ERP Solution
Enterprise Resource Planning (ERP) is the integrated management of main business processes, often in real time and mediated by software and technology. ERP is usually referred to as a category of business management software—typically a suite of integrated applications—that an organization can use to collect, store, manage, and interpret data from many business activities. ERP Systems can be local based or cloud based. Cloud-based applications have grown in recent years due to information being readily available from any location with internet access.
ERP provides an integrated and continuously updated view of core business processes using common databases maintained by a database management system. ERP systems track business resources—cash, and the status of business commitments: orders, purchase orders, and payroll. The applications that make up the system share data across various departments (manufacturing, purchasing, sales, accounting, etc.) that provide the data.ERP facilitates information flow between all business functions and manages connections to outside stakeholder.
Enterprise system software is a multibillion-dollar industry that produces components supporting a variety of business functions. Though early ERP systems focused on large enterprises, smaller enterprises increasingly use ERP systems.
ERP systems typically include the following characteristics:
- An integrated system
- Operates in (or near) real time
- A common database that supports all the applications
- A consistent look and feel across modules
- Installation of the system with elaborate application/data integration by the Information Technology (IT) department, provided the implementation is not done in small steps
- Deployment options include: on-promises cloud hosted,
Configuration
Configuring an ERP system is largely a matter of balancing the way the organization wants the system to work with the way it was designed to work. ERP systems typically include many settings that modify system operations. For example, an organization can select the type of inventory accounting—FIFO or LIFO—to use; whether to recognize revenue by geographical unit, product line, or distribution channel; and whether to pay for shipping costs on customer returns.
Advantages
The most fundamental advantage of ERP is that the integration of a myriad of business processes saves time and expense. Management can make decisions faster and with fewer errors. Data becomes visible across the organization. Tasks that benefit from this integration include:
- Sales forecasting, which allows inventory optimization.
- Chronological history of every transaction through relevant data compilation in every area of operation.
- order tracking, from acceptance through fulfillment
- Revenue tracking, from invoice through cash receipt
- Matching purchase orders (what was ordered), inventory receipts (what arrived), and costing (what the vendor invoiced)
ERP systems centralize business data, which:
- Eliminates the need to synchronize changes between multiple systems—consolidation of finance, marketing, sales, human resource, and manufacturing applications
- Brings legitimacy and transparency to each bit of statistical data
- Facilitates standard
- Provides a comprehensive enterprise view (no “islands of information”), making real–time information available to management anywhere, anytime to make proper decisions
- Protects sensitive data by consolidating multiple security systems into a single structure
Benefits
- ERP creates a more agile company that adapts better to change. It also makes a company more flexible and less rigidly structured so organization components operate more cohesively, enhancing the business—internally and externally.
- ERP can improve data security in a closed environment. A common control system, such as the kind offered by ERP systems, allows organizations the ability to more easily ensure key company data is not compromised. This changes, however, with a more open environment, requiring further scrutiny of ERP security features and internal company policies regarding security.
- ERP provides increased opportunities for collaboration. Data takes many forms in the modern enterprise, including documents, files, forms, audio and video, and emails. Often, each data medium has its own mechanism for allowing collaboration. ERP provides a collaborative platform that lets employees spend more time collaborating on content rather than mastering the learning curve of communicating in various formats across distributed systems.
- ERP offers many benefits such as standardization of common processes, one integrated system, standardized reporting, improved key performance indicators (KPI), and access to common data. One of the key benefits of ERP; the concept of integrated system, is often misinterpreted by the business. ERP is a centralized system that provides tight integration with all major enterprise functions be it HR, planning, procurement, sales, customer relations, finance or analytics, as well to other connected application functions. In that sense ERP could be described as “Centralized Integrated Enterprise System (CIES)”