusty ERP systems for assistance with their outside communication requirements.
Sadly, ERP is unable to deliver in the area of outside communications between manufacturers and vendors. Simply put, ERP was designed to excel at integrating everyone internally but did not address the need to communicate with the outside world.
Most enterprises have had to look beyond their ERP system and search elsewhere for a solution to their outside communication needs. Many enterprises have chosen to use cloud-based providers to provide that solution, and open up a whole new world full of trading partners from all regions of the world.
Getting on board of a cloud-based system can be achieved in as little as a couple of weeks and in some cases several days. An enterprise can move into a prime position to exchange invoices, bills of lading, purchase orders and the like on a daily basis in a very short time.
For companies still using EDI systems to exchange information and documents, there are very real security concerns, requiring each business to deny trading partners and suppliers access to their ERP systems, making it cumbersome and limiting.
Information and data flows in from cloud-based and EDI systems to ERP via a secure application programming interface (API) directly to ERP and is controlled and managed by corporate IT.
The process appears to work well. The large number of enterprises that are considering, and those that have already done so, enhancing their ERP system with external systems to communicate with the world is proof positive.
The upshot of all of this for IT is that enterprises have found a way to run effective systems like ERP without trying to convert these systems to do what they were never intended to do.
It wasn’t too long ago that someone would try and find a way to convert an ERP system into one that would handle the outside processes of a business. Fortunately the ERP systems have maintained their integrity so businesses can they can be integrated with solutions to handle the need for communication with the outside world.
By Sam Michaels,
Sam is the managing editor and creator of Cloud Accounting Today. He holds a MS in Accounting and has over 10 years of experience in the field. He currently resides in Northern Virginia.
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