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ERPS: Another extension - Views on News from Equitymaster
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  • May 22, 2001

    ERPS: Another extension

    ERP (enterprise resource planning system) is one the most talked about product of the new economy or at least was till some time ago. Then came e-commerce and the focus shifted from inside the organisation to outside. The magic mantra was to get your SCM (supply chain management) and CRM (customer relationship management) software in place. The ERP companies responded to this with new products re-christened XRP (Extended ERP). Of course, the question is, what next? And the answer to this is ERPS.

    ERPS (enterprise-wide receipts, payments and settlement) is a system through which an organisation can have online connectivity to the banking software. This will facilitate funds transfer and most importantly, accounting reconciliation with the banks. Therefore, ERPS integrates into the ERP a critical link that is missing - electronic payments and receipts.

    An ERP system allows electronic interchange of data between the suppliers and the company at one end of the value chain and between the customers and the organisation at the other end of the value chain. However, if business is done then fund transfers will certainly follow which presently is offline to a large extent. Therefore, the ERPS puts the missing block in place to complete an ideal picture where all the transactions of an organisation are online.

    What has happened that one more entity has been brought into the picture. With the ERP only the organisation, its suppliers and customers were able to interchange information but now the banker joins the list and they are actually able to transfer money. This is possible with many payment gateways coming into place. The ERPS talks to the payment gateways, which validate and execute the transactions.

    Entities Organisation Bankers
      Suppliers Organisation
      Dealers Suppliers
      Customers Dealers
    Transfer of Information
    (invoices, orders etc)
    (End to end payment)

    This opens up a whole new market for Indian software companies. As the different types of ERP systems like SAP, Baan etc. have to talk to the payment gateway and this has to be done over very secure channels. And again payment gateways are not standardized. Therefore, this again opens a vast market for system integrators.

    The capturing of payment and receipts online will not only make payments easier but will also improve the quality of information available to the finance personnel. With this information they will have a greater control over the floating capital.

    This is just an example of how much remains to be done in the software sector. The question again will be, what next? But it is long before ERPS become commonplace. Therefore, for the answer to that question we do have some time to reply.



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