ERP 101

By Kevin Stewart
Updated: August 18, 2011

Enterprise Resource Planning (ERP) software helps organizations manage and control their key operations. A development of the manufacturing resource planning (MRP) discipline, ERP is used in many different types of organizations, from manufacturing to non-profit companies. ERP systems make it possible to use a single system to manage and control major aspects of a business, including:

• customer relationship management
• human resources
• manufacturing
• finance and accounting
• project management

The goal of ERP is to consolidate all of these information systems into a coordinated and centralized system that uses a single database. This promotes better data accuracy and data currency. Instead of having several separate systems maintaining critical data, this data is accessed, stored, and updated in one place.

ERP systems are usually modular, which allows each organization to choose the modules needed for its particular business. For example, a service company may not need the manufacturing module, while most businesses will use the finance and accounting module. Using a modular approach, an organization can also adopt ERP in a series of phases, which can make implementation more manageable.

Implementing ERP systems can be a challenge for established businesses, because of the difficulty in consolidating disparate systems and processes within an organization. In order to successfully implement ERP in an established organization, you need to have full cooperation of all stakeholders. Careful project planning is critical for this process, and in any case the implementation will take considerable time and effort.

ERP implementation tends to be more straightforward in new organizations that do not have established systems and processes. Whenever possible, starting with ERP as a centralized data management system for critical operations is a much better approach than trying to combine separate information systems into a single system.

Software as a Service (SaaS) or cloud computing is also an important development for ERP. Some of the most advanced capabilities in ERP systems are available as subscription-based products. The same advantages of expanded access to data and low cost of ownership are available with this approach.

ERP makes it possible to manage the operations of almost any business, large or small, based on centralized data access and control. The keys to success in implementing ERP are having well-defined requirements, identifying the modules that are needed to meet those requirements, and obtaining the support and involvement of every function in your organization to make your ERP system an integral part of the ongoing operation of your business.
 

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