What Is ERP And How Does It Work? Why Is It Used In A Various Organization

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Welcome to the saptutorials. Today we will discuss about ERP.ERP is commonly referred to as a business management application designed to meet the needs of a small/ medium /large business such as the sales office, plant, warehouse, manufacturing location, supply chain management, vendor & customer. ERP stands for “Enterprise resource planning“.

Table of Contents

What is ERP software

In general, ERP software covers all key business areas such as procurement, development, inventory management, marketing, sales & distribution, logistic, finance, and human resources (HR). SAP was one of the first organizations to develop modern business management applications overtime periods, the ERP system has also added new applications and modules that support daily business functions & supply chain management.

Initially, in-house application software was developed. To keep this in-house software established, the company needed a team of experts – who were costly to retain. It gave way to the outsourcing of software development projects. Outsourcing gave rise to over-reliance on third parties. This also created a situation in which many third-party apps existed, and it grew …

There was a gross lack of integration between the different application software. Thus, instead of buying best-in-class solutions for Material Management, Marketing & Sales, Accounting, Human Resources, and Planning, it was necessary to have a single-window solution or a single package solution that would address all different business processes and offer the advantage of being fully integrated. Enterprise Resource Planning provided an integrated single-window solution to meet the business needs

Why ERP is needed

The main objective of the ERP system is to increase the organizational efficiency of the organization by managing and improving the use of company resources. Improving and/or reducing the number of resources needed without sacrificing quality and performance are key to improving business growth and profitability effectively. ERP systems typically cover all aspects of business operations and communications:

An integrated system across all business function
Single & common database for consistent information
The real-time operation, Improve Quality
Support for all applications/components, Stay competitive
Common user interface across application/components, improve customer service
On-premise, cloud-hosted, or SaaS deployment, Responds to changing market

ERP software has the ability to collect and compare metrics across departments and to provide a number of different reports based on roles or specific user preferences. The data collected makes data discovery and reporting faster and provides a complete view of business performance with full insight into how resources are spent with the rich analytics dashboard.

ERP synchronizes reporting and automation by reducing the need to maintain separate databases and spreadsheets that need to be manually merged to generate reports. This combined data collection and reporting provides valuable insights, such as where to reduce costs and streamline processes, and provides information on how to make real-time business decisions.

Evolution of ERP

MRP: ERP started with Material Requirement Planning ( MRP). MRP was responsible for the two basic functions of Materials Management and Inventory Management and generally catered to a manufacturing organization.

MRP-II: The upgrade to MRP was MRP-II. MRP-II, together with Materials Management and Inventory Management, provided for production planning.

ERP: Business Resource Planning. This package included a full suite of applications ranging from Sales and Distribution, Planning, Materials Management, Quality Management, Human Resources, and Financial Accounting.

Evolution milestones

1913: The Ford Whitman Harris engineer developed the Economic Order Quantity (EOQ) model, a paper-based production scheduling system.

1964: Toolmaker Black and Decker have adopted the first Material Requirements Planning (MRP) solution that combines EOQ with a mainframe computer.

1970s-1980s: Computer technologies have evolved and concept software has managed business activities outside manufacturing, including finance, human resources, and customer relationship management ( CRM).

1983: MRP II was developed and included “modules” and integrated core manufacturing components as well as integrated manufacturing tasks in a common shared-data system.

1990s-2000s: Gartner Group coins term “ERP” to distinguish between MRP-only systems. ERP systems have been extended to cover business intelligence while handling other functions such as sales force automation (SFA), marketing automation, and eCommerce.

2000-2005: cloud-based ERP software solutions arrive when ERP software makers create “Internet Enabled” products, providing an alternative to traditional on-site client-server models.

Today: Software-as-a-Service ( SaaS) and Anything-as-a-Service ( XaaS) offer new ERP delivery models. Remote web-based access to cloud-based ERP solutions provides mobile solutions, security, and integration with changing industries and smart technologies, including the Internet of Things ( IoT), Internet of Everything (IoE), and even social media, to provide a comprehensive solution.

ERP Features & Capabilities

ERP systems have a very wide range of capabilities, including:

Marketing
Sales & Distribution
Procurement
Managing Inventory
Manufacturing
Accounting
Logistics
Payroll Administration
Reporting and Analysis
Risk management
Supply chain Management
Delivery Chain Management
Management of product lifecycle etc.

ERP Vendors:

SAP

SAP S/4 HANA (High-Performance Analytics Appliance) ‘uses in-memory, column-oriented and relational technology to speed up data recovery. SAP also has cloud solutions like Ariba, fieldglass and Hybris ,CEC that can help to consolidate the system landscape. And its Business One & SAP Business ByDesign, ideal for small and medium-sized companies, provides comprehensive Marketing, Sales financial, business and customer relations functionality.

Oracle ERP Cloud

Oracle is the top name for large companies in the ERP business and, in particular, with its acquisition of NetSuite, has been successful in offering a platform that can deliver add-on functionality to the NetSuite SaaS tools.

Microsoft

Choosing Microsoft for ERP might be a good choice for companies that already use Microsoft’s technology. Microsoft is delivering innovative solutions for small and medium-sized companies and is becoming a growing force that also appeals at larger organizations.

PeopleSoft

PeopleSoft Financials is a financial reporting client/server designed for larger organizations. Apps enable organizations to control, manage and report on financial, accounting, and project tracking information.

Sage

Sage Intacct is an ERP cloud system aimed at small and medium-sized businesses with fast growth. Intacct covers core financial and accounting systems, ordering, order management, and financial reporting, and market intelligence. This also integrates with applications from third-party such as Salesforce.

Epicor

Epicor has been a pioneer in ERP systems, with an emphasis on the manufacturing, distribution, retail, and service industries. As other business software providers, they have their financial accounting roots until they begin incorporating CRM tools into their products. After acquisitions in the late 1990s and early 2000s, Epicor went on to grow its manufacturers

Deltek Vision

Deltek Vision is project-based resource planning ( ERP) program

Infor

Infor, which is an evolving technology for the enterprise, will be considered by small and large organizations, both nationally and internationally, providing a range of applications tailored to individual organizations.

There is much more software available in the market for Enterprise resource planning. Now choosing the perfect ERP product that depends upon your organizational needs & Total Cost of Ownership

Happy Learning ..!!

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