A core business process such as finances, human resources, supply chain management, and inventory management can be managed and integrated into an ERP system.
The ERP system enables the flow of information between business processes and ties together many business processes.
ERP systems ensure data integrity and eliminate duplicate data entry by collecting multiple sources’ transactions.
What is Enterprise Resource Planning (ERP)?
Enterprise resource planning (ERP) functions as a tool for integrating the most important aspects of a company’s business.
It is a powerful application that integrates all processes necessary to run a company into a single system, the key to resource planning.
Besides planning, purchasing, inventory, sales, marketing, finance, and human resources, ERP systems can also integrate various functions.
How does it work?
By managing and improving the company’s resource utilization, ERP systems serve mainly to enhance the efficiency of an organization.
Business growth and profitability are effectively improved when resources are reduced and improved without sacrificing quality and performance.
The basic features of ERP systems include:
- Integrating multiple systems
- One interface for all applications/components
- Database for common use
- Application/component support
- Using real-time data
- SaaS, on-premises, hosted in the cloud
A number of different reports can be generated based on roles and user preferences in ERP software, which collects and compares metrics across departments.
The collected data makes finding and reporting data faster and gives a clear view of how resources are allocated, which results in a better understanding of business performance.
What are the benefits of Enterprise Resource Planning (ERP)?
Various reasons exist for businesses to use enterprise resource planning (ERP), such as increasing revenue, reducing costs, and improving operations.
Although companies can seek and realize different benefits, there are a few that are worth mentioning.
When business processes are integrated and automated, redundancies are eliminated, accuracy increases, and productivity increases. It is now possible to synchronize work between departments with interconnected processes to achieve better results.
Additionally, ERP software offers the following advantages:
- Automates data collection to boost efficiency.
- Business processes are becoming increasingly complex, enabling growth.
- Streamlines processes to save money.
- By having better data, you can report and plan better.
- Ensures better compliance, lowering the risk.
- Shares data and integrates information to facilitate collaboration.
- Enhances customer service.
What are the types of ERP software?
A company’s ERP product depends largely on its size, the type of computing infrastructure used, and whether it has industry-specific features. Here are three types of ERP software.
1. Cloud ERP
The cloud ERP software runs on a cloud platform provided by the service provider. The service provider is responsible for system maintenance.
Cloud computing is also available as a public or private service, becoming more popular due to its low initial costs.
2. Hybrid ERP
The hybrid cloud ERP model is also available to companies who want both to meet their business needs.
Certain applications and data in your ERP system will be in the cloud while others will be on-premise. This is also known as two-tier ERP.
3. On-Premise ERP
In this model, you control everything when it comes to deploying software. You can choose the location for your ERP software to be installed. It is your staff’s responsibility to install and maintain the hardware and software.
Modernizing and upgrading on-premises ERP systems to the cloud has become increasingly common. A thoughtful evaluation of ERP software and deployment options is required as well as careful planning for your ERP upgrade.
The Bottom Line
The objective of enterprise resource planning (ERP) is to manage and integrate all business processes in one system.
Planned and allocated resources are better when companies have a better line of sight. With no ERP, companies often operate as silos, where each department operates independent systems.
If you enjoy reading about the latest software solutions and better ways to improve daily management with your business, take a moment to read through our recommended guide on Freshbooks vs Quickbooks. The more time you spend analyzing the different solutions out there, the more likely you are to find one that fits best