ERP is the abbreviation for Enterprise Resource Planning which is an integration of the core business processes in an organization with the aid of a process management software. The core business processes that can be integrated include marketing, sales, shipping, payments, manufacturing and service delivery.
An integrated ERP system can therefore be defined as a set of business management software used in collecting, storing, managing and interpreting data from the organization’s many business activities.Before an integrated erp system came in to place, most organizations focused on automating the back office functionalities and forgot about the public. With integration, the ERP now has functions such as customer relationship management, supplier relationship management, e-commerce, e-finance e-telecom and e-government in one place.
An integrated ERP system comes with the best practices guaranteeing your organization effectiveness in the performance of its business processes.
Challenges of having non integrated systems
Most fast growing organizations become easily entangled in a complex scenario of having too many applications installed at different locations within the organization. For instance, the accounting software can be installed first for book keeping purposes. This may then be followed by inventory management system and order management system. As the organization opens new branches, the need for integration of processes comes in and such applications like e-commerce and financial consolidation comes in. The list may continue growing on a daily basis and this brings with it the following challenges
a) Wasted productivity – when your employees are engaged in disjointed and inefficient processes, then productivity is affected. A number of important processes such as order processing and expense approvals will become slower and prone to errors.
b) Lacking real time visibility – with unintegrated applications, your organization has so many overlapping databases. This means you can not be able to query your business performance in timely way. This may affect the decision making processes within the organization.
c) Increased costs – each of these applications requires updating once in a while. Your organization will therefore keep on incurring costs on updating individual applications and hence increasing the operational costs of maintaining these disjointed processes.Importance of an integrated ERP system.
In order to maintain the growth trajectory of your organization, there is need to integrate your business processes. This is very important in that it saves costs and improves your productivity. Some of the benefits of having an integrated ERP system are
a) Organizational efficiency – most day to day operations in an organization including order management, expense approvals, invoicing and financial consolidation are automated within the integrated system hence improving the productivity of your staff. Research has shown that integrated ERP system improves financial processing by up to 50 percent, sales productivity by up to 12.5 percent, order processing by up to 66 percent and overall organizational efficiency by up to 50 percent.
b) Improved visibility – accessing your organizations information in real time leads to improved decision making processes. Your staff will be better informed and can make fast and accurate decisions based on data.
c) Cost saving – your IT team no longer have to procure and maintain several systems as all the functions can be done through the integrated ERP system. This in itself saves the organization costs and gives the IT team an opportunity to improve the business processes.
d) Accelerates growth – with an integrated erp system, your organization can expand to new locations without worrying about getting new systems in place. All the processes will be unified hence increasing visibility yet retaining the same level of efficiency.
An integrated ERP system is playing a great role in assisting organizations overcome the challenges of disjointed business processes. This has in turn improved productivity and management of processes within these organizations. Generally this integration is transforming the way businesses are conducted by minimizing the operational costs and improving profitability.