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Enterprise Resource Planning & Why It Should Matter To You

Enterprise Resource Planning

Enterprise Resource Planning & Why It Should Matter To You

Definition of Enterprise Resource Planning (ERP)

ERP refers to “Enterprise Resource Planning” and refers to a specific type of system or software used by businesses to manage and plan every day activities, including manufacturing, supply chain services, financials, and many other processes. Enterprise Resource Planning software can be utilized to automate and streamline individual tasks across the organization or company like accounting and procurement and the management of customer relations, risks compliance and supply chain management.

Individual ERP applications may offer software as a service (SaaS) as well as an entire set of ERP applications is the basis of an ERP system that is utilized to efficiently connect and integrate business processes, allowing the transfer of data between applications, generally using common databases, either on-premise or on-site as well as in cloud.

ERPs integrate every aspect of the enterprise. A ERP software program allows for greater efficiency and better project management which helps to plan, budget and predict accurately on the financial health of the company and operations.

A History of ERP (Enterprise Resource Planning)

“ERP,” or “ERP” was first used in the late 1990s by the Gartner Group, but enterprise resource planning software and systems have been in use in the manufacturing sector for more than 100 years, and are constantly evolving as the industry’s demands change and expand.

ERP History/Timeline:

  • 1913: An engineer by the name of Ford Whitman Harris developed the Economic Order Quantity (EOQ) model, which is a paper-based manufacturing method for scheduling production. Toolmaker Black and Decker adopt their initial Material Requirements Planning (MRP) solution that combines EOQ with the mainframe computer.
  • 1970s to 1980s: The development of computer technology and software concepts were developed to handle various business functions that weren’t related to manufacturing, such as finance, human resource data as well as customer relationship management (CRM).
  • 1983: MRP II was developed and was a feature of “modules” and integrated core manufacturing components. It also integrated manufacturing tasks into a single shared-data system.
  • The 1990s and 2000s were the time when the Gartner Group coined the term “ERP” to differentiate from MRP-only systems. ERP systems grew to include business intelligence and also handle other functions , such as Sales Force Automation (SFA) marketing automation, eCommerce and more.
  • 2000-2005 2005: Cloud-based ERP software solutions will be available in the period when ERP software developers create “Internet Enabled” products, giving an alternative to the traditional on-premise model of client-server.
  • Today: Software-as-a-Service (SaaS) and Anything-as-a-Service (XaaS) offer new delivery models for ERP. Remote access via the internet for cloud ERP solutions offer mobility, security and integration with evolving industries and the latest smart technologies, which includes integration that work with Internet of Things (IoT), Internet of Everything (IoE) as well as social media platforms to offer complete solutions for all industries.

How Does an ERP System Work?

The primary goal for An ERP program is to boost the efficiency in an company by directing and enhancing the way company resources are used. Enhancing and/or reducing the amount of resources required without sacrificing quality or performance is the key to maximizing business growth and profits.

ERP Systems typically provide the entire business operation and usually include:

  1. A system that is integrated
  2. Common database
  3. Real-time operation
  4. Support for all applications/components
  5. Common user interface across application/components
  6. Cloud hosted, on-premise or SaaS deployment

ERP software can be used to gather and compare data across departments , and offer numerous reports that are based on roles or specific preferences of the user. The data gathered helps in the process of analyzing and reporting on data quicker and offers an entire picture of business performance and provides complete details of how the money is being used.

ERP integrates automation and reporting by eliminating the need to manage separate spreadsheets and databases which require manual integration to create reports. The synchronization of data collection and reporting provides invaluable insight into how to reduce costs and simplify processes, giving data needed to make instantaneous business decision-making.

Types of ERP Systems & ERP Software Deployment Options

Enterprise Resource Planning software is classified as an “enterprise application”, which is software developed to meet the needs of the software of an enterprise and enhance the performance of its business. There are numerous ERP software options available today which vary widely based on the dimensions, purpose, and requirements of a business. The types of ERP systems typically relate to deployment options. They are cloud-based ERP (cloud ERP), on-premise ERP, as well as hybrid ERP (some systems are cloud-based and certain on-premise).

Every ERP solution is typically customized to address different aspects of an enterprise, and meet the business needs of an organization and use different strategies for implementation.

Big Business ERP Vs. Small Business ERP

The past was when “big business ERP” was a term used to describe large corporations that frequently used on-premise ERP or on-premise ERP and had plenty of resources that could be devoted to IT as well as other assistance to analyze, modify the, update and deploy their ERP software.

The term “Small Business ERP” or “SME (small and medium-sized enterprise) ERP” is often used to refer to ERP software that includes business management applications that are usually designed to meet the needs for small to mid-sized enterprises.

These terms are not used as often because the primary factor is not the size of the business, but whether that ERP system is able to meet the current and future needs of business regardless of how big the organization.It’s essential that businesses look at and choose ERP systems that can eliminate the need for expensive customizations and adapt to the fast rate of change in business and future technology, and fulfill other needs that have been identified.

Types of ERP Systems: Cloud vs On-Premise vs Hybrid

There are three major kinds of ERP systems that work with different deployment models. The most popular types of ERP systems are Cloud ERP, ERP on premises or hybrid ERP.

The On-Premise ERP software is installed on-site and is maintained in physical offices within an organization, and running on company-owned servers and computers for complete control, support , and ownership of the entire system after it is implemented.

Cloud-based ERP software is a cloud-based solution, also known in the industry as Software as a Service (SaaS) which is a method by which an organization can access and store data from any device that has an internet connection. This is usually by purchasing an annual subscription. Continuous support for updates, training, and flexible modifications are provided by the software vendor.

“Hybrid” ERP software refers to the combination that combines cloud and in-premise ERP systems. The mix of hosting and deployment options differs depending on the service supplier. These models offer ERP users the ability to switch between different delivery models or incorporate advantages not currently available in the existing implementation.

Different ERP vendors support different deployment model options. Combinations of models, commonly called “hybrid” deployment may offer the possibility of hosting and deployment services. The hybrid model can give users a scalable ERP solution that can incorporate benefits that would not be available in the current deployment.

What Industries Can Benefit From ERP?

ERP software is a great tool to use in all industries to help businesses improve its efficiency. It’s a reliable communications tool that manages the flow of information between external and internal departments, helps with the daily tasks of managing projects, ensures compliance with guidelines, and manages the day-to-day complications that arise when managing the business.

Since the underlying principles of ERP software are related to the manufacturing industry, you can find a variety of robust manufacturing ERP systems that can be used to support various industries. ERP software is varied and form a vital part of many industries, such as but not only:

  • Manufacturing
  • Industrial Machinery and Components
  • Construction and Home Improvement
  • Electronics and Technology
  • Automotive
  • Aerospace and Defense
  • Healthcare, Pharmaceutical and Life Sciences
  • Agribusiness, Farming and Agriculture
  • Food and Beverage
  • Healthcare and Hospitality
  • Clothing, Consumer Goods and Retail

As time has passed, ERP systems have grown to incorporate support for various different applications as well as “ERP modules” that support the day-to-day business functions. In the majority of ERP platforms, those commonly used functional areas are organized into ERP modules. These include but are not restricted to:

  • Financial Accounting
  • Management Accounting
  • Human Resources
  • Manufacturing
  • Order Processing
  • Supply Chain Management
  • Project Management
  • Customer Relationship Management (CRM)
  • Data Services

When Does Your Business Need ERP?

Business development typically concentrates on goals that are in line with a company’s immediate and longer-term growth, as in analyzing possible business issues. Analyzing regularly processes and systems helps to determine the times when businesses may require to incorporate the ERP software.

  • An ERP solution must be considered when the existing processes and systems for business include:
  • No longer function or function inefficiently (throttling/bottlenecking)
  • Don’t support the expansion of the company.
  • Insufficient security measures in place to limit the risk

Recognizing broken processes is crucial to grow and identify opportunities for improvement. Here are some examples of ways to suggest that a procedure is no anymore assisting in the growth of a company:

  • Use/Relying heavily on separate databases/spreadsheets/programs that require manual processes for data management and fall out of sync regularly
  • Data and analytics can be difficult to access and/or outdated
  • Daily processes can be challenging or take a lot of time like the use of paper for accounting, financial reports and more.
  • Customer experience and sales suffer because of inaccurate or incorrect data. This can create a negative reputation for reliability and service.
  • Inefficient/complex/complicated IT processes. Systems today are not scalable enough and fragmented systems that are legacy solutions.
  • The time spent in IT is used for patching and fixing old systems in order to keep up with the growth
  • Doesn’t support the latest and advanced technologies such as IoT or artificial intelligence etc.
  • Once the process that is broken is identified companies can then move on to the next step to address these issues and help boost business growth.

What is the Business Value of ERP?

ERP systems aid businesses of all sizes face difficulties, from small companies to large corporations. The old business methods may not be able to keep pace with demand growth and may require better business tools, such as ERP to manage the business’s processes and resources.

ERP software provides a myriad of advantages to the growth and health of an enterprise.

ERP Features & Benefits

  • Cost savings and enhanced ROI efficiency. More efficiency and increased productivity as due to the automation and integration that ERP software can provide.
  • Improve your business insights. Make better decisions by combining a single data source and in-real-time data
  • Manage Regulatory Compliance. Monitor and manage compliance with regulations, and set up alerts to alert you of non-compliance
  • Reduce risk and mitigate risks. Automatize core business processes as well as manual tasks and reporting. Reduce human errors and free up time and time-consuming resources.
  • Increase collaboration. Reduce communication barriers to ensure efficient coordination and collaboration to increase efficiency in your job.
  • Enhance supply chain and distribution reliability of distribution networks. Make use of demand-driven MRP to predict demand and supply, and plan for fluctuations in orders and supply chain
  • Scalability. The same infrastructure that is designed to facilitate operations will allow you to expand with your business’s growth
  • Enhance the management of partners and customers. Customer relationship management, service and supplier and partner management using the benefit of seamless sharing information

How to Select an ERP System

The process of selecting and implementing an ERP system could be a difficult task, with numerous software options to pick from. When choosing an ERP software, it’s essential that the program is compatible with the requirements and objectives of your business while providing the necessary support to set up your ERP system.

Here’s a checklist to go through when you are beginning to compare ERP Systems to help narrow down your choices.

Checklist for Selecting an ERP System

Does the ERP vendor or software being evaluated:

  • Do you meet your system’s requirements?
  • Do you align with the company’s objectives?
  • Integrate/compatibility with existing systems?
  • Are you a member of the Partner Network/Availability with local assistance?
  • Are there options for training or support?
  • Do you have references or recommendations from your customers?
  • Continuously improve and improve to make use of new technologies and meet the changing requirements?
  • After you have decided that the ERP alternatives are narrowed to the solutions which are compatible with your current system and objectives, it may be beneficial to discuss the advantages and features of the system with those who are the key decision makers in the company. The knowledge and understanding of these decision makers will increase the adoption and help with an ERP implementation throughout the company.

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