About ERP

What is ERP?

Google the term "ERP", the information that comes up could be overwhelming and a little confusing. Every one seem to have their own definition of ERP, and ERP implementations can vary widely from one another. These differences undermine the flexibility that can make ERP such a powerful business tool.

To obtain a better understanding of how ERP solutions can change your business, one should gain a better sense of what ERP actually is and how it works. Here's a brief introduction to ERP and why it seems like everyone's talking about it.

ERP is an acronym for Enterprise Resource Planning, but even its full name doesn't express much on what an ERP is or what it does. To have a better understanding, one must take a step back and think about all of the various processes that are essential to running a business, including inventory and order management, accounting, human resources, customer relationship management (CRM), and beyond. At the fundamental level, an ERP application combines these modules into one absolute system to organise processes and information.

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The core feature of any ERP system would be its shared database that supports multiple functions used by different business units. In practice, this means that employees in different divisions-for example, accounting and sales-can rely on the same information for their specific needs.

ERP softwares provide a degree of synchronized reporting and automation to a certain extent. Instead of forcing employees to constrain with separate databases and spreadsheets that have to be manually merged to generate reports, some ERP solutions allow staff to pull reports from one system. For instance, with purchase orders automatically flowing into the financial system without any manual re-keying, the order management department can process orders more quickly and accurately, and the finance department can close the books faster. Other common ERP features include a control panel to enable employees to quickly understand the business' performance on key metrics.

A Brief History of ERP

ERP as a term was coined in 1990 by Gartner, but its history dates back to the 1960s. Software developers during the period designed programs to monitor inventory, reconcile balances, and reports on operations. In 1970, this concept had evolved into Material Requirements Planning - MRP systems for scheduling production processes.

By 1980s, MRP grew to accommodate more manufacturing processes, prompting many to call it MRP-II or Manufacturing Resource Planning. By 1990, these programs expanded beyond inventory control and other operational processes to other back-office functions like accounting and human resources, setting the stage for ERP.

Present day ERP has evloved to encompass business intelligence (BI) while also handling "front-office" functions such as sales force automation (SFA), marketing automation and ecommerce. With these product advancements and the success stories coming out of these systems, companies in a broad range of industries from wholesale distribution to e-commerce started using ERP solutions.

How ERP helps businesses

At its core, ERP helps employees do their jobs more efficiently by breaking down barriers between business units. More specifically, an ERP solution:

  • Gives a global, real-time view of data that can enable companies to address concerns proactively and drive improvements
  • Improves financial compliance with regulatory standards and reduces risk
  • Automates core business operations such as lead-to-cash, order-to-fulfillment, and procure-to-pay processes
  • Enhances customer service by providing one source for billing and relationship tracking.

When you add up these advantages, the value of ERP-particularly cloud ERP-is clear. With an ERP solution, employees have access to accurate information that enables them to make better decisions faster. Not only that, but ERP software helps to eliminate redundant processes and systems, dramatically lowering the cost of doing business overall.

Resource

"Extended ERP reborn in b-to-b," Heather Herald: InfoWorld, August 27–September 3, 2001. "ERP geared for steady growth as sales forecast to hit $50bn by 2015," Rosalie Marshall: http://www.v3.co.uk/v3-uk/news/2049521/erp-geared-steady-growth-sales-forecast-hit-usd503bn-2015#ixzz1NOo0wcHa