What is ERP and why is it important for my Business?
The term ERP may sound like a complex and cumbersome software system. It may be a bit like that, but today, even small and medium-sized businesses can use an ERP systems to reduce their operating costs, increase their revenue, and more generally manage all of their available resources.
ERP definition
The ERP acronym comes from the initials of Enterprise Resource Planning, which can be rephrased as a “business planning system”. On the internet there are countless articles on ERP. However, the most prevalent definition is that ERP is a software system that is in charge of managing all of the business’s operations with the ultimate goal of increasing business performance (Wikipedia definition of ERP). This is achieved through the rational organization and utilization of company data and resources (human resources, material, financial resources, etc.)
ERP: Historical review
Since its inception in the 1990s, where ERP started by introducing accounting and human resources / payroll operations into a MRP (Manufacturing Resource Planning), it has evolved technologically at a rapid pace. Thus, modern ERPs have now incorporated other capabilities such as CRM, warehouse management (WMS), EDI, and Integrated Quality Management (IQM).
Many confuse ERP systems with commercial software packages. However, ERP is far more than an accounting management system.
The difference with them is that an ERP processes and exploits all business data, supporting all its functions, ranging from financial services and human resources management to supply chain and customer relationships.
All of the above is made possible through a single database that records all transactions and business data that are tracked in real-time (or virtually real) sometimes.
Briefly the benefits of ERP
An ERP solution helps a business to:
- Increase its revenue
- Improve its effectiveness by integrating various tasks (Finance & Accounting, Manufacturing, Supply Chain, Customer Relationship Management, Human Resources, BI / Reporting)
- Increase the productivity of its people by automating its processes
- Reduce its operating costs
- Enhance the security of its business data
- Draw and exploit information from different parts of the company
What does an ERP system involve?
In essence, an ERP system consists of individual embedded applications (known as modules), which the company uses to gather, store, manage and, ultimately, interpret data for many (ideally all) of its activities. Some of the modules of an ERP system are:
