What Are ERP Systems?
Thank You Wikipedia for This Definition
Enterprise Resource Planning (ERP) is a category of business-management software—typically a suite of integrated applications—that an organization can use to collect, store, manage and interpret data from many business activities including:
· Product Planning, Cost
· Manufacturing or Service Delivery
· Marketing and Sales
· Inventory Management
· Shipping and Payment
ERP provides an integrated view of core business processes, often in real-time, using common databases maintained by a database management system. ERP systems track business resources—cash, raw materials, production capacity—and the status of business commitments: orders, purchase orders, and payroll. The applications that make up the system share data across various departments that provide the data (manufacturing, purchasing, sales, accounting, etc.). ERP facilitates information flow between all business functions, and manages connections to outside stakeholders.
Enterprise system software is a multibillion-dollar industry that produces components that support a variety of business functions. IT investments have become the largest category of capital expenditure in United States-based businesses over the past decade. Though early ERP systems focused on large enterprises, smaller enterprises increasingly use ERP systems.
The ERP system is considered a vital organizational tool because it integrates varied organizational systems and facilitates error-free transactions and production. However, developing an ERP system differs from traditional system development. ERP systems run on a variety of computer hardware and network configurations typically using a database as an information repository.
OK, isn’t that perfectly clear now? Maybe not, so a simple explanation is to say that any organization wanting to run efficiently and cost-effectively needs ERP. If you work for an organization that sells products and/or services that customers want - ERP is used. If you go to a store and buy products/services or purchase via the Internet, have items delivered or return damaged goods, an ERP system makes this happen.
ERP is basically software that helps organizations manage their financials, supply chain, manufacturing, operations, reporting and human resources. Most ERP systems can run with on-premise servers or in the cloud to improve and automate the core parts of business:
· Financial Management - Control over assets, cash flow and accounting
· Supply Chain (SCM) and Operations Management - Streamline purchasing, manufacturing, inventory and sales order processing
· Customer Relationship Management (CRM) - Improve customer service and increase sales opportunities
· Project Management - Deliver work on time and on budget with better billing and project monitoring
· Human Capital Management (HCM) - Attract and retain good employees with tools to help hire, manage and pay personnel
· Business Intelligence - Easy-to-use reporting, analysis and business intelligence tools
These systems start out by helping organizations keep their books organized. ERP grows to support internal operations and then electronically connects with customers, suppliers and other business partners in the design, planning, production and distribution of goods and services. Business transactions can be totally digital with virtually no paper or manual steps involved. This is Efficient, Cost-Effective and ERP!
Depending on an organization's size and needs, there are a number of ERP software solutions to choose from:
Tier I – Large Enterprise ERP
Tier II – Mid-Market ERP
Tier III – Small Business ERP
ERP is evolving quickly to include Mobile, Cloud and Social Media features. Businesses now need real-time access with their ERP no matter where their people work. The move from on-premise to cloud solutions has sped up but isn’t perfect yet. The use of social media by business is important. However, there are questions about the gains to be made by integrating social media with ERP solutions.
There are hundreds of ERP solutions today, some generic and others for specific industries. Some are free/open-source but most aren’t. Notable solution providers are SAP, Oracle, Microsoft, Infor, IBM, NetSuite, Sage, Epicor, Exact and many, many more. The large number of solutions to choose from often makes the selection process complex and time-consuming. It is always best to know what you want ERP to do for your organization before going shopping.
Many more details and examples are coming to this site soon. Here are a few upcoming Blog post topics:
· Who Needs an ERP System?
· Which ERP Solution is Best – Tier I, II or III
· Best Practices for Choosing an ERP System
· ERP Implementation and Gotchas
· Failed ERP Project Lessons
· Technology Trends for Future ERP Systems
· ERP Cloud Solutions vs. On-Premise Servers
· Security and Privacy