Enterprise resource planning systems are designed to correct a lack of communication among the functional area IS.

ERP systems resolve this problem by tightly integrating the functional area IS via a common database. For this reason, experts credit ERP systems with greatly increasing organizational productivity.

ERP systems adopt a business process view of the overall organization to integrate the planning, management, and use of all of an organization’s resources, employing a common software platform and database.

The major objectives of ERP systems are to tightly integrate the functional areas of the organization and to enable information to flow seamlessly across them. Tight integration means that changes in one functional area are immediately reflected in all other pertinent functional areas.

In essence, ERP systems provide the information necessary to control the business processes of the organization.

It is important to understand here that ERP systems are an evolution of FAIS. That is, ERP systems have much the same functionality as FAIS, and they produce the same reports.

ERP systems simply integrate the functions of the various FAIS. Although some companies have developed their own ERP systems, most organizations use commercially available ERP software.

The leading ERP software vendor is SAP, which features its SAP R/3 package. Other major vendors include Oracle and PeopleSoft, now an Oracle company.

For up-to-date information on ERP software, Although implementing ERP systems can be difficult because they are large and complicated, many companies have done so successfully.

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