ERP - Enterprise Resource Planning
Enterprise resource planning (ERP) is a business management software-usually a suite of integrated applications-that a company can use to store and manage data from every stage of business.
ERP provides an integrated real-time view of core business processes, using common databases maintained by a database management system. ERP systems track business resources-cash, raw materials, production capacity-and the status of business commitments: orders, purchase orders, and payroll. The applications that make up the system share data across the various departments (manufacturing, purchasing, sales, accounting, etc.) that entered the data. ERP facilitates information flow between all business functions, and manages connections to outside stakeholders.
Enterprise system software is a multi-billion dollar industry that produces components that support a variety of business functions. IT investments have become the largest category of capital expenditure in United States-based businesses over the past decade. Though early ERP systems focused on large enterprises, smaller enterprises increasingly use ERP systems.
Organizations consider the ERP system a vital organizational tool because it integrates varied organizational systems and facilitates error-free transactions and production. However, ERP system development is different from traditional systems development.ERP systems run on a variety of computer hardware and network configurations, typically using a database as an information repository.
Developers now make more effort to integrate mobile devices with the ERP system. ERP vendors are extending ERP to these devices, along with other business applications. Technical stakes of modern ERP concern integration-hardware, applications, networking, supply chains. ERP now covers more functions and roles-including decision making, stakeholders' relationships, standardization, transparency, globalization, etc
An ERP system covers the following common functional areas. In many ERP systems these are called and grouped together as ERP modules:
Financial accounting: General ledger, fixed asset, payables including vouchering, matching and payment, receivables cash application and collections, cash management, financial consolidation
Management accounting: Budgeting, costing, cost management, activity based costing
Human resources: Recruiting, training, payroll, benefits, 401K, diversity management, retirement, separation
Manufacturing: Engineering, bill of materials, work orders, scheduling, capacity, workflow management, quality control, manufacturing process, manufacturing projects, manufacturing flow, product life cycle management
Order Processing: Order to cash, order entry, credit checking, pricing, available to promise, inventory, shipping, sales analysis and reporting, sales commissioning.
Supply chain management: Supply chain planning, supplier scheduling, product configurator, order to cash, purchasing, inventory, claim processing, warehousing (receiving, putaway, picking and packing).
Project management: Project planning, resource planning, project costing, work break down structure, billing, time and expense, performance units, activity management
Customer relationship management: Sales and marketing, commissions, service, customer contact, call center support - CRM systems are not always considered part of ERP systems but rather Business Support systems (BSS).
Data services : Various "self-service" interfaces for customers, suppliers and/or employees
ERP can greatly improve quality and efficiency of the business. By keeping a company's internal business process running smoothly, ERP can lead to better outputs that benefit the company, such as customer service and manufacturing.
ERP supports upper level management, providing critical decision making information. This decision support lets upper management make managerial choices that enhance the business. ERP creates a more agile company that better adapts to change. ERP makes a company more flexible and less rigidly structured so organization components operate more cohesively, enhancing the business-internally and externally.
ERP can improve data security. A common control system, such as the kind offered by ERP systems, allows organizations the ability to more easily ensure key company data is not compromised. ERP provides increased opportunities for collaboration. Data takes many forms in the modern enterprise. Documents, files, forms, audio and video, emails. Often, each data medium has its own mechanism for allowing collaboration. ERP provides a collaborative platform that lets employees spend more time collaborating on content rather than mastering the learning curve of communicating in various formats across distributed systems.