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ERP II is a major advance in strategic business software technology. But don't expect to get there without big changes in how you do business
Gartner Group invented the term ERP in the 1990s. Recently, in 2001, it also came up with a new term for next-generation ERP systems focusing on integration, transformation, and collaboration in the business value chain: ERP II.
The ERP II architecture has many technical and functional strata, but one of its more important features is that it provides a conduit for knowledge sharing. Interestingly, the evolution of ERP itself is a resuit of adding layers of knowledge-based functionality to a Materials Requirement Planning (MRP) nucleus, which itself was a metamorphosis of a simple inventory control system. MRP originated in the '70s when the economy was based considerably on tangible assets. Over time, as the economy's emphasis gradually shifted toward intangible or knowledge-based assets, MRP II systems emerged, eventually evolving in the '90s into ERP systems with more complex and integrated business modules for the entire organization, not just the manufacturing function. (See Figure 1, page 36.)
Conventional ERP systems are characterized by their focus on increasing intraenterprise business process flexibility, transparency, effectiveness, and efficiency. Although these systems have improved order fulfillment tremendously, they fall short of addressing interenterprise business process complexities associated with supply chain collaboration. This goal requires a collaboration-based "ecosystem" that compels valued customers and shareholders to share pertinent business knowledge. Such a system is prescribed by Gartner as ERP II, which it defines as "a business strategy and a set of industry-domain-- specific applications that build customer and shareholder value by enabling and optimizing enterprise and interenterprise collaborative operational and financial processes" (Research Note SPA-12-0420).
This definition transforms the traditional back-- office ERP system from internal transactional system into a complete value network system that incorporates front-office functionalities for various customer communities. Integrating the front and back office enables an "information visibility" strategy that pushes the right information to the right people at the right time through the right communications channels. For instance, using Vendor Inventory Management (VIM) techniques, a supplier can connect to factory ERP modules of another company to determine how many parts are still in the stock. Furthermore, a retailer that wants...