What is an ERP system?
ERP stands for Enterprise Resource Planning and is the term used to describe systems designed to integrate a range of business information. A system is implemented that stores and records this data in a standardized way, providing quick and easy access for the relevant people. Employees can then use this access to identify efficiency improvements and opportunities for reducing overheads, thereby maximizing profitability. Online Enterprise Resource Planning (ERP) refers to the Internet-based systems that support such an implementation.
Features and functions
In simplest terms an ERP system is introduced through the implementation of software that manages a range of business information, such as accounting data, customer interaction details, HR, procurement and sales data.
The successful implementation of an ERP system relies on a significantly larger and more complex range of factors. The main ones being the cooperation of the people who will use and benefit from the system, their skills and expectations, as well as the organization’s operations, priorities, vision and values.
Generic ERP systems therefore are rarely the answer and ultimately the detail of the features and functions of the system will depend very heavily on the specific requirements of the business in question.
There are numerous potential benefits to implementing an online ERP system. Consider the following:
- Process Improvement. As part of any ERP system implementation a company will typically carry out a review of its processes and procedures to ensure the system is fit for purpose. Introducing ERP invariably leads to process improvement by both identifying areas that can be streamlined and then enabling the activity required to carry this out.
- Simplicity. The simplicity of having a single system to cover a wide range of processes and operations should not be underestimated. Instead of trying to force diverse and sometimes incompatible systems to work together, everything can be stored and accessed in a single, consistent way.
- Insight. A good ERP system will provide all the right people with quicker and easier access to their critical information. As a result it will provide a clear visibility of performance metrics that can be used to inform decision making at every level, including fundamental organizational policy.
- Security. In the modern world, data is one of the biggest assets of any organization and must therefore be properly protected to maintain a competitive advantage and reduce risks. Information security is a fundamental part of the philosophy of any good ERP system.
- Adaptability. Companies need to change in order to grow and continue to be relevant in increasingly competitive industries. The right ERP system will feature the capacity to grow along with the business it serves so it can continue to meet the changing requirements. Managed properly, it will actually be a facilitator of the change rather than a hindrance.
It is perhaps no surprise, given all of these reasons and the increasingly data-driven nature of the business world, that more and more organizations are implementing online ERP systems. More so than even before, companies recognize the benefits that such a system can bring and consider them a critical ingredient for their ongoing success and future growth.
Image credit: Shing Hin Yeung (Own work) – http://creativecommons.org/licenses/by-sa/3.0 via http://commons.wikimedia.org/wiki/File%3AERP_Modules.png