Enterprise Resource Planning (ERP) software systems combine system functionality and common business activities into a single integrated system designed to facilitate overall business performance. ERP mainly integrates financial management, sales, human resources, asset design and development, distribution, and inventory management. In short, ERP software is aimed at simplifying business procedures and helping business owners save time and money. It also facilitates the decision making process and facilitates the smooth functioning of an enterprise. ERP has become inevitable for all companies engaged in various businesses involving production, consumption, trading, and services.
There are various types of ERP applications available in the market. While some are designed to provide solutions for a single business operation, some are designed to support different divisions of an organization. Enterprise resource planning software is used to track business processes and data, as well as to give information on efficiency, costs, and business goals. The main objective of the ERP is to improve business operations and reap maximum benefits.
ERP is a very complex system. To make it more understandable, enterprise resource planning applications consists of four major elements – Business Information Technology (BIT), Information Resources, Process Management, and Data Storage and Monitoring. BIT is the heart of ERP, as it provides the basis for storing, organizing, analyzing, and sharing business information. Information resources include computer systems and devices, including computers, networking devices, workstations, servers, storage cabinets, and computer applications. Process management includes activities like billing, order processing, procurement, inventory control, quality management, logistics management, project accounting, quality assurance, training, and customer service.
A business process is a specified sequence of activities that bring about or facilitate business progress. Each component of an enterprise resource planning application may contain functions that perform distinct functions. Workflows provide a flexible means of integrating these components. Workflow designs can be written by the developers or they can be stored in the software’s database.
Today, many companies are investing in enterprise resource planning applications or in ERP implementation. This is because real-time processing is now becoming an essential part of the business process. ERP greatly improves the efficiency of many companies‘ business processes by providing them with real-time information, access to critical information, analysis tools, and highly trained staff. There are many companies that offer ERP solutions, but it is vital for a company to carefully consider all the elements involved in installing and integrating ERP software.
The planning process involves several stages, which are discussed below. Upon signing up for an ERP system, a company should first establish how the entire enterprise resource planning system will be used. This includes defining the core business processes that the ERP system will monitor. Then, according to the company’s specific needs, these core business processes should be modified or improved to incorporate the ERP application. Next, these modifications should be evaluated according to the business activities.
When evaluating the ERP system, it is important for a company to determine how changes in its internal processes or those of its external business partners will affect its performance and business results. Usually, businesses undergo a series of transformations, especially when they are growing. Enterprise resource planning software should allow for this process of transformation, which usually involves changes in the way businesses have handled their financial closes over time. For example, during the last ten years, most businesses have grown in size and need a more complex process of financial closes.
Some companies make use of virtualization in order to improve the efficiency of their enterprise resource planning systems. Virtualization allows two or more servers to run the operating system of the ERP application and enables users to access data from remote locations without compromising the servers. This is very useful for businesses that are geographically dispersed. Virtualization also allows for the management of business operations across multiple platforms, which include desktop, laptops, tablets, smart phones, and web tablets. In addition, virtualization helps in the management of the real-time flow of data, applications, and people between the application servers and the actual business locations.