Any business enterprise consists of number of business functions such as marketing, sales, manufacturing, finance, inventory management, human resources etc. All these business functions need to be managed well in order to run a business enterprise profitably. These business functions cannot be managed in isolation; they need to be managed in an integrated way.
With size of the business enterprise increasing, it becomes more important to automate the management of these business processes by using software systems. Traditionally each of these functions used to have their own dedicated management software system. Each software module will then require complex interfaces with other modules to function. This created immense challenges in maintaining these systems individually and also did not allow the enterprise to truly get a seamless view of all the business information in an integrated and unified manner.
In order to address some of these shortcomings, Enterprise Resource Planning (ERP) software systems came into existence. Project Management Professional PMP Course will aid you in understanding the ERP system.
Enterprise resource planning (ERP) is the integrated management of core business processes, often in real-time and enabled by software and technology.
ERP is usually referred to as a category of business-management software — typically a suite of integrated applications for each core business function—that an organization can use to collect, store, manage, and interpret data from these many business activities in real time and use the data for managing the business functions and also for decision making
While the standalone systems will have their individual databases for storing data, ERP will have a common central database from which the various software modules will access information. Having a central common database, easily allows one software module to access the required business information from modules easily. This means that companies using ERP are largely saved from having to make double entries to update information because the system shares the data, in turn enabling greater accuracy and collaboration between the organization's departments.
There are many ERP systems which are available in the market. ERP products which are readily available have built in business processes by taking into consideration global best practices. This helps organizations to get access to best practices for each business functions. ERP also allows specific customization of business processes on a need basis.
There are many matured ERP software systems available in the industry. Some of the leading ERP systems are being offered from SAP, Oracle, PeopleSoft, JD Edwards and many more. Some of the business modules offered by these ERP systems include Finance, Human Resource, Inventory, Sales, CRM, Project Management, Manufacturing, Decision Support System etc. An organization can choose the appropriate modules they need based on their business requirements.
ERP solution implementation has been a very expensive affair in general demanding huge investments of time and money. Traditionally ERP systems have been implemented as dedicated monolithic systems for individual organizations. But with advent of cloud technology, ERP solutions are also available on cloud as Platform-as-a-Service, Software-as-a-Service from these leading vendors. This has made ERP solutions affordable now.
The most fundamental advantage of ERP is that the integration of business processes saves time and expense. Management can make decisions faster and with fewer errors. Data becomes visible across the organization. Some of the business tasks become more efficient as below:
ERP systems centralize business data, which:
ERP comes with its fair share of challenges as well. Below is a list of some of the challenges:
ERP surely brings lot of benefits to an organization. Below are some of the benefits an organization can expect to harness from an ERP system implementation:
ERP is a need of modern businesses to run them smoothly and profitably. There are different types of ERP solutions available with different capabilities (Small, medium and large business) and with different pricing models. An organization can choose the right ERP system and implement.
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