Definition of Enterprise Resource Planning (ERP)
Enterprise resource planning (ERP) refers to a type of software that organizations use to manage day-to-day business activities such as accounting, procurement, project management, risk management and compliance, and supply chain operations. A complete ERP suite also includes enterprise performance management, software that helps plan, budget, predict, and report on an organization’s financial results.
ERP systems tie together a multitude of business processes and enable the flow of data between them. By collecting an organization’s shared transactional data from multiple sources, ERP systems eliminate data duplication and provide data integrity with a single source of truth.
Today, ERP systems are critical for managing thousands of businesses of all sizes and in all industries. To these companies, ERP is as indispensable as the electricity that keeps the lights on.
Examples of some common components found in modern ERP systems
ERP systems typically include accounting, inventory management, human resources, customer relationship management (CRM), supply chain management (SCM), manufacturing execution systems (MES), production scheduling, and financial reporting.
Main ERP Components?
Human Resources. Managing your employees should always be priority number one.
Customer Relationship Management.
Supply Chain Management.
Inventory Management System.
ERPs importance to the business
An effective ERP solution works as the mind of a business. It’s in this perspective that integration is crucial. In traditional settings, management decision-making requires extensive documentation such as files and reports. With an ERP solution, it becomes simpler with centralized data storage and the analytical tools in the system that not only makes work easier but also faster and more effective.
The history of ERP development
The development of ERP arose as a need to ensure that there is ease in managing the business. It started with traditional communication models. With the development of the computers, better communication models, networking and internet services were established. It’s on this platform that the development of ERP has happened.
In the advent of internet use, various communication models have developed. They include social media sites as well as marketing platforms. The creation of applications with capabilities to support this kind of communication enhances these platforms. ERP is a solution that works in a similar way, but its tailoring applies to a specific business allowing connectivity to its clients, suppliers and its various departments.
What is the biggest problem with ERP?
The first challenge of ERP implementation is trying to work out which of your already existing processes and systems would benefit from an ERP integration and which of these would end up impeding the workflow of your business. This is especially difficult for organisations with different competing divisions.
What causes ERP failure?
ERP implementation failure generally results from inadequate planning and resource management, coupled with a lack of awareness regarding risks. This failure can happen at multiple levels, including critical business processes that can overwhelm a technical team's ability to manage risks and manage change effectively.
Which is disadvantage of ERP?
Key disadvantages include the high costs of ERP software, its complexity, slow implementation, and data migration. If you want your procurement process to be as efficient as possible, it's best to invest in a P2P solution that provides integration with an ERP system.
What problems can ERP solve?
ERP stands for Enterprise Resource Planning which is a complex solution for the most widespread business issues.
5 business issues that ERP software can solve:
Repetitive manual tasks;
Customer data tracking;
The 6 biggest benefits you'll get from an ERP system
A better view of your business process.
Enhanced inventory control.
Greater customer service.
Stronger security and regulatory compliance.