Enterprise Resource Management: formula sheet

Key formulas

Definition of ERP

ERP = integrated business modules + one common database + real-time data

Use this as the opening line of any answer on meaning.

Evolution sequence

Inventory Control → MRP → MRP II → ERP → ERP II (extended ERP)

Remember the order. Each stage widened the scope of the earlier one.

Core features checklist

Integration, common database, real-time processing, modularity, best practices, configurability, access control, reporting

Pick the features the question asks for and explain each in one line.

Objectives checklist

Less duplication, accurate data, faster decisions, lower cost, better control and visibility, compliance support

Link each objective to a business benefit.

Three-tier architecture

Presentation layer → Application layer → Database layer

Remember the order and the function of each layer. Each tier can be scaled or changed separately.

On-premise ERP cost pattern

High upfront (licence + hardware + implementation) + ongoing maintenance

Typically treated as capital expenditure, with the company responsible for security and upgrades.

Cloud ERP cost pattern

Recurring subscription fee (per user or per usage)

Typically operating expenditure. Lower entry cost, but long-term total cost needs checking.

Hybrid ERP

Hybrid = On-premise core + Cloud-based modules

Choose it when some data must stay in-house but other functions need flexibility.

ERP implementation life cycle (sequence to remember)

Planning → Selection → Gap analysis and design → Configuration and customisation → Data migration → Testing → Training → Go-live → Post-implementation support

Different books group or name phases slightly differently. Keep the order and state that your grouping is a standard one.

Rollout strategies

Big bang | Phased | Parallel | Pilot (hybrid)

Be ready to define each, give one advantage, one risk and one suitable situation.

Big bang vs phased rule of thumb

Big bang: fast, high risk. Phased: slower, lower risk.

This is a general tendency, not a fixed rule. The right choice depends on size, complexity, risk appetite and readiness.

Security goals (CIA)

Confidentiality + Integrity + Availability

Use these three words to frame any ERP security answer.

Least privilege

User access = minimum rights needed for the assigned role

Review rights when roles change and remove them on exit.

Segregation of duties

Initiate ≠ Authorise ≠ Record ≠ Custody

Where staff are few and separation is not possible, use compensating controls such as supervisory review.

Control types

Preventive + Detective + Corrective

Classify each control you name. Example: access rights are preventive, log review is detective, restoring from backup is corrective.

Control layers

General controls + Application controls

General controls cover access, change, operations and backup. Application controls cover input, processing and output within a module.

Quick revision

• ERP integrates the main business functions on one shared database.
• A module serves one function, such as finance, HR, procurement, production or sales.
• Integration removes duplicate entry and gives a single version of data.
• Deployment can be on-premise, cloud-based or a mix of both.
• Implementation follows planned stages, from planning and selection to go-live and support.
• Strategy choices include phased rollout and all-at-once go-live; compare their risk and speed.
• Customisation raises cost, effort and upgrade difficulty.
• Benefits include better information, efficiency and control; risks include cost, resistance and data migration problems.
• Poor user training and weak top-level support are common reasons projects fail.
• Key controls cover user access, segregation of duties, change management and audit trails.
• Governance means clear ownership, policies and oversight of the ERP and its data.
• In a case answer, always link the facts to a risk and a control.

Common mistakes

• Defining ERP as just accounting software. Fix: State that ERP covers finance, HR, production, purchase, inventory, sales and more, all on one database.
• Writing the evolution stages in the wrong order or skipping MRP II. Fix: Learn the chain Inventory Control → MRP → MRP II → ERP → ERP II. Note that MRP plans materials, while MRP II adds capacity, labour and finance.
• Treating ERP and CRM as the same thing. Fix: Say ERP manages internal resources and transactions. CRM manages customer interactions and data. Note that CRM can be a module or a separate system.
• Listing module names with no functions. Fix: For every module write at least three functions. A bare list earns few marks in a descriptive paper.
• Saying cloud ERP is always cheaper than on-premise. Fix: Say cloud has lower upfront cost but ongoing subscription; total cost depends on the period and scale.
• Saying cloud ERP is insecure and on-premise is secure. Fix: State that security depends on controls. Cloud shifts some responsibility to the vendor, but you still need contracts, access control and compliance checks.
• Jumping straight to software installation and skipping planning and gap analysis. Fix: Always start with objectives, scope, team and process study. Show that design follows requirements.
• Saying big bang is always bad or phased is always better. Fix: Present both sides and decide using the case facts. Big bang can suit a small firm with a single location.
• Writing only a list of points with no explanation. Fix: Add one line of impact for each point, and link it to the case facts.
• Treating ERP failure as a technology problem. Fix: Stress business causes: weak sponsorship, unclear scope, poor change management, bad data and inadequate training.

Exam tips

• Start every answer with a crisp definition containing the three keywords: integrated, all functions, common database.
• Draw a small flow of one transaction across modules. A simple example scores well in case-based questions.
• Learn the evolution as a five-step chain with the decade and the added scope at each step.
• In case questions, apply the facts: name the company's problem, then show how ERP solves it, then give a conclusion.
• Add one line on security, access control or data protection to connect the answer with the rest of the paper.
• Answer in a fixed pattern of module, functions, links. It is easy for the examiner to give marks for each part.
• For case questions, pick modules to fit the business and say why. Do not list every module.
• Use the ERP versus CRM difference in any question that mentions customers.