ERP (Enterprise Resource Planning) is a way to integrate the data and processes of an organization into one single system, using sub-systems that include hardware, software and a unified database in order to achieve integration.
The term ERP used to refer about how large organizations of the industrial type planned to use organizational wide resources. Today ERP is used in almost any type of organization it doesn’t matter whether its large, small or what industry it falls in. How do we know what software system can be considered ERP? First, it must provide an organization with functionality for at least two systems or more.
However, many of today’s ERP systems can cover more than just two functions and integrate them into one unified Data Base. Human Resources, Supply Chain Management, Customer Relations Management, Financial, Manufacturing functions and Warehouse Management functions can be found on modern companies under one umbrella – the ERP system.
The Key to ERP is integration. Its main goal is to integrate data and processes from all areas of the organization and unify it, to provide ease of access and an efficient work flow. ERP Systems usually accomplish this through one single database that employs multiple software modules.
The ideal configuration is then to have one ERP system for an entire organization, but organizations that are very large have been known to create an ERP system and then add external interfaces for other stand alone systems considered more powerful or able to fulfill the organization’s needs in a better way.
The Ideal ERP System
The ideal ERP system would have a single database for all areas of the company and contain all of the data for various software modules, such as:
Workflow management, quality control, bills of material, manufacturing process, engineering, etc.
Accounts (payable & receivable), general ledger and cash management, fixed assets.
Training, payroll, time and attendance, benefits.
Purchasing, Inventory, supplier scheduling, claim processing, order entry, supply chain planning.
Activity management, time and expense, billing, costing.
Call Center Support, service, commissions, customer contact, sales & marketing.
ERP and Productivity
Before ERP systems appeared, in most organizations each department had their own operating system, data and database. The problem was that many of those systems would not be able to communicate with each other, so for example the financial of a company would have been on a separate computer system than the Human Resources information, thus complicating the processing of certain functions.
When a company sets up an ERP system, all aspects of the organization can work in harmony. As a result the organization enjoys increased productivity and may use less types of software.
Implementation of an ERP System
Implementing an ERP system is not an easy task. It takes considerable planning and consulting. The timeline for an ERP implementation may range between 3 months and more than 1 year.
ERP systems are extraordinarily wide in scope and can be extremely complex for many organizations. For instance, Changes on staff and work practices might be required. It is advisable (and more cost effective) to use specially trained ERP implementation consultants and not only the “in-house” IT staff.
Ownership of the project of the most important traits that an organization should have when implementing an ERP system. So many changes take place and it has such an effect on almost every individual in the organization, that it is important to make sure everyone is on board and will help make the new ERP system a success.
Organizations may implement their customized ERP system using ERP vendors or consulting companies. 3 types of professional services are needed when implementing an ERP system: Consulting, Customization and Support.
Consulting: responsible for the initial stages of ERP implementation, training, workflow, etc.
Customization: extend the use of the new ERP system or change its use creating customized interfaces and/or underlying application code. Some things may still need to be built or customized for an organization’s specific needs. Support: Technical support and maintenance of ERP systems.
Advantages of ERP Systems
There are many advantages of implementing an EPR system:
It’s totally integrated.
It has the ability to streamline different processes and workflows.
It is easy to share data across various departments in an organization.
It improves efficiency and productivity levels.
It provides better tracking and forecasting.
Its costs are lower.
It provides improved customer service.
Disadvantages of ERP Systems
ERP’s advantages outweigh disadvantages but here are some of the most common obstacles experienced by organizations:
Lack of skills and the inexperience of the workforce may delay its adaptation to the new system.
Customization can be limited.
The organization might need to re engineer some business processes.
Avion Technology, Inc.
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