Enterprise resource planning, or ERP as it is commonly known, is a very complex and versatile category of business management software. Although the commonly held perception about software is that it is only used for things that are related to engineering and for things that are information technology offshoots like programming and other such things, that is surely not the case at all. Enterprise resource planning is only one example of how that is true and knowing ERP basics is the first step towards understanding it.
Enterprise resource planning is basically a set of integrated applications. These applications are intertwined in such an intricate way in order for this software to be used for business management. Because it covers all the aspects and concepts that are to be considered while managing any business, it’s no doubt that any organization can make use of enterprise resource planning. By using ERP, a business can not only collect and store data from many business activities, but they can also easily manage and interpret the data as well.
Enterprise resource planning is an ERP software that typically consists of multiple enterprise software. What makes ERP so versatile is the fact that based on what a certain organization needs, different parts, and modules of software can be individually purchased to make things easier for them. Enterprise resource planning is an enterprise software the concept of which is pretty self-explanatory. Each part or module of the software focuses on a certain area of business and altogether, ERP can be used to efficiently manage and look after your business. All the main areas which are included in the ERP system are product planning, purchase, manufacturing or service delivery, finance, shipping and payment, marketing and sales, product development or even marketing among other business processes. Any business or organization can use ERP to manage their business or carry out certain tasks which involve managing back-office activities and tasks. Although it is obvious how useful ERP actually is, the basic goal of using one such enterprise resource planning system is basically to provide one single depository for all the information involved with running an organization. This is where all the various aspects of ERP are used to improve the flow of data and information in the organization across all the channels and people.
Enterprise resource planning (ERP) provides an all-encompassing and integrated approach for various business processes. This is done often in real-time and the common databases by a database management system are used. The multifaceted ERP systems track business resources like cash, production capacity, and raw materials. Along with that it also keeps track of business commitments like orders, purchase orders, and even payroll. As it is known, ERP consists of an intricate system of applications which make up the system and share data across various departments like purchasing, sake’s, accounting, etc. that provide the data. Enterprise resource planning helps the flow of information throughout the business and the organization since there is so much of it. The information flows in all directions and manages connections to outside stakeholders.
The ERP system is very useful and effective and it is only natural that there be a lot of money associated with it. The enterprise system software is a multi-billion dollar industry and it is involved in the production of components that support a wide array of business-related functions. The information technology investments have become the largest category of capital outflow in USA based businesses over the past decades and for that reason, it is not only the bigger enterprises that make use of ERP systems but the smaller enterprises as well. ERP is a vital and extremely useful organizational tool because it not only links and connects various systems in an organization but it also systematically aids problem free dealings and production. Although it is a very useful tool and has become quite common across the world, yet it runs on a variety of computer hardware and configurations of the network which is how ERP system differs from traditional system development. The network configurations are done typically using a database and information depository.
Tasks performed using ERP
Essentially, enterprise resource planning is an integrated system that runs in real time. Everything runs on a common database with modules that work fluidly with each other. There are different functionalities ERP systems offer and these different functionalities are grouped together and exist as modules. The different modules are as follows:
- Financial accounting
- Management accounting
- Human resources
- Order Processing
- Supply chain management
- Project management
- Customer relationship management
- Data services
By grouping these different functionalities together into modules, the ERP system is able to run more efficiently than if it wasn’t organized in this way. An organization is able to take care of all aspects without much confusion and this is generally what enterprise resource planning systems are for.
As mentioned earlier, ERP is complex and intricate enterprise software that covers and overlooks various aspects of any business and its management. However, to simply state the functions, ERP is used in distribution process management which involves overseeing the movement of goods from the manufacturer to the point of sale and consists of various things like packaging, inventory, warehousing, etc. ERP works for supply chain management (the oversight of the movement of finances, materials and information from supplier to manufacturer to wholesaler to retailer and to consumer), services knowledge base, configuring, pricing, improving accuracy of financial data, facilitating better planning of the project, accounting, and financial application, lower purchasing costs, management of human resource, managing the payrolls, automating employee life-cycle, standardizing critical business procedures, assessing business needs and reducing terminated tasks as well.
As mentioned before, ERP works in different modules and these modules include basically the ones for product planning, material purchasing, inventory control, distribution, accounting, marketing and finance, and human resource management. Enterprise resource planning has become increasingly popular over the years and various software applications have also emerged to help organizations and business managers in implementing ERP into other business activities and may also infuse modules for CRM (customer relationship manager) and business intelligence which can be presented as a single all-encompassing package.
The Implementation of Enterprise Resource Planning
Due to the workload enterprise resource planning software systems are able to take care of, when it is implemented into a business or organization, there are typically big (and positive) changes that go along with it. Consulting, customization, and support as the different services offered to help implement enterprise resource planning properly. Because an ERP system that is more module based can be implemented little by little, over time, it will take just over a year to implement the desired ERP system properly. This can, however, range anywhere from a couple of months for a smaller project and up to years when it’s for, let’s say a multi-national organization. Not only that but the amount of customization needed can also make the implementation time longer.
To implement ERP systems properly, the process of the business must also change too. This is important so business processes are understood and analyzed in order to align it with the ERP system smoothly. It is possible to mismatch an ERP system, so it’s important to recognize the current processes, analyze the effectiveness and understand any solutions that may be automated. By balancing the processes of an organization to fit and align with an ERP system, modifications can be made to help configure everything better.
Top ERP Trends
The ERP system belongs to a field which typically does not undergo fast changes and is very slow to experience them. During the past few years, however, there have been certain forces and changes which have fundamentally shifted the entire scenario. The major ERP trends are as follows;
Mobile ERP: whereby employees and executives have direct access to information no matter where they are. It is predicted that businesses will soon completely take up mobile ERP for dashboards, reports and to conduct business processes.
Cloud ERP: with the widespread popularity of cloud computing technology, it is not a surprise that it has set its claws into the enterprise world as well. Although most ERP users are not comfortable with the idea of uploading their data onto the ERP cloud environment, however, such reservations have been quickly evaporating as the advantages of the ERP cloud are shown to outweigh the negatives.
Social ERP: as the name suggests, social ERP is concerned with social media and its importance. No matter what the implications it is a fact widely accepted that social media is very powerful and vendors and businesses have been quick in seizing the opportunity and introducing social media into their ERP systems.
Two-tier ERP: Enterprises and businesses, in the beginning, attempted to create ERP systems that were all-encompassing completely. However, that proved to be a failure and led to the creation of the two-tier ERP system. Two-tier ERP systems are an organized way to run essentially two different ERP systems simultaneously. This will typically include an ERP for the corporate level while the other is at the subsidiary level.
Apart from these top trends, there is also a slow-growing market for open source ERP software.
Before ERP, businesses and companies around the world have never run so smoothly. Having an effective ERP system makes a lot of difference. They are more organized, more prepared, make decisions fast enough to keep up with today’s fast-paced market, there are much more possibilities and there is more collaboration than ever before. Not to mention, data security has gotten so strong with the whole advancement of technology. Modules and entire ERP solutions can be customized more than ever to suit your company’s needs. There is honestly no reason to not use one of these systems if your company is big enough. Without proper ERP, your business will never be the most efficient or effective it can be.