What Is ERP?

What is ERP?

ERP – Enterprise Resource Planning is a piece of software, or more accurately a collection of different applications, each satisfying a particular business demand, that synchronize together in order to provide an integrated management of business processes. Mainly focused on the back office functions that do not affect the general public directly, ERP has developed from a manufacturing resource to a core enterprise system, automating processes, by using a database as an information bank.  Although the specifics vary from one organization to another, most will include:

·        Product Planning
·         Manufacturing
·         Marketing & Sales
·         Inventory
·         Purchasing

By 'integrated' it means that ERP will “pull” together the information from all these departments and provide an accurate picture for the Accounting department, for example. ERP is also capable of analysis and reporting which feeds information in at management level for decision-making purposes.

Configuration & Customization

Successful ERP implementation for any business means understanding what specific processes the business needs and, once the software is out of the box, setting up these processes.  The software is designed to support a number of configurations and any performance mishaps will be assigned to the software provider. Customization on the other hand is a more complex process which personalizes the software further than configuration and therefore it will fall under the customer’s responsibility. Customizing ERP can be done in different ways, some more complex than others such as:

·         Re-writing part of the software – complex, invasive and harder to maintain. May  resist upgrades and require subsequent re-writing or testing.

·         Creating an entire new module to work within the existent system

·         Outsourcing third-party software

Advantages
·         Transparency for management and collaboration between departments
·         Automated and synchronized work flow
·         Central analysis and reporting system
·         Central database storage

Disadvantages
·         Cost and resources deployed for implementation, configuration and personalization
·         Cost and time saving will not be noticeable straight away
·         Data migration and employee transference from existing software to ERP
·         High (ERP software) switching costs means vendor control over upgrade / maintenance costs