ERP stands for Enterprise Resource Planning. ERP software is comprised of powerful and strategic business process management tools that can be used to manage information within an organization. While every company and organization operating today is different, they all face a common challenge: in order to stay competitive in today’s business environment, they need a dependable and efficient way to store and access information. That’s where ERP systems come into play. ERP systems integrate all facets of an enterprise into one comprehensive information system that can be accessed by individuals across an entire organization.
With effective ERP software in place, business owners and leaders can automate and streamline tedious back office tasks, help employees become more productive and successful in their roles, and get real-time visibility into the inner workings of their operations. This resource will provide you with an in-depth overview on the topic of Enterprise Resource Planning.
Basic ERP Concepts & Glossary of Terms
There are hundreds of concepts and terms that relate to enterprise resource planning, but here are ten worth understanding now, before you decide whether you want to implement an ERP solution at your business:
- Enterprise Resource Planning (ERP): Business process management tools that can be used to manage information across an organization.
- On-Premise ERP: ERP software that is installed locally on your hardware and servers, and managed by your IT staff.
- Cloud-Based ERP: ERP software that exists and is managed off-site by your provider.
- Supply Chain Management: the flow of goods and services from origin point to point of consumption.
- Third-Party Vendors: Businesses or partners that can be integrated into your ERP system.
- Capacity Requirements Planning: A method used to determine the available production capacity of a company.
- Mobility Solutions: The ability to access your data through your ERP from anywhere, and by using mobile devices.
- ERP Deployment Options: The types of ERP system you can implement at your organization.
- Business Architecture: How an organization is structured; all the moving parts.
- Customer Relationship Management: Tools that businesses use to manage interactions with customers.
An ERP system is made up of applications and tools that help all areas of your business communicate with each other more effectively. ERP systems integrate all facets of an enterprise into one comprehensive information system. Employees in planning and scheduling, for example, have access to the same data as the staff in financial management for their specific needs. All data is available in real-time, which enables employees to make faster, more informed business decisions. With ERP systems, all vital business functions—estimating, production, finance, human resources, marketing, sales, purchasing—share a central source of up-to-the-minute information. Enterprise resource planning systems streamline the collection, storage and use of your organization’s data. The right ERP system can help you collect and store data into one centralized place from areas such as:
- Finance & Accounting
- Human Resources
- Customer Relationship Management
- Production Management
- Business Intelligence
- Warehouse Management
- Inventory Management
- Supply Chain Management
- Point-of-Sale (POS)
Primary Benefits of ERP Systems
Why are more businesses of all sizes implementing ERP systems today than ever before? Here are some of the main reasons and benefits why organizations use ERP systems:
- Finance & Accounting
- Provide business leaders with real-time visibility into their operations.
- Provide business leaders and teams with instant access to their global supply chains.
- Enable business leaders to identify challenges, uncover opportunities, and make faster decisions that impact different areas of their businesses.
- Help automate and streamline tedious tasks and redundant processes.
- Give employees the tools and data they need to be successful.
- Provide a single point of truth for organizations.
- Can often be accessed from anywhere (off-site and from mobile devices).
- Help increase productivity among your team.
- Make it easier for teams to collaborate with each other, and with third-party vendors.
- Offer powerful reporting and forecasting tools that you can use to make informed decisions about the future of your business.
- Keep data secure, and help you ensure that your business continues to operate in compliance with global regulatory laws and guidelines.
How To Decide If/When Your Business Needs ERP
Every business is unique and faces different challenges at different times, so the question is, how do you decide if and when investing in Enterprise Resource Planning is right for your business?
If you’re able to check off most of the items on this list, it’s probably safe to start evaluating ERP software providers and working to allocate the resources needed for deployment:
- Your team members are spending too much time on tasks you know could be automated and streamlined.
- You don’t have easy access into the data you need to make informed decisions about your business.
- You work with vendors and third-party applications across the globe.
- You have a lot of different software tools and processes that you’ve adopted and implemented for your business over the years, but they are not connected to each other.
- You don’t know what your inventory levels really look like on a daily basis.
- You’re personally spending too much time searching for information, trying to boost productivity and efficiencies, and integrating new tools that are needed in order to scale. Your teams can’t easily collaborate or share information with each other.
- You can’t access essential business data and information when you’re off-site.
- You’re having trouble keeping up with changes in regulatory compliance.
- You’re finding or addressing problems after it’s too late; in other words, you’re not able to be as proactive as you’d like when it comes to identifying problems that need to be fixed in order to keep your operations running smoothly.
If you can check off at least sixty or seventy percent of the list above, it’s time to start exploring vendors.
In order to justify the investment needed in order to use an ERP system at your business, use the checklist provided above. List the specific challenges you think your organization is having, and talk with your decision-maker about how you think an ERP solution could help.