What is the difference between BPM and a powerful ERP?

One of our readers commented on the post: What is the difference between workflow and Business Process Management (BPM)? asking the question, "What is the difference between BPM and a powerful ERP?" I will try to answer this question here and certainly look forward to getting your feedback on the topic.

ERP (Enterprise Resource Planning), powerful or not, is basically a suite of software applications from a single vendor that offers a complete solution for running a certain type of business. For example there are a number of ERPs for manufacturing companies, contractors, distributors, retailers, and many other vertical industries.

With ERP’s breadth of scope, it is logical to think that a particularly powerful one would be built upon a Business Process Management platform, and therefore actually help model and execute the business processes inherent in the industry it serves. I think that is the assumption underlying this reader’s question.

However, in practice, none of the ERP solutions available in the market today have taken a BPM-centric design approach. Instead, ERPs are generally a collection of disparate applications (for example: accounting, inventory control, order management, job costing and CRM) that have been put together by the ERP vendor, in many cases through acquisitions of smaller software companies or applications that were developed independant of each other.

A new generation of ERP applications can be built from the ground up with a BPM engine at its core. Such a solution would allow business users to visually design and manage workflows–the building blocks of the ERP’s business processes.  It would also include business process templates out-of-the-box, engineered to promote best practices for a particular process and industry.

Someday, when an ERP is rebuilt and not cobbled together from smaller suites of applications, this vision may become a reality.

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  1. #1 by Valery at September 29th, 2010

    I am neither a BPM guru nor I ever dealt with ERP directly so make sure to take what I say easy :-)

    I agree with Ben that ERP is just a piece of IT infrastructure. As any tool, it may be more useful in one instance than in another, etc. Continuing on that, as any other tool it is not universal. You are likely to need (many) other IT tools as well.

    Trying to expand Ben’s answer, I would add that “managing a workflow” may look simpler that it is. BPM concerns with managing the whole architecture of a process. The latter builds on a strategy that specifies a change path and includes developing appropriate (can be different for different periods) KPI’s and incentives. ERP is not going to think about conflicts of interests or of choosing an appropriate competior to benchmark against.

  2. #2 by Netsuite Services at January 22nd, 2010

    Great article, thank you for sharing!


  3. #3 by Taamilan at October 7th, 2009

    can you clearly define BPM and ERP?
    I both are overlapped ?

  4. #4 by Ben Swayne at November 8th, 2007

    This is a very misleading and off-topic response in my opinion. As a developer of ERP software, and a project manager I see both sides.
    Perhaps Mr. Rudolf Melik lacks experience with a number of vendor’s ERP systems and is speaking from experience with one particular package.
    First of all I’d say the scope of BPM is much larger than the scope of the ERP software itself, so its an unfair comparison. BPM includes certain function that require human intervantion (they cannot be performed by software), rather the ERP softare is just a component or tool that can be used to enhance your ability to do BPM.
    I will agree with Mr. Melik on his point of larger ERP vendors acquiring smaller vendors. It can be iritating when a “unified” product doesn’t work with itself very well; however I think that’s an unrelated point to the question at hand.
    9 times out of 10 the “problem” with ERP software is user related. The user doesn’t see the business in the same light as the person who modelled it. Or maybe the user did not receive sufficient training as they are “too low” on the ladder?
    Even if you designed an ERP package exactly the way Mr. Melik would like to see it, somebody else will disagree with him.
    The fact is most ERP software is either so highly customizable (like SAP) that you’ll run out of money before you finish “perfectly” modelling your business process; or they are designed from the ground up by a smaller vendor to target one vertical market (and therefor designed to supliment a particalar industries BPM model)
    So I don’t really see your point.
    To answer the readers original question:
    Workflow is simply the flow of work that occurs for the business to continue profitably.
    BPM is used to look at that flow of work and continually optimizing it (therefor modelling/redesigning, then executing and monitoring)
    ERP software is a tool that allows you achieve the desired BPM results, it does not do BPM for you. This is why we need managers, someone with sufficient skill and experience to look at the work flow and be able to make a deeper decision than just a formulaic number crunch.
    ERP will help you manage your work flow by structuring it and centralizing it and providing “macro summaries” (big picture stuff), difficult to spot as a just a human mind (or time consuming to generate manually).
    The manager performing the BPM must make the decisions to have the software customized, or the workers trained or retrained to optimize the process.
    See the difference?

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