IT Glossary

Postmodern ERP

Postmodern ERP is a technology strategy that automates and links administrative and operational business capabilities (such as finance, HR, purchasing, manufacturing and distribution) with appropriate levels of integration that balance the benefits of vendor-delivered integration against business flexibility and agility. This definition highlights that there are two categories of ERP strategy: administrative and operational.

Administrative ERP Strategy. This focuses on the administrative aspects of ERP, primarily financials, human capital management and indirect procurement. Some industries don’t need operational capabilities, such as manufacturing or distribution, so they focus their ERP strategy on administrative functions, perhaps augmented by some industry-specific functionality (such as grant management in the higher education and public sectors, or project resourcing, billing and costing in professional services). These industries are generally characterized as service-centric industries.

Operational ERP Strategy. Organizations in manufacturing, distribution, retail, etc. (sometimes referred to as product-centric industries) are likely to extend their ERP strategy beyond administrative functions into operational areas, such as order management, manufacturing and supply chain, to maximize operational efficiencies. Also, asset-intensive organizations, such as utilities and mining, may include operations and maintenance of assets in their ERP strategy. These organizations can realize benefits from the integration between administrative and operational capabilities, for example, where operational transactions that have a financial impact are reflected directly in the financial modules.

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