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New investments-in information technology or otherwise-take a back seat during any recession. But the recent economic slowdown has apparently seen one difference: companies continue to invest in ERP (Enterprise Resource Planning) systems.

Many ERP systems have not lived up to their promise of huge savings and improved processes. But ERP systems have laid the foundations for future growth based on information technology, which is a strategic area for businesses in the future.

Many of the gains that are now realisable through e-business would have seemed like a pipe dream without ERP systems in place. ERP provides a foundation for a business. Some of its key elements are common data repository, standardised business processes and an environment for continuous change. Most ERP users would agree that well-implemented ERP can unlock substantial value for a company.

Standard Business Processes

ERP demands standardisation. This implies fewer business processes to be supported, and changes in traditional functioning. The gains from this huge task are streamlined operations and tight interlinking between departments and other group companies.

However, by implementing best practice processes one may lose competitive advantage because as processes get eliminated, companies compete solely on their core strengths. For example, if PC manufacturers IBM, Dell and Compaq used an identical ERP-enabled SCM (Supply Chain Management) system configured in the same way, then the battle for supremacy would be based on parameters other than SCM.

Common Data Repository

In an ERP system, everyone uses the same data. This reduces data duplication and redundancy and makes data transparent and easy to compare. To those who haven't used an ERP system, it is similar to a centralised Excel sheet that all can access. As is obvious, this provides considerable productivity gains.

Continuous Changes 

An ERP implementation gives most people their first experience of a major change initiative. That's also when they realise that business leadership, and not IT leadership, is needed for proper implementation of strategic IT initiatives like ERP. Moreover, an ERP project ingrains people with the philosophy that change is the only constant in today's business and, hence, top management must become flexible. And there's the important realisation among top management that everyone needs to shape up to IT or ship out.

These are some of the important ingredients on which an ERP foundation is built. If properly envisioned, planned and implemented, it can offer far-reaching results translating into a much-improved bottom line-which is why the slowdown hasn't hurt the appeal of ERP to companies.