Enterprise Resource Planning (ERP) is an organisational wide computer software system deployed to manage and coordinate all the resources, information, and functions of a business from shared user data nodes, these nodes being LAN or WAN based.
The ultimate requirement of an ERP system is to centralise an enterprises core software and processing functions, regardless of which business sector the enterprise operates in. ERP systems are deployed in all business sectors examples of which; but not limited to; include manufacturing, non-profit organisations, governments and health authorities.
As a central resource management tool, and to be classed as an ERP system, the operations of at least 2 ‘modules’ must be brought together under one scope, typically a single or interlinked relational database. For example, a system that provides module resources of Accounts Receivable, Accounts Payable and Payroll could be classified as an ERP system. However, it is generally expected and found that a ‘true’ ERP system will incorporate a mixture of these along with such modules as Manufacturing, Purchasing, Sales, Warehouse Stock Control (Inventory), along with elements of CRM & EPOS (Electronic Point of Sale).
All these ‘modules’ can be separate software entities from varying vendors but the data is written back and accessed from a single combined data source (typically a relational database) . The data source itself can be split between different disk locations or servers to help with integrity and disaster recovery but essentially it is one source from which the information can be pooled & analyzed from by the outlying software packages that rely upon it. The fact it is centralised increases fingertip accessibility and allows for fast data analysis by key decision makers within the enterprise who may be required to make very quick and accurate decisions.
Due to the complexities of collating & managing data from varying data vendor sources there are vendors who have developed ‘ERP Suites’ which incorporate many, if not all the modules that an enterprise could envisage using, into one software package. Typically these modules will be ‘bolted-on’ meaning that they are installed but only enabled once the enterprise has a requirement for them, at which time they ‘bolt it on’.
This methodology allows the enterprise to be very cost effective with its IT resource since they are not paying for modules they are not using. Eg, an enterprise that sub-contracts its payroll would not necessarily require to purchase the payroll module element of its chosen ERP solution whilst similarly a company which holds no inventory may not require the warehouse inventory module element. Therefore, an enterprise can grow (or shrink) it’s ERP solution at its own pace and in line with its own expansion needs, typically on a per annul basis with the vendor.
ERP helps in smooth functioning of various integrated information systems of the company. These include manufacturing, selling & distribution, payable, inventory, accounts, human resources, order status, etc. Also, it performs essential business activities and increases customer service satisfaction.
It allows smooth flow of information in all departments so that anyone can access it easily. Improving collaboration, ERP bridges the gap between business partners. Thus, you can use enterprise resource planning for better project management. It is an open system architecture through which latest technologies can be automatically introduced like Electronic Fund Transfer, Internet Intranet, Video Conferencing, etc. Boosting and refining business processes, ERP helps in better implementation of resources.
aadmin is a contributor at ERPfm. We are committed to providing well-researched, accurate, and valuable content to our readers.
