What Is ERP? Enterprise Resource Planning Software Explained
What Is ERP? Enterprise Resource Planning Software Explained
Enterprise Resource Planning systems are one of today’s successful enterprises’ main tools. ERP solutions are known for supporting core business processes like inventory management, project management, supply chain management, customer relationship management and many more. We insist on you to get to know ERPs various capabilities, whether you’re planning on getting an ERP solution, or for you to understand what your current solution should be providing for your business.
What is ERP in simple terms?
An ERP system, also called an ERP suite, is a software solution. In simple terms, it helps to efficiently manage all of your most important processes within an integrated platform.
While retailers always want to optimize their enterprise resource management, most struggle to balance different practices with sacrificing resources. That’s why the enterprise resource planning system was born. The first traces of ERP were paper-based scheduling systems with the economic order quantity (EOQ) model in manufacturing. However, now-a-days ERPs can be found in all industries, not just in the manufacturing industry.
An ERP is an organization recorder where you can get instant insight into all of your business departments. This includes: finance, HR, manufacturing, supply chain services, procurements and others. Nowadays there are various options that let you visualize information, such as cloud technology or devices compatible with Alexa. It can help any business grow no matter the industry. Anything from the beauty industry to cycling, everyone needs an accurate, real-time, effective business process that enables competitiveness in your sector and thrive from within.
What Does ERP Stand for? / What Does ERP Mean?
The term ERP stands for Enterprise Resource Planning and is described as “the central nervous system of an enterprise”. It provides the automation, integration and intelligence necessary to efficiently run all day-to-day business operations. It gathers data from all over the business and centralizes it so that you can view it from one place. This enables you to make the best decisions based on real-time, reliable data.
What is ERP and How Does it Work?
An ERP system is made up of integrated modules or business applications that are connected to each other. This is how they are able to share a common database. Each of these modules typically focus on one business area only. However, they work together using the same data to meet the company’s needs. Companies can start using an ERP by only choosing a couple of modules. As time goes by, they can easily add modules and scale the solution as needed. This system also supports industry-specific requirements, either as part of its core functionalities or through application extensions that can be integrated into the solution.
What are the most common types of ERP?
ERP systems can be classified into various types. The commonness of them depends on different aspects such as the industry you’re interested in.
The first category in which we can find types of ERPs is in their level of customization:
Types by level of customization
You can encounter ready-made, custom-built or hybrid solutions. Your approach to any of these options should depend on your business processes complexity, budget (since custom-built tends to be more expensive) and resource availability. No matter what you choose,our recommendation is to always look for off-the shelf excellence, with a possibility to engage in some level of customization.
Types by deployment
There are 3 main types of ERP solutions based on deployment: on the Cloud, on-premise and hybrid ERP systems. A general approach is to choose the Cloud option, since this means you’ll have data accessibility anywhere, anytime. Besides, cloud-based ERP is a customer favorite option since the only requirements are a computer and Internet connection, in order to implement/access the system (which is not the case with on-premises ERP systems).
Types by industry
Yes, most ERP software systems are designed intelligently enough to serve multiple industries, throughout the same platform. If you want a more tailored approach, either you come across an industry-specific solution with high levels of specialization, or you collaborate with an industry-specialized partner that guides you through a customization process, so that you can get the best fit out of a generic ERP system.
Types by size
Finally, the size of your company will help determine the type of ERP system that’s most convenient for you. Small and medium businesses can get a similar implementation process, but a large corporation needs a specific treatment for it.
What is an ERP example?
We’re dealing with a small, but fast-growing, furniture manufacturer in the U.S. This business manages a warehouse in California and is planning on growing the team (15-25 persons). Multiple orders have been placed in the last month, which of course is great news! But lately, the follow up of invoices, production planning and distribution have gained a new level of complexity.
For starters, they are looking for a ready-made solution that helps with generic data processing. The second requirement is to take as less time as possible implementing the solution, since there is no time to waste!
Although this company has a physical work environment, the warehouse shouldn’t be invaded by the ERP physical modules, since space should be focused on inventory and production processes.
What type of ERP should our made up company get?
- Ready- made solution
- On the Cloud
- For small- medium enterprises
- Partner that helps the company focus on relevant modules such as inventory management and Product Planning.
What is the difference between an ERP and a CRM?
This question is quite common between SMEs. An Enterprise Resource Planning (ERP) system and a Customer Relationship Management (CRM) system are both software systems that play distinct roles within an organization. While they may have some overlapping functionalities, their primary focus and areas of application differ. Starting with, the ERP acts as a business management software, while the CRM system is most notably used for specific business units.
While ERP and CRM systems serve different purposes, they can be complementary in certain cases. Integration between ERP and CRM systems can provide a comprehensive view of both internal and customer-related data, enabling organizations to make informed business decisions and optimize their operations and customer relationships.
Key differences between ERP and CRM
|Scope and Function||Integrates and manages core business processes and operations across various departments within an organization. ERP modules typically include finance, accounting, human resources, supply chain management, inventory management, manufacturing resource planning, and other operational areas.||A CRM system focuses on managing customer interactions, sales processes, and customer data. It helps businesses track leads, manage sales opportunities, nurture customer relationships, and provide personalized customer service. CRM systems often include features such as contact management, lead tracking, sales forecasting, customer support, and marketing automation.|
|Data Focus||ERP systems primarily focus on internal real-time data related to the organization’s resources, operations, and finances. They facilitate the flow of information between different departments and provide a centralized database for managing enterprise-wide data, such as financial data.||CRM systems center around external data related to customers, prospects, and sales activities. They gather and organize customer data, including contact details, purchase history, preferences, and interactions.|
|Target Users and Objectives||Typically used by employees across different departments within an organization, including finance, HR, operations, manufacturing, and logistics. The primary objective is to enhance operational efficiency, automate processes, and provide a unified view of the entire business’ resources and operations.||Primarily used by sales, marketing, and customer service teams. The primary objective is to improve customer relationship management, enhance sales effectiveness, and deliver personalized customer experiences.|
|Integration and Collaboration||Integrating various key business functions within an organization, enabling seamless data flow and collaboration. They ensure consistency and accuracy of data across different modules and departments.||Integrating customer-related data and processes across sales, marketing, and customer service functions. They enable teams to collaborate on customer interactions, share customer information, and coordinate sales and service activities.|
Is QuickBooks an ERP system?
No. ERP systems are meant to cover multiple business processes, and since QuickBooks is only meant for accounting functions. It can’t be considered an ERP solution, but rather an accounting software.
Many QuickBooks users outgrow the solution when their businesses start requiring a more comprehensive approach. This is the importance of having a customizable solution (like an ERP software system) that grows alongside your business. Our favorite ERP software provider is SAP.
What is SAP?/ What is SAP Business?
SAP is an enterprise created in 1972 that develops software solutions for small and midsize companies, as well as large corporations. Using standard applications, industry solutions, platforms, and technologies you can map and design your business processes. Its solutions can be installed either on-premise at a user’s location, or used from the cloud, depending on your company’s preferences.
SAP is now a multinational enterprise that established the global standard for Enterprise Resource Planning (ERP) since the introduction of their first software product (SAP R/2 and SAP R/3). It has earned its place as one of the world’s leading producers of software, as well as a modern ERP solutions provider. SAP is focused on the development of ERP technology that helps improve business functions, by mostly facilitating an effective data processing and information flow across business units and organizations.
In conclusion, SAP is a company that helps other businesses accelerate their workflows, improve their operational efficiency, raise productivity, enhance customer experiences and ultimately increase profits with the help of technology.
What Does SAP Stand for?
SAP stands for the company’s original German name “Systemanalyse Programmentwicklung” which translates to System Analysis Program Development, which was founded in 1972. However, today SAP SE (the abbreviation + Societas Europaea) is the company’s legal corporate name.
What is SAP Used for in Business?
SAP is an enterprise that understands the problem that traditional business models have by decentralizing data management and solving said problem with their software solutions. When you acquire any of SAP’s solutions, you’ll be one step closer to centralizing your company’s data management. In addition, you’ll increase your employee’s efficiency and company transparency by giving every department easy access to real-time insights across the enterprise.
Since there are multiple complex business processes, a modern ERP solution supports the implementation, integration and overall after-implementation support.These processes have been completely validated for any small business, still, you might want to have the right ERP business partner to help along the manual processes required for installation.
Learn about SAP Business One