Enterprise resource planning or ERP for short, is the process in which a business or company integrates together all the essential part of the business. In an ERP System, areas including the planning of projects, purchasing of resources, inventory, sales, marketing products, financing, and human resources are integrated together making things more convenient and efficient.
The process of enterprise resource planning is most often utilized in software. With the growing popularity of ERP, the applications for large software systems have also grown in development allowing companies to easier implement enterprise resource planning into the into their business.
For a better understanding of what enterprise resource planning does in a company, think of it like the glue that a company uses to bind together the many computer systems that it uses. In a typical sense, departments in the company would have their own system which is optimized for the tasks that that division undertakes. By utilizing ERP, those departments would still be able to maintain their own system but it will be much easier to communication information across the different departments and through the entire company.
Our bodies have a central nervous system which receives, manages, and sends signal throughout our body. The ERP Software functions very similarly for a company. The software itself collects data from the different departments of the company and allows this information to be readily available for other departments so that it can be used for the betterment of the company. The data in the ERP software is added in real time by whoever is authorized to use it having a valid password allowing them to access the system whenever.
With the ERP, a company can achieve greater synergy within itself being greater than the sum of its individual parts or in this case the departments. A company that utilizes ERP becomes more self-aware having data about the company’s finance, production, human resources, distribution, etc. linked together.
The technology that is being utilized by the different part of the business is linked together through the ERP system which removing technology which is duplicated and incompatible allowing the company to save on costs. The technology being linked together into a single system include the stock-control systems, customer database, order-monitoring system, and accounts payable.
Without the proper implementation of an ERP system, the company could suffer from cost overruns. It is important to understand that implementing an ERP system will not always remove the inefficiencies that a business suffers from. Companies have to be able to evaluate the way that they are organized. Failure to do so will result in them having technology that is incompatible.
Should a company decide to integrate through the use of an ERP system, they have to be willing to let go of old work processes that are not compatible with the ERP software. If not, the objectives of the ERP will just go unachieved. An ERP System is not a miracle fixer for a company. The company themselves will have to learn to adjust in order for the ERP system to be installed and further improve things for the company.