Electronic Business: Concepts, Methodologies, Tools, and Applications (4-Volumes) P14 potx

64
The Evolution of ERP and its Relationship with E-Business
MRPII Hierarchy
The main additional functions contained in MRPII
V\VWHPV ZHUH ³SXUFKDVLQJ FDSDFLW\ SODQQLQJ
and master scheduling, as well as inventory and
production planning” (Kessler, 1991). Along with
integrating all of these additional functions in one
whole, it also implemented the procedures devel-
oped during the years of using MRP to solve some
problems that appeared in MRP. It resulted in a
general control structure that breaks the produc-
tion control problem into segments and provides
a hierarchical approach (Hopp & Spearman,
2000). Hierarchy of the MRPII defers from one
software package to another. One version of an
MRPII hierarchy is shown in Figure 1 (Toomey,
1996). Such a structure makes it possible for a
manufacturer to deal with the intimidating task of
coordinating thousands of orders with hundreds
of tools for thousands of end items made up of
additional thousands of components.
There are many different forms of the MRPII
hierarchy but generally all of them constitute three
major parts: long range planning, intermediate-
range planning, and short-term control as shown
R Q W K H U LJ K W K D Q G V L G H RIW K H ¿J X U H  An explanation
of these is presented in the following paragraphs
(Toomey, 1996).
Long range planning consists of forecast-
ing, resource planning, and aggregate planning.

Forecasting predicts demands in the future, and
resource planning determines the capacity re-
quirements over the long term while aggregate
planning determines the level of production.
Intermediate planning provides rules for
planning the different functions that take place
during production. Intermediate planning forms
demand management, master production schedule
(MPS), rough-cut capacity planning (RCCP),
bill of material (BOM), material requirements
planning (MRP), and capacity requirements
planning (CRP).
Demand management is the process of convert-
ing the long-term aggregate forecast into a detailed
forecast while tracking individual customer
orders. The MPS is the source of demand for the
MRPII system. The MPS gives the quantity and
due dates for all parts that have independent de-
mand. The RCCP provides a quick capacity check
of a few critical resources to ensure the feasibility
of the MPS. The BOM provides the relationship
EHWZHHQHQGLWHPV¿QLVKHGSURGXFWVDQGORZHU
level items (the constituent parts of the end item).
The MRP conducts allocation and performs the
job release function by releasing materials onto
WKHVKRSÀRRUDQGFRQYHUWLQJWKHPLQWRVFKHGXOHG
receipts. Its output is the job pool, which consists
of planned order releases. The CRP provides a
more detailed capacity check on the production
plans compared to RCCP.

Short term planning serves job dispatching and
input/output planning. Job dispatching provides
rules for arranging the queue in front of each
ZRUNVWDWLRQRQWKHSODQWÀRRUVXFKWKDWGXHGDWH
integrity is maintained while machine utilisation
is kept high and manufacturing times are kept
low. Input/output planning provides an easy way
to check releases against available capacity by
monitoring the level of work in progress (WIP)
at each work centre (Toomey, 1996).
Disadvantages of MRPII Systems
The inaccuracy of the bill of materials and inven-
tory database is a common problem with MRPII
systems (Bayhan, 1999). Inaccurate bills of ma-
terials mean inaccurate material and capacity
plans. Providing a management system that will
facilitate data accuracy will likely require major
adjustments in strategic management approaches
(Correll, 1995). However, the MRPII systems
contain a method for planning and procuring the
materials to support production. During years
of using MRPII, the need for other functions
arose that would, together with MRPII, create
an actually integrated manufacturing manage-
ment system. Consequently, it was completed by
creating a large production control system named
65
The Evolution of ERP and its Relationship with E-Business
enterprise resources planning (ERP) systems. The
following section will explain this system.

Enterprise Resources Planning
(ERP) Systems
ERP is an extension of MRPII with additional
capabilities, such as better graphical user interface,
the use of relational database, fourth language
generation, open system portability, and is much
more integrated than MRPII (Boyle, 2000). In
addition, Kapp, Latham, and Ford-Latham (2001)
state that the difference between ERP and MRPII
is the inclusion of a variety of manufacturing
processes within ERP, in which modern ERP
software is able to handle both discrete work
RUGHUVDQGÀRZRUGHUVMXVWLQWLPH-,7DQG
MRP, electronic data interchange (EDI), and
hand-entered orders. Wainewright (2002) also
stated that MRP was used for tracking suppliers,
ZRUNLQSURJUHVVDQGWKHRXWSXWRI¿QLVKHGJRRGV
while ERP was used for all type of business with
DGGLWLRQDOIXQFWLRQVLQFOXGLQJ¿QDQFLDOVSD\UROO
and human resources management.
According to Wallace and Kremzar (2001),
ERP is far better than MRPII for three reasons:
1. ERP applies a single set of resource planning
tools across the entire enterprise.
2. ERP provides real-time integration of sales,
RSHUDWLQJDQG¿QDQFLDOGDWD
3. ERP connects resource planning approaches
to the extended supply chain of customers
and suppliers.
'H¿QLWLRQRIERP Systems

ERP is the technological backbone of electronic
EXVLQHVVHEXVLQHVVLQWKHEDFNRI¿FH,WZDV
FRPPRQGXULQJWKHVWR¿QGWKHFRPSXWLQJ
VRIWZDUHIRUWKH¿QDQFHGHSDUWPHQWZDVGLIIHU-
ent from that used by the human resources or
stores departments. According to Kalakota and
5REL Q V R Q    ( 5 3³R YH U F R P H V W K H L Q W H J U D W L R Q 
challenges posed by disconnected, uncoordinated
EDFNRI¿FHDSSOLFDWLRQVWKDWKDYHRIWHQRXWOLYHG
their usefulness.”
7KHUH DUH VHYHUDO (53 GH¿QLWLRQV WKDW DUH
all more or less similar (Hicks, 1997). ERP is
GH¿QHG DV PRGXOHEDVHG LQWHJUDWHG VRIWZDUH
packages that control all the personnel, material,
PRQHWDU\DQGLQIRUPDWLRQÀRZVRIDFRPSDQ\
(Granlund & Malmi, 2002). Gelinas, Sutton, and
2UDPVXJJHVWDQDOWHUQDWLYHGH¿QLWLRQIRU
ERP systems as:
Integrated software packages designed to provide
complete integration of an organisation’s business
information processing systems and all related
data. These systems are conceptually based on
event-driven systems concepts, which include the
FDSWXULQJRIERWK¿QDQFLDODQGQRQ¿QDQFLDOGDWD
to facilitate access and ad hoc analysis.
<HW DQRWKHU GH¿QLWLRQ LV JLYHQ E\ :DOODFH
and Kremzar (2001); they state that ERP sys-
tems are an enterprise-wide information system
solution set of management tools that balances
demand and supply, including the ability to link

customers and suppliers into a complete supply
FKDLQHPSOR\LQJFRQ¿UPHGEXVLQHVVSURFHVVHV
for decision-making, and providing high degrees
of cross-functional integration among sales,
marketing, manufacturing, operations, logistics,
S X U F K D V L Q J  ¿ Q D Q F H  D Q G K X P D Q U H V R X U F H V  W K H U H E \ 
enabling people to run their business with high
levels of customer service and productivity, and
simultaneously lower costs and inventories, and
providing the foundation for effective e-com-
merce. Thus, for the purpose of this paper, ERP
FDQEHGH¿QHGDVVRIWZDUHWKDWFDQEHXVHGWR
integrate information across all functions of an
organisation to automate corporate business proc-
esses. Some ERP systems, according to Markus
and Tanis (2000), were developed out of admin-
LVWUDWLYH¿QDQFLDODQGKXPDQUHVRXUFHVVLGHVRI
the business (e.g., SAP and PeopleSoft), and
others grew from materials resource planning in
manufacturing (e.g., Baan).
66
The Evolution of ERP and its Relationship with E-Business
Feature of ERP Systems
The many features of ERP systems have greatly
increased the quantity and quality of information
provided to enterprises, helping them to achieve
HI¿FLHQF\LQWKHLUPDQDJHPHQWSURFHVVHV2YHU
the years, much has been learned about the success
of ERP systems. Several researchers show that
ERP provided tremendous support for business

planning and organisational objectives (Bingi,
Sharma, & Godla, 1999). Some of the major
features of ERP and what ERP can perform for
the business system are noted in the following
paragraphs, based on the literature reviewed.
Integration
(53¿UVWDSSHDUHGRQWKHGHFLVLRQVXSSRUWKRUL-
zon in the early-1990s (Granlund & Malmi, 2002).
As an integrated enterprise-wide information
system, ERP was designed to provide managers
with easy access to internal and external informa-
tion that are crucial to the success of a company
in the business environment. Companies need to
establish a streamline business process, which
FDQ VLJQL¿FDQWO\ HQKDQFH WKH FRPPXQLFDWLRQ
and cooperation among functional departments.
To achieve this objective, functional integra-
tion is required (Tarn, Yen, & Beaumont, 2002;
Zheng, Yen, & Tarn, 2000). The current ERP
systems provide companies with the mechanism
to systematically and effectively measure the per-
formance of key business processes and evaluate
the contribution of various aspects of the business
(Davenport, 1998).
An ERP system has the potential to integrate
all processes and functions of a business and to
present a complete picture of the entire organi-
VDWLRQ(53DVVXUHV³VHDPOHVVLQWHJUDWLRQRIDOO
WKHLQIRUPDWLRQÀRZLQJWKURXJKDFRPSDQ\´
(Davenport, 1998) by means of a single database

that enables the various departments within an
organisation to successfully share information and
contact each other (Hedman, 2002). The single
database approach means common access to a
single set of data. Therefore, all departments’
access the same information, as Figure 2 shows,
and thus the need for redundant data entry is
eliminated (Hedman, 2002).
Packages
ERP systems are commercial packages that are
bought from software vendors (e.g., SAP,
Baan, Oracle, J.D. Edwards and People-
Soft) (Harrell, Higgins, & Ludwig, 2001).
Software vendors such as SAP, PeopleSoft,
and Oracle have developed a variety of applica-
WLRQVVXLWDEOHIRUDGRSWLRQE\¿QDQFLDOVHUYLFHV
industry, highlighting the change from the more
traditional uses of ERP systems within business
to a more general perspective (Martin, 1998).
Pawlowski, Robey, and Raven (2000) indicate
that ERP packages can be considered shared in-
formation systems, which are systems which cross
typical organisational boundaries and therefore
have multiple users and stakeholders who have
different cultures and approaches to work.
Best Practices
%HVWSUDFWLFHVFDQEHGH¿QHGDV³WKRVHSUDFWLFHV
that have been shown to produce superior results;
selected by a systematic process; and judged as
exemplary, good, or successfully demonstrated”;

WKHVHSUDFWLFHVDUHWKHQDGDSWHGWR¿WDSDUWLFXODU
organisation (American Productivity and Quality
Centre, 1997). The use of best practices, when
incorporated within all areas of an organisation,
including its stakeholder relationships, can lead to
an organisation attaining world class performance.
(53 SDFNDJHV DUH LQWHQGHG WR ¿W WKH QHHGV RI
many organisations and therefore support generic
business processes. ERP vendors therefore claim
WRKDYHGHVLJQHG³EHVWSUDFWLFHV´%\ORRNLQJDW
academic theory and individual companies, they
claim to have designed the best way to do business
(Markus & Tanis, 2000). Best practices in an ERP
67
The Evolution of ERP and its Relationship with E-Business
system are captured in the different choices that
must be made when implementing the system. An
ERP system generally has a number of different
best practices available, which implies that a com-
SDQ\FDQFXVWRPLVHWKHVRIWZDUHVLJQL¿FDQWO\DQG
PDNHLW¿WWKHVSHFL¿FQHHGVRIWKHRUJDQLVDWLRQ
For example, SAP’s R/3 system offers more
than 1,100 best practices. Because such a large
number of best practices are available, virtually
each implementation is unique. Since, the portfolio
of best practices chosen varies from implementa-
tion to implementation (O’Leary, 2000).
However, since ERP packages are based on best
practice, they are of a normative nature. Because
of the normative nature of ERP, the performance

often requires changing business processes and
therefore includes at least some degree of business
process reengineering (BPR) (Hedman, 2002).
%35FDQEHGH¿QHGDV³WKHIXQGDPHQWDOUHWKLQN-
ing and radical redesign of business processes to
achieve dramatic improvements in measures of
performance such as quality, speed and services”
(Hammer, Champy, & Hammer, 1993). BPR is a
vital part of the process innovation, helping in
the redesign and re-evaluation of the processes
used in organisations to achieve their objectives
(Turban, Lee, King, & Chung, 2000). However,
the inclusion of BPR in the implementation of ERP
adds considerably to the risk and expense of the
implementation (Markus & Tanis, 2000).
Advantages of ERP Systems
Implementation
7KH EHQH¿WV RI LQVWDOOLQJ DQ (53 V\VWHP DUH
widespread. An ERP system restructures a
FRPSDQ\¶VGDWDÀRZVDQGSURYLGHVPDQDJHPHQW
with a direct access to a wealth of information
(Davenport, 1998). According to Wallace and
Kremzar (2001), operating the business in a rapidly
changing and highly competitive environment
is the primary purpose of implementing an ERP
V\VWHP2¶/HDU\VWDWHVWKDW³RQHRIWKH
primary reasons for the movement toward ERP
is that the competition has it [and that] a lot of
ERP purchases are premised on the need just
to stay in business.” Thus, the implementation

of an ERP system can be seen as a competitive
necessity. Although implementing an ERP system
PD\EHFRVWO\DQGWLPHFRQVXPLQJWKHEHQH¿WV
are worthwhile. With careful planning and selec-
tion of the right ERP system, a company may
H[SHFWWRDFKLHYHVLJQL¿FDQWEHQH¿WVLQFOXGLQJ
dramatic increases in responsiveness, produc-
tivity, on-time shipments, and sales, as well as
decreases in lead times, purchase costs, quality
problems, and inventories (Wallace & Kremzar,
2001). According to a survey regarding R/3 cited
in Al-Mashari (2001), the most common reason
for implementing ERP is standardisation of pro-
cesses and systems. Another much cited reason
IRULPSOHPHQWLQJ(53LVWKHPL[LQJEHQH¿WVRI
the system (Al-Mashari, 2001).
While the ability to enhance the management
RILQWHUQDOSURFHVVHVLVRQHEHQH¿WRILPSOHPHQW-
ing an ERP system, enterprise resource planning
DOVREHQH¿WVPDQ\RIWKHH[WHUQDOSURFHVVHVRIDQ
organisation. Turban et al. (2000) argue that ERP
system assists with customer relationship manage-
PHQWE\RIIHULQJFXVWRPHUVDPRUHHI¿FLHQWDQG
higher-quality level of service, including the abil-
ity to order products online and to inquire about
product pricing and the status of an order.
Kalakota and Robinson (2001) explain that for
large companies, ERP speeds communications
and the distribution and analysis of information,
facilitating the exchange of data across corporate

divisions by unifying the company’s key pro-
cesses, product planning, logistics, accounting
DQG ¿QDQFLDO VHUYLFHV KXPDQ UHVRXUFHV DQG
sales distribution.
ERP system enables an organisation to inte-
grate all data that is used in the entire organisa-
tion. Davenport (1998) lists some of the many
functions supported by SAP’s R/3 package
shown in Figure 3.
68
The Evolution of ERP and its Relationship with E-Business
Disadvantages of ERP Systems
Implementations
Although the implementation of an ERP system
brings many advantages, it may also bring dis-
advantages. One of the main disadvantages is
WKHODFNRIIHDWXUHIXQFWLRQ¿WEHWZHHQDYDLODEOH
packages and company needs (Markus & Tanis,
2000). ERP implementation can be a consider-
able drain upon an organisation in terms of both
cost and development time. Even a medium-sized
installation can take up tens of millions of dollars
DQGUHTXLUH\HDUVRIWZHDNLQJEHIRUHWKHEHQH¿WV
DSSHDU7KLVLVUHÀHFWHGLQWKHLGHQWL¿FDWLRQWKDW
approximately 90% of ERP implementations are
late or over budget (Holland et al., 1999). It takes
an average of eight months after the new system
LVLQVWDOOHGWRVHHDQ\EHQH¿WV.RFK6ODWHU
Baatz, 1999). ERP’s can have a negative impact on
the work practices and culture of an organisation

if it is being implemented inaccurately (Soh, Kien,
& Tay-Yap, 2000). However, the more accurate
WKH (53 LV LPSOHPHQWHG WKH PRUH EHQH¿W WKH
company will achieve.
Implementing Enterprise Resource
Planning (ERP) Systems
The implementation of an ERP changes the way
organisations perform business and how people
complete their work (Koch et al., 1999). Con-
sequently, the implementation of ERP systems
ultimately results in changes to processes (busi-
QHVVRULHQWHG DFWLYLWLHV ZKLFKLQ WXUQLQÀLFWV
changes to work practices (people-oriented
activities). ERP implementation should involve
the analysis of current business processes and the
chance of re-engineering, rather than designing
an application to make the best of bad processes
(Scheer & Habermann, 2000). The implementa-
tion of ERP software is not a technical task. The
implementation of ERP systems is a business-
based endeavour, as organisations try to match
the technological imperatives of the ERP software
with the business needs of the company. Daven-
port (1998) states that technical challenges are
not the main reasons that enterprise systems fail.
Organisations fail to reconcile the technological
imperatives of the ERP system with the business
needs of the enterprise itself (Davenport, 1998).
Although statistics are quoted showing many
companies are adopting ERP technology (Kumar

& Hillegersberg, 2000), it may be contested that
these are following a trend rather than making
sound business decisions (Caldas & Wood, 1999).
Primary implementation motivators are often
cited as a desire to integrate all parts of a busi-
ness, achieve business change, replace outdated,
unsupported software, to take into account new
tax restrictions, and overall, to improve company
stability and increase competitive advantage and
SUR¿W'DYHQSRUW.XPDU+LOOHJHUVEHUJ
2000; Markus & Tanis, 2000).
Reasons Why ERP Implementations
Fail
Implementing a new ERP system does not always
guarantee successful results. There is, according
to Bermudez (1998), a number of reasons why
ERP systems failed to improve manufacturing
planning:
• The level of detail in ERP systems is too
rough for adequate decision making. Also,
the existing technology which is used for
ERP systems does not allow greater detail
for real time analysis and simulation, which
enables adequate decision-making.
• The tools used within ERP systems are used
infrequently and are sometimes incompre-
hensible for senior management.
• There is no consideration given to the
interdependency of material and capacity
availability (Bermudez, 1998).

Other reasons why ERP systems failed ac-
cording to Kapp et al. (2001) can be:
69
The Evolution of ERP and its Relationship with E-Business
• Inadequate training: As companies try to
cut back on the budget for implementing an
(53V\VWHPWKH¿UVWLWHPRQWKHFKRSSLQJ
block is often training. This will seriously
hamper long-term chances of success.
• Employees’ resist: The real reason ERP
implementations fail is because employees
resist the new ERP software rather than
embrace it (Kapp et al., 2001).
Companies fail to reconcile the technological
imperatives of the ERP with the business require-
ments of the enterprise itself (Davenport, 1998).
If a company rushes to install an ERP without
¿UVWKDYLQJDFOHDUXQGHUVWDQGLQJRIWKHEXVLQHVV
implications within an Internet economy, the
dream of integration can quickly turn dreadful.
7KHORJLFRIWKH(53PD\FRQÀLFWZLWKWKHORJLF
of the e-business. Thus, the main reasons for ERP
implementation failures are due to business and
management problems (Davenport, 1998; Al-
Mashari, Al-Mudimigh, & Zairi, 2003).
ERP and E-Business
The Internet continues to grow as a medium
for commerce, allowing a company to conduct
business everywhere, all the time. E-commerce
and the Internet eliminate the constraints of time

and distance in operating a business and enable
a multitude of connections between customers,
suppliers, and trading partners (Fingar, Kumar, &
Sharma, 2000). E-business, according to Ahmed,
=DLULDQG$OZDEHOFDQEHGH¿QHGDVD
shorthand term that embraces a complex mix-
ture of technologies, infrastructures, processes,
and products brings together whole industries
and narrow applications, producers and users,
information exchange, and economic activity
LQWRDJOREDOPDUNHWSODFHFDOOHG³WKH,QWHUQHW´
Similarly, Kalakota and Robinson (1999) maintain
WKDW³HEXVLQHVVLVDERXWUHGH¿QLQJROGEXVLQHVV
models, with the aid of technology, to maximise
customer value.”
The characteristics of the new economy have
increased the level of competition in all the in-
dustries, and the Internet presents an important
RSSRUWXQLW\IRUHYHQVPDOO¿UPVWRODXQFKQHZ
products or services because of the speed and low
cost of doing business (Alwabel, Ahmed, Gouda,
& Zairi, 2004). E-commerce also reduces inef-
¿FLHQFLHVFDXVHGE\EX\HUVHDUFKFRVWVWRREWDLQ
information about the price and product offerings
as well as the cost of sellers to communicate
information about their prices and product of-
ferings (Lynch & Ariely, 2000). By assembling
a network of partners that specialise and excel
in the links of the value chain, it is possible for
organisations to achieve new levels of quality,

ÀH[LELOLW\DQGFRVWVDYLQJV(53DQGHEXVLQHVV
are not competitive systems. Their greatest ben-
H¿WVFDQRQO\EHDFKLHYHGZKHQWKH\DUHXVHGLQ
agreement, completing each other. Thus, without
a successful ERP system, the e-business systems
wou ld h a ve o n l y l i t t l e t o p r e s e n t ; a s i n t o d a y ’s n e w
business environment, power has shifted toward
consumers who demand intelligent products that
deliver new dimensions of value time and content
in addition to the current one’s price and quality
(Aldrich & Douglas, 1999).
The basic functionality of ERP and e-business
are different. Yet, ERP is an integrated software
packages system that handles an organisation’s
internal information whereas e-business is fun-
damentally a distribution medium and does not
involve a lot of processing. Although the informa-
WLRQÀRZLQJWKURXJKHEXVLQHVVLVEHFRPLQJPRUH
willing to process all of the time, it is still processed
by applications, and the best business applications
are still ERP and other enterprise packages from
major vendors. Sixty-six percent of IT managers,
according to a recent survey of e-business and ERP
(Norris, Hurley, Hartly, Dunleavy, & Balls, 2000),
viewed ERP as their most important and strategic
platform because it provides a solid foundation
and information backbone for e-business. When
ERP and e-business are properly implemented,
they supercharge each other. E-business is the
70

The Evolution of ERP and its Relationship with E-Business
best vehicle to share business information with
partners for creating major B2B synergies (Nor-
ris et al., 2000). A fully-integrated ERP system
will capture and create accurate, consistent, and
timely relevant data, and assist in intelligent
business decision-making. E-business improves
a company’s business performance by connecting
various stakeholders to a company’s value chain
and information systems as illustrated in Figure
4. When any parts of the supply chain have access
to other’s business information, organisations
can streamline their processes and automate data
processing and business activities all through the
supply chain (Norris et al., 2000).
Furthermore, ERP systems according to
Jaiswal (2002) can be organised to smoothly in-
tegrate various business functions and even can
be extended to external business partners. It can
also be organised as combined business models
as shown in the Figure 5.
The major role of e-business is to operate on
applications such as ERP, supply chain manage-
ment (SCM), and customer relationship manage-
ment (CRM), an extended of the company to its
supplier and customer, as well as other partners
as shown in Figure 6.
ERP Future Trends
The ERP system has had a major impact on the
manufacturing industry for a decade. The ERP

system can serve the manufacturing businesses as
ZHOODVRWKHULQGXVWULHVVXFKDV¿QDQFLDOVHUYLFHV
health care, and the consumer goods sector. The
future of ERP is all about improving the supply
chain and promotion greater than the collabora-
tion across multiple enterprises. ERP vendors
now provide continuous product enhancements
WRWKHRUJDQLVDWLRQVWKDWDO UHDG\KDYH³JRQHOLYH´
with their ERP package. Customer relationship
management (CRM) and supply chain manage-
ment (SCM) are functions that ERP vendors are
now attempting to sell to organisations that have
already bought and implemented an ERP package
(Chen, 2001).
CONCLUSION
Although ERP systems have the potential to
VLJQL¿FDQWO\HQKDQFHWKHSHUIRUPDQFHRIPDQ\
organisations’ business operations, they are still
expensive and intensely complex to implement.
Thus, the possibility of failure has always been
KLJK,QRUGHUWRUHDSWKHSRWHQWLDOEHQH¿WVDQG
avoid serious drawbacks, companies must really
understand and deal with the planning issues.
This paper focuses on the evolution of ERP and
its relationship with e-business. This paper begins
E\GH¿QLQJWKHFRQFHSWRI053DQG053,,DVD
¿UVWDQGVHFRQGSKDVHRI(53WKHQLWGLVFXVVHV
the issues surrounding the concept of ERP. In
addition, the advantages and disadvantages of
ERP are examined to explain the opportunities

and threats of ERP and how organisations can
XWLOLVHWKHVHEHQH¿WVDQGRYHUFRPHWKHVHEDUULHUV
Furthermore, reasons why ERP implementations
fail are discussed as well as the relationship be-
tween ERP and e-business.
ERP and e-business are not competitive sys-
tems. Yet, the basic functionality of ERP and the
HEXVLQHVV DUH GLIIHUHQW7KHSRWHQWLDO EHQH¿WV
from ERP systems are varied with different types
RIEHQH¿WVDULVLQJDWGLIIHUHQWSRLQWV(DUO\LQWKH
(53H[SHULHQFHEHQH¿WVDURVHIURPERWKWKH,7
infrastructure and the re-engineered, IT supported
RSHUDWLRQDO SURFHVVHV <HW EHQH¿WV PD\ DULVH
from improved management decision-making,
especially with regard to day-to-day operational
PDWWHUV7KHVHEHQH¿WVVHHPWRUHVXOWIURPEDVLF
use of the technology. However, organisations
VKRXOGSODQWRDFKLHYHWKHVH HDUOLHUEHQH¿WVDV
TXLFNO\DVSRVVLEOHXVXDOO\ZLWKLQWKH¿UVWIHZ
years of adopting the ERP systems. On top of that,
companies could offer training and consulting to
employees as well as provide high support levels
of human key account managers to reduce the
reluctance of targeted decision-makers to adopt
ERP. However, an ERP system in itself does not
offer competitive advantage in an organisational
environment. Competitive advantage comes not
71
The Evolution of ERP and its Relationship with E-Business
from the fact that companies have adopted an

ERP system in, yet that is what every other major
company all over the world has done. It is how
they interface that system with their employees and
KRZPDNLQJHPSOR\HHVSHUFHLYHLWVEHQH¿WV7KH
implementation of ERP software is not a techni-
cal task. The implementation of ERP systems is
a business-based endeavour, as organisations try
to match the technological imperatives of the ERP
software with the business needs of the company.
Thus, if organisations used ERP systems as an
analytical and modelling tool for the redesign of
organisational processes, real improvement in the
organisation’s performance would be achieved.
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