ERP, or enterprise resource planning, is modular software designed to integrate the most functions of an organization’s business processes into a unified system.
An ERP system consists of software components, usually called modules that specialize in an important business function, like finance and accounting, HR, production, materials management and customer relationship management (CRM). Organizations only use the modules they have to run their particular business.
How ERP works
There are two characteristics that distinguish ERP software from collections of more narrowly focused business software.
The first is that the integration between modules that permits them and their users to interact. for instance , a sales order created within the CRM module are going to be shared with the assembly module, therefore the manufacturing department will have the knowledge about what product to form . When the merchandise is shipped, data within the inventory management module changes, and when the customer pays, the accounting module records the revenue.
The other distinguishing feature of ERP system is a central database during which transactions are recorded by modules, access that data and share it. Having what the ERP industry calls a “single source of truth” saves users from having to enter information quite once. This successively improves data accuracy, facilitates reporting and enables collaboration between departments.
There are also different operational kinds of ERP software:
- On-premise ERP
These systems are designed for businesses of all sizes though could even be more appropriate for small and medium companies.
- Open Source ERP
Like any open source software, this solution allows you to examine, modify, and enhance your ERP ASCII document. Using an open source ERP allows you to customize your application to raised suit your workplace.
- Cloud-based ERP
Any ERP Software-as-a-Service (SaaS) which is out there over a Cloud-hosting service rather than on-premise deployment may be a cloud based system. This feature allows you to access real-time data as long as you’ve Internet access and is suitable for large enterprises.
- Hybrid ERP
Enterprise resource planning systems that blend on-premise and Cloud-based deployment are often mentioned as hybrid ERP.
In general, ERP uses a centralized database for various business processes to reduce manual labour and to simplify existing business workflows. ERP systems typically contain dashboards where users can inspect real-time data collected from all across the business to measure productivity and profitability.
Key features of ERP systems
Four ERP concepts differentiate the software from most other sorts of business applications:
- comprehensive integrated business processes
- central database
- consistent look and feel across applications
Benefits of ERP systems
There are a lot of benefits from ERP system and most of them come from information sharing and standardization. They will also enable better insights from the info generated in daily transactions or coming into ERP systems from newer technologies, like IoT.
- In addition, ERP software does the following:
- boosts efficiencies by automating data collection;
- enables growth by managing increasingly complex business processes;
- helps lower risk by enabling better regulatory compliance;
- Improves supply chain management.
Businesses typically address an ERP system once they outgrow spreadsheets and siloed applications and wish the unifying capabilities of an ERP system to enable growth.