The acronym ERP stands for Enterprise Resource Planning; ERP Software encompasses a number of systems and software programs that help with resource planning on an enterprise level.
Enterprise Resource Management (ERP) Software refers to applications that can streamline or automate accounting, production, sales, and other key business features. ERP systems work in an integrated software suite by consolidating and sorting business data in order to automate other business functions.
A tier 2, also known as a two-tiered ERP system combines two systems to better fulfill the needs of larger organizations that may be situated across more than one location or subsidiary. This two-pronged approach to enterprise resource planning produces superior data management and consolidates data from across the entirety of the enterprise into a single source.
Most ERP software systems use a variety of features ranging from human resource management to data analysis. Other common features include integration, automation, reporting, customer relationship management, accounting, and tracking and visibility.
ERP software is designed to increase visibility and efficacy for all sizes of businesses. The central feature of any ERP system is thus a synchronized database that is shared across different business units and used for multiple key functions.
Enterprise resource management software has many useful applications that can help to improve workflows and existing systems. Some common applications include program management, functional consulting, technical consulting, implementation, optimization, migration, upgrading, interface programming, and customizations.
With so many functions and applications, ERP software can support all sorts of business processes in various departments through one centralized application. ERP software helps to supply cross-functional information reports; all of this consolidated business data provides the context necessary to make important and informed decisions.
The manufacturing industry in particular has been reaping the many benefits of ERP solutions however, the advantages of centralization and organization can be applied to companies from other industries. Human resources, finances, relationship management, and supply chain management are industries that may reap significant benefits from enterprise resource planning software.
ERP is used by a number of different business sectors but is most commonly used in manufacturing and supply chain. Companies working in this industry use ERP to keep track of the many moving parts of manufacturing, shipping, and distribution. Alternate industries that use ERP software include healthcare, nonprofits, construction, and hospitality. More industries than ever before are embracing ERP as more companies realize the benefits of using these systems.
ERP, although typically marketed as a single solution, can be broken down into four different types of enterprise resource planning. These categorizations help to understand the general landscape of the ERP market and specify different utilizations. The four categories are: Box ERPs, Industry Specific ERPs, Intermediate and Flexible ERPs, and Large Scale ERPs.
While ERP can help solve many problems within a business, there are challenges that come with this type of software. It is important to be cognizant of the maintenance costs and work that comes with ERP. Integrated processes need to be planned and thought through prior to making changes, and some systems provide inadequate flexibility to make said changes. Also, key features need to be properly understood and put into place.
ERP implementation can be complex and challenging, and some of the typical issues that arise during the process include:
ERP challenges can be overcome by creating and clearly defining ERP implementation goals with special attention paid to activities and processes such as:
The risks of an ERP implementation can include:
ERP software is rooted in the manufacturing industry, and these systems have been used to support manufacturers and supply chains for decades. However, many companies across industries such as retail, finance, farming, healthcare, and others are beginning to leverage ERP systems more regularly as a strategic way to improve data integrity, reporting, and information transfers.
When buying an ERP, follow these steps to ensure you choose and implement the best options for your business:
Small businesses can use ERP software to build strong processes, consolidate and automate finance processes, and streamline communication between departments as well as customer or clients. Cloud ERP systems are much more affordable than traditional on-premise ERPs, which means that companies can make the investment in these tools much earlier than in the past.
ERP implementation can typically take anywhere form 6 months to 1 year, depending on the size of a company and the complexity of migrating data and processes into a centralized ERP ERP.
Below are some of the most important things to look for in a new ERP system:
The biggest trend in ERP software is cloud deployment. As more companies shift to remote work and need tools to support mobile business and off-site employees and contractors, cloud-based ERP systems are becoming the more common option for mid-sized companies and enterprises alike.
Some other ERP software trends include: