The term is often used in general business situations to describe a corporate entity, anything from a sidewalk coffee shop to an organization as large as Tata Engineering, Tata Steel, Wipro Ltd., or any such organization.
An Enterprise is a group of people with a common goal, which has certain resources at its disposal to achieve that goal . The enterprises act as a single entity. This view of company or organization is drastically different from the traditional approach. In the traditional approach, the organization is divideq into different units based on the functions they perform as shown in Figure 3. So we have the manufacturing or production department, the production planning department, the purchasing department, the sales and distribution department, the finance department, the R&D department and so on. Each of these departments are compartmentalized and have their own goals and objectives, which from their point of view are in line with the organization's objectives.
Each of these departments function in isolation and have their own system of data collection and analysis. So the information that is created or generated by the various departments, in most cases, are available only to the top management (that too as summary reports) and not to the other departments. The result is that instead of taking the organization towards the common goal, the various departments end up pulling it in different directiuns. This is because one department does not know what the other does. Also, sometimes the departmental objectives can be conflicting.
For example, the sales and marketing people will want more product variety to satisfy the varying needs of the customers. But the production department will want to limit the product variety to Gut down production costs. So unless all the departments know what the others are doing and for what purpose, these kinds of conflicts will arise, thus disrupting the normal functioning of the organization.
This transparency and information access ensures that the departments no longer work in isolation pursuing their own independent goals. Each subsystem knows what the others are doing, why they are doing it and what should be done to move the company towards the common goal. The ERP system helps to accomplish this task by integrating the information systems, enabling smooth and seamless flow of information across departmental barriers, automating business process and functions and thus, helping the organization to work and move forward as a single entity.