ERP: Not easy, not cheap, but worth the effort

The Lowdown

What is it? ERP is an integrated suite of software products, which attempts to combine the needs of all departments and functions of an organization into a single, integrated software program that runs off a single database.

What does it include? Modules span back-office business processes from manufacturing and engineering, finance, accounting and human resources to front-office functions such as CRM.

How much does it cost? A full-scale ERP system can cost up to $15 million. Less-ambitious systems can be purchased for $500,000 or less.

Must-know info? Though the initial costs of ERP can seem high and the return on investment distant, most users are pleased with ERP within a few years. ERP II represents a new generation of Internet-based applications that let employees, customers and suppliers participate in a virtual workplace.

Enterprise resource planning software has been around for about a decade as a tool to help government streamline business processes. If used wisely, it can help agencies meet their goals while squeezing more out of tight budgets.

Since its early days in manufacturing, ERP has attempted to combine the needs of all departments of a company into a single, integrated program that uses a single database.

Agencies aren't always interested in the full complement of modules that come with a comprehensive ERP suite. Government typically uses modules in finance, budget, accounting, procurement, human resources, purchasing and payroll.

There is little doubt that the integrated approach of ERP has payback potential for organizations if the software is installed correctly and the entire organization has bought into the changes ERP brings about.

But ERP is by no means a quick fix; it can take years to transform an enterprise into a smooth-functioning entity in which in all departments and personnel can glean productive information from other departments without a glitch.

ERP also isn't cheap. Large organizations often pay millions of dollars for a comprehensive ERP system, plus round-the-clock support from consultants and vendors. Smaller organizations can pay $500,000 or more for a handful of modules that meet their particular requirements.


Despite these caveats, the ERP market is expected to be strong. International Data Corp., an industry market research firm in Framingham, Mass., predicts that spending for ERP software will jump by 6 percent this year, and increase by 13 percent to 14 percent annually through 2006, outpacing the expected growth rate of the overall software market.

J.B. Miles of Pahoa, Hawaii, writes about communications and computers. E-mail him at jbmiles@hawaii.rr.com.

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