ERP or Enterprise Resource Planning is growing steadily over more than a decade. It integrates internal and external information in an organization. The functional areas of ERP cover financing or accounting, sales, and services, CRM, etc.
By definition, the ERP integrated system is a single modernized system built around a single or multi-server architecture purchased by the company and maintained in-house.
What is ERP software?
ERP software modules are individual applications or software product packages that can control individual functions using the shared system.
The characteristics of ERP:
ERP is an integrated system operates in a real-time system.
It maintains a common database that is used to support all applications.
ERP maintains a consistent look and fills throughout every module.
Global operations for a multinational business can be possible through ERP
Functional areas of ERP:
ERP is used in finance, human resource, manufacturing, supply chain management, customer relationship management.
Finance: Accounting, cash management, fixed assets, receivables, budgeting
Manufacturing: Engineering, work orders, project life cycle management
Supply chain management: Inventory, purchasing, supply chain planning
Customer Relationship Management (CRM): Sales and Marketing, Call center support
Advantages of ERP:
The advantage of ERP by which businesses operate saves time and expense.
It reduces paperwork by ensuring rapid processing of information
Decisions can be made more quickly and with fewer errors.
Data becomes visible across the organization.
ERP provides sales forecasting thus allowing inventory optimization.
ERP can be useful is order tracking. When a company receives orders for a product, being able to properly track the orders can allow the company to get detailed information on their customers and marketing strategies.
The following advantages can be obtained from ERP systems centralizing business data:
Elimination of multiple system synchronization i.e. consolidation of finance, marketing and sales, human resource, and manufacturing applications
ERP is useful in standard product naming/coding.
ERP helps in real-time information available to management anywhere, anytime to make proper decisions.
Sensitive data can be protected by consolidating multiple security systems into a single structure.
Disadvantages of ERP
Along with the advantages, there are many disadvantages and limitations in Enterprise resource planning (ERP).
The accomplishment of the system is fully dependent on how the workers utilize it. Properly trained workers or employees, and several companies have attempted to save money by reducing the cost of training. But ERP is costlier. Quality cannot be compromised.
Customization is required. ERP should be effectively used by companies. It must be modified to suit the need of the company. This means ERP is expensive.
The integration of independent businesses can create unwanted discrepancies.
Evaluation of ERP is very tedious and challenging as the complexities which are associated with the changes are not easy to implement.
Implementation of ERP provides significant changes to staff work. ERP business solutions are generally comprised of three types of services – consulting, customization and support. The implementation time depends on the size of the business, module numbers, and scope of process change and the readiness of the customer to take over the ownership of the project.