What is ERP?

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What is ERP?

We explain what enterprise resource planning is and how it can benefit businesses.

ERP (enterprise resource planning) is, put simply, a platform for managing the processes that happen in your organisation. It’s usually a collection of tools that enable an organisation to automate many of the day-to-day processes, such as order management, accounting, staff management, CRM and much more, allowing staff to free up time to concentrate on innovation.

It covers all departments of a business, including technology, services and human resources and integrates the key functions relating to product planning, development, manufacturing, sales and marketing.

If you’re finding your business is outgrowing its current accounting application, an ERP system may be the next step – and we’ve explained when to consider making the upgrade in another feature.

Benefits of ERP

One of the main benefits of ERP is that everything can be managed from a single console, not only ensuring everyone is singing from the same songsheet but also making it easier for IT departments to manage.

It also ensures everyone is reporting their results in the same way; gleaning insights from a centralised place and helping management make decisions about performance and resource distribution, for example.

ERP modules

ERP software usually comprises modules that can be combined to make an entire application perfectly aligned to a business’ strategy. For example, if there’s no need for HR resources to be managed in-house, that module can be omitted, so only the key processes you need to manage are available.

You can pick and choose to add on or remove modules as your business change, making it a flexible option compared to purchasing individual applications that may do the job, but don’t integrate very well.

Types of ERP systems

Because there are so many ERP tools available on the market, it’s important to ensure you choose the right one for your particular business need. Here are the key considerations when choosing the best ERP tool for your business.

Vertical ERP

Some ERP tools are developed for a specific industry vertical – for example, if you run an engineering firm, you may want to choose one that caters to the need of that sector rather than a generic solution.

Size of business

If you’re a large company, it’s likely your business will operate in a very different way compared to a small enterprise. For starters, you’re likely to have more staff and each person’s role will be limited in comparison to a smaller firm, whose employees are more likely to overlap in their day-to-day duties. Therefore, finding a solution specifically catered to the number of employees you have and their job roles may be the right decision for you.

Platform

ERP tools are available to run both on-site and in the cloud. Carefully consider which is right for your business. Those based in the cloud are generally more scalable because it’s much easier to increase capacity rather compared to an on-premises solution that may have limited storage. However, you may require the security of on-premises if your industry is heavily regulated.

Compliance

Similarly, if your industry sector is highly regulated, you may need to find an ERP tool that specifically ensures you are complying with regulations and will provide the reports you need to present to an industry body, for example.

ERP tools offer massive advantages to a business, boosting productivity and innovation, but they can also be a big investment, so it’s worth carrying out extensive research before you make the jump.

Next: we explain in more detail what ERP can do for your business and how to choose the right system for your business.

This article originally appeared at IT Pro.

Copyright © ITPro, Dennis Publishing
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