The sheer amount of information that can be found online when you simply search for "ERP" is overwhelming, to say the least. Definition, Implementations and Experiences vary vastly. Though be careful you don’t mistake these vast differences for confusion, it may just be hiding the truth about the flexibility and power hidden in this essential business tool.
So here is an introduction to what ERP really is, to give you a deeper understanding of what ERP actually is and what it can do for you in transforming your business operations.
We could start off by telling you that ERP is an acronym for Enterprise Resource Planning, but even elaborating on the acronym doesn’t help much in understanding what ERP really is or what it can do for you. To get a real grasp for what ERP really means we need to take a perspective of our business and its people, processes and systems, and break that down into the various functionality that your business needs to make it run at full pace. This includes things like CRM (Customer Relationship Management), HR, Financials, inventory… and the list goes on. Essentially, ERP Software takes these core processes, systems and functions and places them into one streamlined solution.
Probably the most important feature of all ERP systems is that your data is held on one central location, feeding into each facet of your system with the data that each particular division or processes need to function. This means that the data is used throughout the different teams and processes in your business will be accurate and consistent.
Reporting and Automation can also be simplified with the use of ERP software. With multiple systems and processes, employees can find themselves maintaining separate databases and spreadsheets manually, taking up time inputting and merging data to generate reports. With multiple processes, systems and a central data point, ERP Software can allow staff to pull off complex reports from one location. ERP often can also contain job specific dashboards displaying KPI’s and Business Performance stats relevant to specific departments.
Origins of ERP
The acronym ERP was first used in 1990 by Gartner, but its roots date to the 1960s. In the 1960’s the concept applied to inventory management and control in the manufacturing sector. Software engineers created programs to monitor inventory, reconcile balances, and report on status. By the 1970s, this had evolved into Material Requirements Planning (MRP) systems for scheduling production processes.
In the 1980s, MRP grew to encompass more manufacturing processes, prompting many to call it MRP-II or Manufacturing Resource Planning. By 1990, these systems had expanded beyond inventory control and other operational processes to other back-office functions like accounting and human resources, setting the stage for ERP as we've come to know it.
Today, ERP has expanded to encompass business intelligence (BI) while also handling "front-office" functions such as sales force automation (SFA), marketing automation and eCommerce. With these product advancements and the success stories coming out of these systems, companies in a broad range of industries—from wholesale distribution to ecommerce—use ERP solutions.
Moreover, even though the "e" in ERP stands for "enterprise," high-growth and mid-size, and even small companies are now rapidly adopting ERP systems. Software-as-a-Service (SaaS) solutions—also referred to as "cloud computing"—have helped fuel this growth. Cloud-based solutions not only make ERP software more affordable, they also make these systems easier to implement and manage. Perhaps even more importantly, cloud ERP enables real-time reporting and BI, making them even valuable to executives and staff seeking visibility into the business.
As a result, companies of all sizes and a wide range of industries are transitioning to cloud ERP systems. In fact, Forrester predicts that SaaS-based ERP adoption will rise 21 percent annually through 2015. When you stop to consider the benefits of ERP, it's easy to see why it's become so popular and why its use will continue to grow so rapidly.
What does this mean for your Business?
In a nutshell, ERP aims to let your employees work more efficiently by incorporating all processes under one roof and pulling all data from one central location.
Specifically, an ERP solution:
- Gives a global, real-time view of data that can enable companies to address concerns proactively and drive improvements
- Improves financial compliance with regulatory standards and reduces risk
- Automates core business operations such as lead-to-cash, order-to-fulfilment, and procure-to-pay processes
- Enhances customer service by providing one source for billing and relationship tracking.