The scope of traditional ERP is limited to an enterprise, which cannot cross the boundaries of
other organizations. Thus there is no effective communication with other business parties and
thus organization cannot make quick responses to the market changes through cooperations.In
traditional ERP systems the focus is still on product instead of whole value chain that comprises
of customers, suppliers and other parties. As the traditional ERP is internal management system,
it can only realize the internal management of logistics, information and fund flow. But it does
not include the information about the customers. Thus it can’t instantly reflect the demand and the
relevant financial changes.In many organizations ERP is separated from E-business which
weakens planning and designing phases of ERP implementation. Also purchasing data is not
incorporated with financial and distribution data which leads to data inconsistency and data
integrity problems. Due to incompatibility between software, hardware and data, there is increase
in cost and a lot of memory space is wasted.
In a traditional business process, after a customer order is received, the order information flows
from one department to other department through order entry, manufacturing, warehousing,
distribution and finance until the product is delivered to the customer and the payment is
received. The key elements of the value chain have been controlled by separate and disparate
information systems that could not communicate with one another. Not only did the companies
not take an integrated view of their own business processes, but they also had an equally vague
understanding of how their systems relate to the systems of their suppliers, competitors, business
partners, distributors and customers. Hence, these transactions are typically carried out with
minimal or no shared business processes.