GUIDE TO ENTERPRISE RESOURCE PLANNING SOFTWARE
GUIDE TO ENTERPRISE RESOURCE PLANNING SOFTWARE
ERP or Enterprise Resource Planning is a class of software solutions that empowers companies to consolidate internal and external data and to manage essential business processes. It is a recognized suite of software tools and processes that when used together, streamlines corporate systems, focusing employee time and company’s earning where it can generate the best return.
An ERP is defined as a “method for the effective planning and controlling of all the resources required to take, make ship and account for custom orders in making, distributing or service company.”
The ERP systems consist of software components called modules, each module focus on an important business function. ERP is as indispensable as the electricity that keeps the light on.
What is ERP?
Enterprise resource planning refers to a type of software that organizations use to manage their business activities like project management, risk management, accounting, procurement, supply chain operation, and compliance. When it comes to complete ERP suites, it covers enterprise performance management, software that helps plan, budget, predicts, and reports of an organization’s financial results.
ERP systems tie together a lot of business processes and allow the flow of data between them. It eliminates data duplication and provides data integrity with a single source of trust by collecting the shared transactional data of an organization from multiple sources. In this modern age, the ERP system is vital to manage thousands of businesses of all sizes and in all industries.
The History of ERP
The concept of ERP was coined in the year 1990 by Gartner, but its roots date to the 1960s. Back then, the concept applied to inventory management and control in the manufacturing sector. It was created by software engineers to monitor investor, reconcile balances and report on status. By the 1970s, it had evolved into a Material Requirements Planning system that was used to schedule production processes.
In the year 1980, MRP developed to encompass more manufacturing processes, prompting many to call it MRP- II or Manufacturing Resource Planning. By 1990, these systems expanded beyond inventory control and other operational processes to other back-office functions such as accounting and human resources, setting the stage for ERP that we know.
In the late 1990s, cloud ERP arrived which was the next fundamental shift in how ERP was delivered and consumed. Cloud computing made it feasible for companies to connect their ERP system to customers, suppliers as well as partners. It also created web browsers the standard UI for most new ERP systems.
Major Features of ERP Systems
Here are the four ERO concepts that differentiate it from most other types of business applications:
- Comprehensive integrated business processes
- Central database
- Consistent look and feel in the application
Most of the ERP software solutions handle some important and core business processes either in dedicated modules or in the sub-function of other modules, which are common to all types of business. The ERP finance module is the single one, which is in every ERP product, as every company requires the ability to process financial transactions and account for them.
Here are the other commonly used cores ERP modules are as follows:
- Human Capital Management
- Order Management
- Sales Management or CRM
- Purchasing or Procurement
Companies involved in manufacturing or distributing products require additional modules with specialized capabilities. Some common modules include:
Manufacturing Management or Production Management
Supply Chain Management: Complex process for demand planning and logistics covering transportation management systems and warehouse management systems.
Some companies still add another layer of muddles that are even more specialized or offer advanced capabilities that go beyond what is possible within a standard module.
Benefits of ERP
- Increased Productivity: ERP helps you in streaming and automating your core business processes to support everyone in your company to do more with fewer resources.
- Better Insights: It eliminates information silos and presents a single source of the face. You also get fast answers to mission-critical business questions easily.
- Accelerated Reporting: ERP keeps track of business and financial reporting and shares output. It acts on insights and enhances performance in real-time.
- Enhanced Agility: When you get an ERP for your business, you can quickly identify and react to newer opportunities with effective operations and ready access to real-time data.
- Lower Risk: ERP maximises business visibility and control, at the same time, it ensures compliance with regulatory needs and predicts and prevent risk.
- Better Financial Consolidation: ERP solutions eliminate the data silos that arise from disparate systems. It works for you and virtually eliminates the task.
- Simplified IT: If you wish to simplify your IT to give everyone an easier way to work, get an integrated ERP application that shares a database.
Selecting ERP Software
When you decide to take support from an ERP system, consider providing your future objectives. Before starting with ERP, outline these objectives so that your system can be able to support these goals and projected progress.
People of the Major Team
Employees from major departments should be involved in finding the important needs for their areas. Working as a project team will find the needs of the business and how it needs to be resolved. You can allocate responsibility individually for software maintenance post-implementation.
It is important to review the daily process in your business to map out during the early stage of the project. It will provide you a better picture as to how the software will perform for your business and what kind of impact it will bring. You need to make sure that you have included an external process like spreadsheets in it.
Try that the ERP software you are going to bring in your business, it would be utilised by all members. It needs to be covered in the scope of the software needs once the functional needs have been agreed upon.
Think about the Future
When it comes to investment, we always check longevity and future scalability. Advance technology is a vital attribute in your selected solution. This solution will be needed that can adapt to changes and growth of the business without becoming obsolete.
Cost is a major game player. The price of the software is going to be determined by the functionality and resource needs, hence careful consideration should be given to these factors when setting your budget. The larger the project, the more likely it will bring the extra ERP modules are needed, coming quite possibly with an additional expense to buy or extra development work.
Finding Perfect ERP for Your Business
Now, you have a proper idea about this solution and you have decided to purchase the one. But wait, careful consideration is compulsory before your select software.
- Price- Buy the software that comes under your budget.
- Return- Before buying makes sure that the solution provides a return on investment.
- Minimal Disruption- bringing anything new is great, but your new software implementation should not disrupt your day-to-day business
- Functionality- Your ERP software should be supportive and always buy it to improve your current business process.
- Reputation- Do sufficient research to find the best ERP software provider who can deliver what he claims
- Expansion- The software should be such that can expand and grow with your business
- Support- Buy you software from the company that provides support all-time support and post-implementation
Advantages and Disadvantages of ERP Software
The sheer size, interconnectedness, and complexity of ERP are a blessing as well as a curse.
When an ERP system performs well, it makes things run smoothly and opens up new possibilities. But when its deployment is delayed or the system goes down, it can bring business to a standstill and force users to scramble, looking for manual alternatives. Here is the list of major advantages and disadvantages of ERP system;
- It can save businesses money over the long run by streamlining the process.
- ERP brings a unified system that low IT, Labour and training costs.
- Through improved data and analytics, it facilitates reporting and planning
- Bringing better compliance and security
- ERP software is expensive to deploy and maintain
- Many people finding it tough to implement
- ERP needs significant change management
- ERP modules are less sophisticated than specialized software