ENSAYO SOBRE ERP

Contents

Executive Summary

ERP and the Primacy of the General Ledger

The Rise of the Extended Enterprise

The “Horseless Carriage” Era of the Extended Enterprise

The Emergence of the Business Network

Conclusion: ERP and the Business Network: Use the

Right Tool for the Job You Are Doing

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BEYOND THE FOUR WALLS: ERP AND

THE BUSINESS NETWORK

White Paper

e2open.com White Paper: ERP and the Business Network Page 2

Executive Summary

With the increased pace and volatility of business, access to timely,

accurate operational information is more critical than ever. And as

globalization and outsourcing have extended supply chains to every

corner of the world, the sources of this information are increasingly

outside the four walls of a single enterprise. These changes are driving

the rise of a new class of enterprise software, the business network, built

from the ground up to solve problems that Enterprise Resource Planning

(ERP) systems were never meant to address.

ERP systems were created to harmonize and manage business processes

within the four walls of the enterprise, a job they do fairly well. These

systems were not, however, designed to manage the complex, crossenterprise

interactions that characterize the modern supply chain.

The right tool for managing a global supply chain must reflect and

accommodate the nature of that supply chain. Ideally, it will take the form

of a cloud-based business network that connects and coordinates all of

the participants on a common platform. By providing a shared space

for communication, collaboration, and the execution of shared business

processes, the business network addresses the complications that can

arise from the interdependence of a number of partners and allows them

to collectively respond to the challenges and opportunities that emerge

in the course of operations.

Business networks supplement ERP systems, rather than replacing them.

The ERP system remains the system of record and the guardian of the

internal processes of the enterprise, while the business network provides

the system of process, the platform for working with trading partners

to meet customer needs profitably and expeditiously. Common sense

dictates using the right tool for the task at hand—and when that task

involves external trading partners, the right tool is a business network.

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ERP and the Primacy of the General Ledger

As many have noted, Enterprise Resource Planning (ERP) systems have

very little to do with planning, a bit more to do with resources, and

everything to do with the internal business processes of a given enterprise.

The term ERP was coined by Gartner Group in 1990 to describe the

evolution of Manufacturing Requirements Planning/Materials Resource

Planning (MRP, MRP II) and Computer Integrated Manufacturing (CIM)

systems to more comprehensive solutions that encompass additional

business processes. In the intervening years, ERP systems have grown

to incorporate many key business processes, with modules for backoffice

functions such as financial management (e.g., GL, AR, AP, and

FA), manufacturing, and human resources (HR), as well as for front-office

functions such as Customer Relationship Management (CRM).

The fundamental goal of the ERP system is to automate manual, paperbased

processes (from order entry on one end to invoice and payment

collection on the other) and to provide cross-departmental visibility into

the status of a given process. ERP systems, by standardizing all of the

different departments of an enterprise that are involved in executing a

complete business process on a single database, provide a “single version

of the truth” and reduce the time lost to documents sitting in in-boxes

and out-boxes (whether physical or virtual). These systems can also be

helpful in enforcing standardized business processes, ensuring that things

are done “by the book.”

Keeping the books is another critical function of the ERP system: The ERP

system is the corporate system of record, essential for collecting, storing,

and providing the data needed for managing the business and meeting

financial reporting requirements. All transactions—with customers,

partners, or suppliers—are recorded in the General Ledger. In that regard,

ERP systems are primarily retrospective, dealing with historical data and

memorializing things that have already happened, rather than prospective.

The system provides the CFO with financial snapshots—quantitative

pictures of the enterprise at particular moments in time, rather than

looking outside to provide a dynamic, moving picture of the broader

trading network of customers, partners, and suppliers.

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The Rise of the Extended Enterprise

In an earlier time, most manufacturing companies were vertically

integrated—sourcing raw materials and performing all of the functions

of transforming those materials into saleable products on their own. The

Ford River Rouge plant is exemplary of this era: iron ore and coke came

in one end of the plant, completed automobiles rolled out the other. In

this setting, harmonizing internal processes to maximize asset utilization

is central, with products pushed out into the market in response to

forecasted sales. Market feedback is incorporated in the planning cycle,

as part of a regular, periodic, internal process.

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Now, however, companies increasingly rely upon their trading partners

(suppliers, contract manufacturers, co-packers, channel partners, and

others) to design, manufacture, and deliver their products and to help

them create value for their customers. This change is due to a number

of factors, including globalization and the trend toward outsourcing

significant parts of the value chain, in order to tap low-cost labor markets,

to take advantage of the specialized skills of key partners, and to establish

a presence in and get access to rapidly growing emerging markets.

Among the other factors

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