Home Articles What Every Business Must Know About ERP Software

What Every Business Must Know About ERP Software


Enterprise resource planning software, often referred to as ERP, allows businesses to manage their day-to-day operations across the organization. The software handles accounting, project management, and supply chain operation tasks, along with many other requirements. Furthermore, a complete ERP suite also offers features related to enterprise performance management. This area focuses on the financial results of the organization, including budgeting, predicting, and reporting.

ERP systems bring together business processes while ensuring the smooth flow of data. This eliminated data duplication while ensuring its integrity. Today, companies of all sizes benefit from the use of the software.

If you are ready to learn more about ERP systems, the following information will be of great help.

The Fundamentals

Faith Based Events

An ERP system revolves around a central, defined structure that benefits from a common database. This ensures the enterprise data is normalized and benefits from common definitions along with user experiences. The core constructs and business processes across departments become interconnected with the use of the software. This connects the systems and the users, integrating the people, technologies, and processes. It allows the organization to collect and organize data before analyzing it and distributing it to the appropriate parties.

Furthermore, the program allows the proper tracking and representation of costs across the business, doing so by attributing the costs to the appropriate account in the general ledger.

The use of one database allows for connected spreadsheets and eliminates chaos. All users, from upper-level management to the new hire, create, store, and utilize the same data. This minimizes errors due to inaccurate, outdated, and incomplete data.

Why Every Business Needs an ERP

Every business, regardless of size, benefits from the use of an ERP. By bringing enterprise data and processes together, a company finds they can align departments while improving workflows. This leads to savings across the organization.

What are some benefits associated with using an ERP within an organization?

The user experience remains the same regardless of the department or task, which leads to improved efficiency, and the infrastructure is standardized so the person working in the warehouse sees the same things the person in the front office does. The consistency in the look and feel of the program makes it easy for all parties to work together. Furthermore, it leads to higher user adoption rates.

Data integrity improves with the use of ERP. In addition, the company takes on fewer risks thanks to the integrated financial controls found in these programs. The integrated and uniform systems also lead to lower operational and management costs.

How Did ERP Come About? 

Over 100 years ago, Ford Whitman Harris developed the economic order quantity (EOQ) model. An engineer, Harris established this paper-based manufacturing system in 1913 to improve production scheduling. Manufacturers used the EOQ for decades with great success. It wasn’t until 1964 that Black and Decker opted to move to a material requirement planning solution or MRP. This solution brought together the EOQ concepts and a mainframe computer.

In 1983, manufacturing resource planning software was launched. Modules served as a critical architectural component of the software, with integrated core components consisting of scheduling, contract management, and more. This program allowed various manufacturing tasks to come together in one system and demonstrated how the software would enable organizations to integrate and share enterprise data.

Moving to the Cloud

Over the next decade, countless companies adopted ERP. However, the cost of doing so increased, as the hardware and software needed to run the system were costly. They called for capital investments and depreciated within ten years. Furthermore, companies needed to customize their ERP systems to meet their needs, which led to additional costs.

At the same time, technology was evolving thanks to the expansion of the world wide web. New functionality and features were seen. This led to businesses looking for alternatives that could keep up with changing security demands and new technology. These needs resulted in the introduction of software as a service (SaaS).

The SaaS delivery model makes use of remote services to deliver ERP systems. The software provider handles all tasks related to installing and maintaining the software, saving the business owner money. Both operational and capital expenses decrease when this option is selected, as the company doesn’t buy the hardware or software and won’t need to hire IT staff to maintain the system.

Companies use the savings for other areas of their business, knowing their ERP software remains current. Furthermore, employees turn their focus to value-added tasks. This benefits the company in a variety of ways.