What is ERP?
December 18, 2019
- Posted by: Shashi Ranjan
- Category: ERP
- December 18, 2019
- Posted by: Shashi Ranjan
- Category: ERP
Enterprise Resource Planning (ERP), is a business management software which comes with a set of integrated applications that allow a business to collect, store, manage and interpret data from its different – different activities in real-time, thus enabling its overall smooth functioning. In simpler words, an ERP software system helps integrate the different core processes of a business such as manufacturing, raw material procurement, marketing & sales, planning, finance, supply chain,etc., into a single system. This facilitates flow of real-time information across departments and empowers the data-driven and pro-active, accurate the business decisions based on the real facts.
ERP (Enterprise Resource Planning) actually helps the organizations to get to rid of disparate systems and processes, taking form of a unified IT package, which gives the employees authorized access to the single-yet-shared database where data entered once can be used over and over again. This eliminates data duplication, chances of errors, delays and manipulations and brings a degree of automation to the business. It also enables the generation of synchronized reports on key business metrics, giving the required information at the time it is required and in the way it is required.
The modern face of ERP (Enterprise Resources Planning):
Though built with this basic purpose, the face of ERP (Enterprise Resource Planning) has completely changed now. From elephant-like computer peripheral the sizes and the speed, to contemporary palm-sized lightning-fast computers, the same evolution is witnessed by ERP systems solutions too. Modern-day ERP solutions have embraced technological advancements allowing the business control from anywhere and at any time via the cloud, apart from being available on-premise. The availability of not just the industry-specific solutions, but micro-industry specific ones as well as drastically reduced the implementation time as well as the customization cost, while increasing the degree of fit in terms of processes and regulatory mandates.
Keeping pace with all these improvements, more and more vendors are coming up with ERP solutions that are fit for small businesses too that are simple yet fast.
Moreover, the availability of online learning portals, e-courses, knowledge base and simplified workflows, have substantially curbed the need for intensive training, which is one of the major concerns, fears and expenses for ERP adopters.
What are the types of ERP?
- On-premise: A traditional ERP software/on-premises ERP system, has a database that resides on an onsite server and hardware. It is managed by the IT staffs of the company which has got it implemented.
- Cloud: A Cloud ERP system is provided as a service and hosted on vendor’s servers. In this case, the software and its data are managed centrally at a remote datacenter (internet “cloud”) by the ERP vendor and accessed by customers through a Web browser.
- Hybrid: A hybrid ERP (Enterprise Resources Planning) solution is the combination of the two ERP – on-premise & cloud. By opting for a hybrid ERP, a company can adopt the cloud applications while also retaining its on-site ERP resources. Greater mobility, ease of the installation and outside support are some of the benefits that make businesses go for hybrid ERP.
What are the components of an ERP?
The key components of an ERP software solution are the multiple modules, with each of them focusing on one specific area of the business. These modules are individually purchased, based on the specific needs and the technical capabilities of the organization. Some of the most common ERP (Enterprise Resources Planning) modules include those for:
- Quality Control/Assurance
- Inventory Management
- Material Procurement
- Formulation, BOM, R&D
- Business Intelligence
What all businesses need ERP?
Any business, be it large-scale, small-scale or the medium-sized, ranging from the manufacturing to catering and whether discrete or the process manufacturing, need an ERP solution. This is because the challenges of small and medium businesses are no different from the large industries. They needs to follow the same guidelines, abide by regulations, maintain reports & documents, meet quality parameters, manage resources, cut costs, thrive on thin profit margins et al, just like the big daddies of business. So, to standardize their processes, streamline operations, cut losses and the wastage, stay audit-ready, exploit resources and improve the profits, even macro, start-ups, small and the medium industries are looking for an ERP partner.
The ERP systems were predominantly developed to manage discrete manufacturing processes that involved the production of goods that are easily distinguishable and can be physically counted like nuts, bolts, wires, etc. Such ERP software was ideal for industries like automobiles, mobile phones, furniture, toys, etc.
However, with time, the need for software for process manufacturing was felt because process manufacturing is based on formulas/recipes and involves blending, mixing, heating, etc., which result in a change of state. These different sets of needs could not be fulfilled through software built to follow production on assembly lines. Thus, the dedicated ERP solutions for process manufacturing came into the existence bringing about the key capabilities like- Physical property analysis, formulation, unit of measure conversion, density calculations, batch processing, regulatory compliances, etc., among many.
What are the benefits of an ERP to businesses?
An ERP software solution helps your businesses to ensure the numerous benefits, the first being automation. Below are the other advantages of ERP Software solution:
- Streamlined processes: An ERP system integrates all the processes across departments from beginning to end and meets the specific needs of each individual’s businesses.
- Improved productivity & efficiency: An ERP system saves time and resources by automating manual businesses tasks and processes to promote the productivity and improve efficiency. 82 % of companies that implemented an ERP solution improved either key or all the business processes post-implementation.
- Enhanced business visibility: With the integration of all the business processes, ERP(Enterprise Resources Planning) gives the management comprehensive and real-time visibility into the performance of each department and access to key business data.
- Quality analysis & reporting: An ERP software allows the business managers to use interconnected dashboards to quickly analyze & report, thus facilitating informed and accurate decision making.
- Reduced costs & risks: Uniform and streamlined business processes reduce operational and the management costs while improved data integrity and financial control reduce risks.
- Industry & regulatory compliance: An ERP software solution facilitates control over reporting processes and thus ensures compliance with regulatory requirements, meeting data integrity and enabling complete traceability, thereby keeping away hefty fines and image damage.
Studies reveal that the 60% of the organizations that got the ERP implementation done were very satisfied with the overall ERP vendor experience. Further, 60% percent* of the companies who got the ERP implementation done viewed it as a success. This should give you a clear picture as to how beneficial ERP is to the success and growth of your businesses.
Future of ERP(enterprise resources planning)?
In the last century, ERP has evolved a lot to accommodate the latest technological trends as well as advanced tools to solve the critical business problems. The ERP vendors continue to evolve in order to make their offering more and more powerful, flexible and affordable, all at the same time. Some of the contemporary trends that will define the future of ERP (Enterprise Resources Planning) include the Cloud Technology, Big data analytics, the Internet of Things, Artificial Intelligence, mobility integration with e-Commerce and move towards public cloud. These trends will continue to make businesses more simpler.
And in all these years, the unprecedented response it has received and the faith which the clients across the globe have reposed in it tells that ERP is here to stay for many more years to come.