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Enterprise resource planning (ERP), sometimes called enterprise systems, is an integrated platform used by organizations to plan, track, and control the flow of materials, information, money, and people within an organization. ERP helps companies automate many of the administrative tasks associated with running a business. These include managing finances, tracking production schedules, and automating accounting functions.
An enterprise resource planning software integrates multiple areas of a company’s operations into one central database. This allows employees to access data across departments and make better decisions about how to allocate resources. For example, an ERP system might allow managers to view real-time data on inventory levels and customer demand, and then adjust production accordingly.
The term ERP originally referred to manufacturing management systems, however, it now encompasses much broader uses such as financial management, supply chain management, project management, and human capital management.
An Enterprise resource planning system is used by businesses to manage their resources efficiently from one single source of truth, as well as automate core functions such as accounting, inventory management, human resources, customer relationship management, supply chain management, manufacturing, and distribution. It offers a wide range of benefits for organizations such as improving productivity, eliminating manual processes, improving quality control, enhancing internal communication, and reducing costs. In addition, it allows companies to access data from multiple sources and perform analysis to make better decisions.
The benefits of ERP vary based on the industry, size, and business functions of the organization. For example, small businesses often use this type of business management software to keep track of inventory, while larger ones tend to use it to coordinate sales and distribution channels. In addition to managing finances, ERP helps companies plan projects, monitor business performance, and forecast demand.
Even while ERPs offer several advantages, their adoption can often be challenging.
In many cases, ERP implementations can end up being too big to handle. This leads to project fragmentation, where different teams work on separate parts of the same ERP solution. Also, some companies can be reluctant to abandon old working processes, which can result in cost overruns. In addition, the complexity of the overall project can make it difficult to keep track of changes, leading to potential problems during deployment. Finally, ERP systems don't always eliminate inefficiencies within a business or improve things across the board.
The best way to avoid failure is to implement an ERP solution properly. This includes adopting a phased approach, employing change management principles throughout the project life cycle, and avoiding splitting large ERP implementations into multiple smaller ones.
In the past, “Big Business ERP” addressed larger companies that often deployed onsite / on-premise ERP systems and had an abundance of internal resources and investment to dedicate to analyzing, customizing, upgrading, and deploying their software solutions.
However, with the rise of cloud computing and SaaS, there has been a shift towards more affordable and flexible ERP solutions designed to fit all-sized companies. Modern ERP solutions are typically hosted online and address current and future business requirements no matter the size of the organization.
As a result, organizations may now explore deploying ERP systems to save costs and adapt to future demands without incurring large initial expenditures.