The ERP Systems in Modern Business and Corporate Management
Boris A. Staykov, Tatiana V. Atanasova, Vladimir V. Monov and Lyubka A. Doukovska
Institute of Information and Communication Technologies, Bulgarian Academy of Sciences,
Acad. G. Bonchev str., bl. 2, 1113 Sofia, Bulgaria
Keywords: Enterprise Resource Planning (ERP), Management, Integration, Business Processes.
Abstract: The purpose of this paper is to make an analysis and assessment of the increasing need of using
sophisticated software systems for managing business processes. In our days the most important thing is the
information and the success of every business depends on how fast and effective managers deal with
information. Business processes usually include manufacturing, sales order management, inventory and
warehouse control, logistics, advanced forecasting and planning, financial management, customer
relationship management and many others, all of them connected and depending on each other. It is
practically impossible to manage all those processes effective without using software that gives a
convenient, easy understandable and user friendly interface to the end user. End user of such system can be
anybody from top to the bottom level of the company hierarchy. It is commonly recognized that ERP
(Enterprise Resource Planning) systems are the software systems that provide the functionality to manage
all that information. A major issue for these systems is that these processes are very different and specific
for each business and company. Because of this there is impossible to create one universal ERP system that
is good enough for everyone. Instead of this, software companies produce core software which can be
expanded and tuned according to each specific company. This automatically includes a process of
integration that is a key part of the ERP system.
1 INTRODUCTION
Nowadays when we speak about business modelling
and software information systems, it naturally comes
to ERP systems as the most significant, large,
complex and sophisticated implementation of
information technologies into the contemporary
enterprises, business companies and corporations.
But what exactly is or isn’t an ERP software system?
First of all we can say that it isn’t software in the
traditional meaning that we all know – programme
that you can buy, install, run and start to use right
away. ERP is a large sophisticated software solution
that combines many parts (modules) that are used to
manage different business processes in certain
company or enterprise. The development of such a
system is long and difficult process that involves
many people – software engineers; programmers;
business consultants; even field workers from all
levels of the hierarchy of the client company that
will be using the ERP system. In fact there are no
two absolutely identical ERP systems. That is
because each ERP solution is designed and
developed for one exact client company, according
to their business models, processes, needs and
desires. That’s why they are very expensive (the
investment for ERP system can cost to the client
company as high as hundreds of thousands of US
dollars) and complex because they integrate many
functional and cross-functional business processes.
Typical ERP systems support Operations
(Production), Human Resources, Finance &
Accounting, Sales & Distribution, and Procurement
(Magal, 2012). As mentioned before – the
development of an ERP system is a long demanding
task, involving many specialists and unfortunately
there is no guarantee for success at the end.
Many ERP implementations have been classified
as failures because they did not achieve
predetermined corporate goals (Umble, 2003). The
process of implementation of one ERP system has
few major steps and can take between 6 months and
1 year of time! Those steps are:
- Analyzing the company business processes and
creating abstract models of each one of them and the
corresponding relationships between them.
281
Staykov B., V. Atanasova T., V. Monov V. and Doukovska L.
The ERP Systems in Modern Business and Corporate Management.
DOI: 10.5220/0004776502810285
In Proceedings of the Third International Symposium on Business Modeling and Software Design (BMSD 2013), pages 281-285
ISBN: 978-989-8565-56-3
Copyright
c
 2013 by SCITEPRESS – Science and Technology Publications, Lda. All rights reserved

- Designing database models that contain all the
necessary information for those models and
relationships.
- Designing the actual software. This includes user
interfaces, security management system, backup and
archiving systems and mechanisms etc.
- Integration of the system and training the end
users how to work with the software.
Each one of these steps involves constant dialogs
and communication between the ERP vendor, Client
Company, different consultants in certain areas,
software engineers and end users. Should any of
these steps fails, there is a very high probability that
the whole project will fail and lead to huge financial
losses for the vendors and the clients.
But when implemented and integrated correctly
and precisely, one ERP system gives to the company
very powerful tools for running their business in the
most effective way. That means sharp resource
planning and decision making using analytical
instruments; better fast and effective communication
and coordination between company departments and
external counteragents; efficient accounting and
warehouse management; minimizing loses and
abuses of any kinds.
2 EVOLUTION OF THE ERP
SYSTEMS
To understand how the contemporary complex ERP
systems started to exist, we will follow briefly the
natural software evolution during the past 50 years,
using an article on implementation procedures in
ERP systems, written in 2002 by Elisabeth Umble,
Ronald Haft, and Michael Umble.
During the 1960’s the use of software
technologies was mainly for inventory control.
Companies could afford to keep lots of ‘‘just-in-
case’’inventory on hand to satisfy customer demand
and still stay competitive. Consequently, techniques
of the day focused on the most efficient way to
manage large volumes of inventory (Umble, 2003).
Most of the software packages then were designed
and served the purpose for more efficient inventory
control and warehouse management (Ptak, 2000,
Shankarnarayanan, 2000).
In the 1970’s, it became increasingly clear that
companies could no longer afford the luxury of
maintaining large quantities of inventory. This led to
the introduction of material requirements planning
(MRP)systems. MRP represented a huge step
forward in the materials planning process. For the
first time, using a master production schedule,
supported by bill of material files that identified the
specific materials needed to produce each finished
item, a computer could be used to calculate gross
material requirements. Using accurate inventory
record files, the available quantity of on-hand or
scheduled-to-arrive materials could then be used to
determine net material requirements. This then
prompted an activity such as placing an order,
cancelling an existing order, or modifying the timing
of existing orders. For the first time in
manufacturing, there was a formal mechanism for
keeping priorities valid in a changing manufacturing
environment (Umble, 2003). Later the MRP systems
expanded to “closed loop MRP” (Oden, 1993), that
besides inventory planning included also tools for
planning the production levels, sales planning and
scheduling, making business promises to customers,
forecasting and different analysis tools.
In the 1980’s, companies began to take
advantage of the increased power and affordability
of available technology and were able to couple the
movement of inventory with the coincident financial
activity. Manufacturing resources planning (MRP II)
systems evolved to incorporate the financial
accounting system and the financial management
system along with the manufacturing and materials
management systems. This allowed companies to
have a more integrated business system that derived
the material and capacity requirements associated
with a desired operations plan, allowed input of
detailed activities, translated all this to a financial
statement, and suggested a course of action to
address those items that were not in balance with the
desired plan (Ptak, 2000).
By the early 1990s, continuing improvements in
technology allowed MRP II to be expanded to
incorporate all resource planning for the entire
enterprise. Areas such as product design,
information warehousing, materials planning,
capacity planning, communication systems,
humanresources, finance, and project management
could now be included in the plan. Hence, the term,
ERP was coined (Ghosh, 2012).
Since then the ERP systems are becoming larger,
more sophisticated and they are being integrated in
enterprises and companies of all sizes – large
business corporations, medium and small business
enterprises.
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Figure 1: Common ERP system structure.
3 STRUCTURE OF THE ERP
SYSTEMS
All contemporary ERP systems are client-server
based applications and they allow interaction with
and operation from many types of computer devices
– desktop or mobile computers, industrial mobile
devices, POS (point of sale) devices and even cell
phones. Of course this is impossible without using
the Internet, VPN and LAN networks. Also because
of the big variety of devices and operating systems
that interact with the ERP systems, the most
convenient and maybe the only way of
implementing ergonomic, user friendly and
convenient user interface is to use web based
technologies.
The web interface is universal,platform
independent and the only thing that one device is
required to have in order to interact with the ERP
modules is the web browser.
Key feature of successful ERP systems are to be
flexible – in order to respond to the constantly
changing needs of an enterprise; to be modular – that
means that different functionalities must be logically
separated in the system, which allows them to be
detached, modified and attached back to the system
without affecting unintentionally any other
functionality or part of the whole system;
comprehensive – must support wide range of
The ERP Systems in Modern Business and Corporate Management
283

business processes within one or more organisations.
Beyond the company – it should support online
connectivity and information exchange with other
business-related companies (usually using web
service API interfaces).
As mentioned before – the ERP system is not
single software that can be produced once and
distributed as is to various companies, but is a
complex modular system that is being engineered
and developed according the company needs.
Therefore the ERP vendors are using their own ERP
development frameworks – software environment
that allows them fast and efficient implementation of
the software system. Most significant vendors of this
type of software are SAP, Oracle, Microsoft, SAGE
and Info Global (IBM) (Low, 2013).
The common structure of ERP systems is shown
on Figure 1. It consists of database management
system (RDMS) – where all the information is
stored and managed; data access layer; application
layer which consists of various modules that
represent different business processes and activities,
analytical tools and other instruments and tools; user
management and security layer; end user interfaces.
4 THE IMPORTANT ROLE OF
THE ERP SYSTEM FOR THE
BUSINESS
As regarded in this article, integrating well designed
and developed ERP system into enterprises and
companies has a crucial role to their successful
business. With today’s information variety and
amount, constantly increasing market needs and
demands, complex services, intra and inter-
companies processes and relationships, it’s
impossible to be successful without actively and
even aggressively using the power of the
contemporary information technologies. Each stage
of one’s enterprise activity must be precisely
planned, implemented, monitored and analyzed.
ERP systems combine everything in a way so that
managers can have wide view of the whole picture
in front of them, so they can make effective and in
time decisions. Efficient warehouse management is
important for materials ordering and production
planning. This is directly connected to customer
management, logistics, effective distribution and
service support. Efficient accounting and financial
planning depends on how fast and precise the
information about all those business processes is
maintained, presented and analyzed.
The most important benefits of using ERP
systems, based on Kay Roman detailed research
article (Roman, 2009) are as follows:
1. Enhanced Technology – the old legacy
software systems can’t meet the current technology
needs. ERP systems allow speeding up all
operations;
2. Efficiency in Processes – The new system will
eliminate labour-intensive manual processes and
current duplication of efforts; will streamline critical
business processes for many departments; will make
data collection better and more efficient;
3. Integrated and consistent information - A
major benefit of a new system will be replacing
multiple, disconnected databases with a single,
integrated system;
4. Easier Reporting - An advantage of a new
system will be improved and more customizable
reporting;
5. User Friendliness of the System - A new
system will provide easier access to information and
overall improvements in its use for the functional
staff;
6. Access to Data - Increased self-service for
data needs, real time data, Better access to
information and decision making;
7. Ability to Provide Better Customer Service -
Speedier and more applicant friendly service;
8. Increased Functionality - Better functionality
for users;
9. Better Communications- Promotes more
collaboration with business partners;
10. Increased Security of Data - Data restrictions
can be enhanced.
5 CONCLUSIONS
ERP systems have a key role for successful business
in modern enterprises and business companies. They
are natural evolution of the general software systems
and the use of constantly expanding nowadays
information technologies. ERP are the most complex
and sophisticated software systems, developed for
certain company according to its needs and specific
business processes. Therefore their integration is a
long difficult process, involving many specialists
and consultants. If not planned and designed
precisely and carefully, such a project can be easily
turned into a failure and huge financial loses. When
done correctly, once integrated this system brings
big benefits to the companies, allowing them better
planning, managing forecasting and expanding their
successful business.
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ACKNOWLEDGEMENTS
The research work reported in the paper is partly
supported by the project AComIn “Advanced
Computing for Innovation”, grant 316087, funded
by the FP7 Capacity Programme (Research Potential
of Convergence Regions).
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