ERP (Enterprise Resource Planning), What is It?

Home / ERP Management Software / ERP (Enterprise Resource Planning), What is It?
What is ERP?
You Must Understand What ERP Is Before Deciding Its Value.

Hearing the word ERP can make even a CEO wonder, “what is that?” Simply explained, ERP is an industry acronym describing business management software that a company can use to collect, manage, and interpret data from many daily business activities. It stands for Enterprise Resource Planning [ERP] and is considered a vital organizational tool because of its ability to integrate varied informational systems and facilitate error-free production and transactions. Choosing the right ERP solution for the needs of your company is an important decision that can impact the long-term sustainability of your business. So the question is, “What can this software do for my company?”

A properly designed ERP system can help with:

  • Product planning and cost
  • Manufacturing
  • Service delivery
  • Marketing and sales
  • Human Resources
  • Asset Management
  • Regulatory Management

What ERP Systems Should Support

In business there are core processes which are very similar across industries & geographies, modern ERP systems are designed to support many business activities such as:

  • Data conversion
  • Database integration
  • Distribution process management
  • Facilitate better project planning
  • Supply chain management
  • Help configuring prices
  • Improve accuracy of financial data

Choosing the right ERP can help standardize critical business procedures and reduce redundant tasks. When data easily moves through a business, it can make it easier to accurately assess business needs.  Keep in mind that an effective ERP solution should be able to work with your existing legacy or critical office system.  Selecting an ERP system that does not properly integrate with your current system can be an expensive and costly mistake.

 

Related:  ERP Upgrade, 5 Reasons Why You Don’t.

 

Today’s ERP systems are completely customizable, but as with everything, that customization may come with a steep price. ERP customization is available for all sizes of businesses based on your specific technology and business needs.  Before committing to a highly customized system that can be quite costly, consider whether or not some of your unique requirements could be mainstreamed.  Think of it as the 80-20 rule.  What comes out of the box should support 80% of your processes.

In Search for an ERP System

Before looking at ERP vendors, carefully define and focus on the specific business processes and system requirements that will be affected by the implementation of a new ERP system.  Your business will benefit greatly by having a system that is industry-specific and includes features that have been designed to solve your business’s individual requirements.  Some of the most common ERP modules include those for product planning, material purchasing, inventory control, distribution, accounting, marketing, finance and HR. The goal of ERP is to provide a central repository for information that is gathered from various points throughout the organization to improve the reporting and communication across an entire enterprise. Choosing the right software and vendor will positively impact the way you manage your business.

 

 Recommended Recording: Thinking About ERP, What To Expect

 

Finding an ERP system that will enhance the technological processes of your company is an important decision.  Focusing on the needs of your business first will help you to find the best ERP solution to make your company operate at its best. In upcoming posts we’ll focus on the steps involved with starting an ERP software search and what that entails.

About the author, Rick Rusch, CPA, CITP, CGMA

For over 25 years Rick has helped companies research & select an appropriate ERP accounting software solution. Recognizing the new dangers of the Internet age, Rick has focused on cybersecurity to help clients guard their digital data. Rick has degrees in accounting and computer science.


Join Our Monthly News Crew

You'll receive monthly insider tech tips to make your business run faster, easier, and more profitably.

Thank you very much.  Look for our monthly publication on the first Tuesday of each month!  Follow us on Twitter for daily updates.