What is ERP (Enterprise Resource Planning)
In this article you will learn what is ERP software and how the ERP systems helps organization for day to day business process.
ERP is a business software system that support business or enterprise throughout the organizing, planning, maintaining, tracking and utilization of organization resources(Man, Machine, Material and Money).
If you are new to ERP, the first question which arises in your mind is What is an ERP (Enterprise Resource Planning), ERP System, ERP software and why it is so important for business success.
Let discuss briefly about what is an ERP software and how it helps in business achievements.
Its recommended to read previous SAP training article what is SAP.
- ERP stands for Enterprise Resource Planning.
- ERP is gate way to integrate the data and processes of an organization into single system with all modules that supports the core business areas. Its recommended to read about SAP modules list.
- Enterprise Resource Planning systems cover all basic functions of an organization
- Enterprise Resource Planning is developing into a Multi-Module Application Software Package that enables business processes across the supply chain management.
- ERP Software allows to integrate all the operational units such as financing, human resources, manufacturing, sales, marketing, finance & accounting, procurement, inventory management and so on.
- ERP software system allows the business to achieve real time business process, increase productivity, improves delivery, reduce cost and increase profits, increase product quality,improve information and performance management.
If u get an query what is erp, simply we can explain ERP is a business suite with number of applications that are integrated together and assist a organization in collecting, managing and reporting information throughout the business process.
Why do we Need ERP Software
ERP is an integrated systems of different business process for e.g. if a company has different departments like sales department, production department, material management, finance department,etc, so in ERP we have an integration of all the departments and they all use common database.
- We can have standardization of systems across locations. For e.g. for MNC companies can have different plants in different locations with standard systems.
- Erp systems helps to have a better controlling over the different process.
- As ERP is a integrated systems, it helps to provide the better reporting.
History of ERP Systems
- ERP System have took years to emerge and is still evolving. These systems are transformation and ever-changing.
- Before early ERP-type systems emerged, in the prehistoric age of 1960 and early 1970’s Departmentalised systems came into picture.
- In 1970’s manufacturing chain was the center of business operations. This led to the development of MRP systems.
- The second phase of ERP development occurred in 1980’s which focused more on quality measures which led to the evolution of MRP II Systems.
- In the 1990’s, Enterprise Resource Planning started using multi-module application to increase organizations process. ERP Systems integrates with all the modules of organization’s business modules and this led to the evolution of ERP System.
- The benefits of ERP systems are: customer satisfaction, better information, productivity, increased quality and decreases in time to market, product cost, delivery time, inventory levels.
Top ERP Vendors list.
ERP Vendors are classifies based upon clients they service. We have three types of ERP vendors they are Tier I, Tier II, Tier III. Here we are going to list top ERP Vendors in the following sectors.
- Manufacturing and Distribution Industry.
- Transport, Communication, Energy and Sanitary service.
- Service Sector and finally
- Retail Sector.
Top ERP vendors in Manufacturing and Distribution Industry.
TOP ERP vendors in Transport, Communication, Energy and Sanitary service.
Top ERP Vendors in Service Sector.
Top ERP vendors in Retail Sector.
What is ERP software and its components
ERP Advantages and Disadvantages
Advantages of Implementation of an ERP system :
- Reduced redundancy in entering data
- ERP system provides the real time information all needs of the organization in a single system.
- It Allow everyone to access same source and share same source of information
- It allow to access, update instantly and saves lot of time.
- Integration among different functional areas to ensure proper communication, productivity and efficiency
- The Accounting for all of these tasks, tracking the Revenue, Cost and Profit on a granular level.
- Allow standardisation of business processes and enterprise’s information.
- It is a single source of systems that can be use through out the organization.
- ERP software enables real time information availability, reduction in inventory and cycle times.
Disadvantages of ERP Systems:-
The disadvantages of ERP systems are as follows :-
- Takes a lot of effort and time and requires a lot of training
- Customization of the ERP software is limited, you may not allowed to design application as per business requirements.
- ERP systems can be very expensive to install.
- ERP Systems centralize the data in one place and this can increase the risk of loss of sensitive information in the event of a security violation.
- The usage of ERP system can be difficult for users, so appropriate training is to required to use the ERP software.
Read more for ERP Advantages and Disadvantages Before ERP After ERP systems
What is ERP in Manufacturing
A manufacturing company could use an ERP system to track and manage virtually every operation in the organization. Requests for Proposal (RFP) and corresponding quotes can be entered and assigned to any large database of customers. Quotes can be changed to Sales orders upon receipt of purchase orders, with line items and corresponding prices that represent goods to be delivered to a customer.
What is ERP SAP
SAP is an Enterprise Resource Planning software that supports all the companies business process. It integrates with all SAP modules and provides the accurate business solutions of financial, sales, manufacturing etc.
Common ERP Software Modules
- Sales Order (SO)
- Purchase Order (PO)
- Finance and Accounting
- Manufacturing Resource Planning
- Customer relationship management (CRM)
- Human Resources
The important modules in ERP SAP Systems are as follows-
What is ERP SAP FICO: – SAP FICO stands for Financial Accounting and controlling. It is one of the important module of ERP because it store all the financial transactions data of company. It is used for extract the financial statements of balance sheet and Profit & Loss accounts for external reporting. Read more for ERP SAP FICO
What is ERP SAP MM: – SAP MM stands for Material Management, it supports the procurement process and inventory functions of day to day operations. SAP MM module carriers all the activities of material planning and control, purchasing, inventory management, goods receipt and invoice verification. Read more ERP SAP MM
What is ERP SD: – SAP SD stands for Sales and Distribution, it handles all the process of order to delivery and execute all the process of sales, shipping and billing of goods and services. Read more for ERP SAP SD.
What is ERP SAP HR: – SAP HR is also known as HCM (Human Capital Management), it handles all the activities of employees from hiring to final termination in organization. Read more ERP SAP HR
What is ERP SAP ABAP: – SAP ABAP stands for Advanced Business Application Programming, it is a fourth generation programming language that is used to develop the SAP applications. Read more for what is SAP ABAP
- It is a singe application integrated software program.
- It is a singe database systems.
- ERP systems allows to share the information and communicated more effectively.
- ERP automates customer orders, order fulfilment, billing, shipping and tracking and so on.
Also read our ERP SAP training tutorials with scenarios.
ERP Software Packages
- Baan by Baan corporation.
- Peoplesoft from oracle corporation
- Oracle Application
- JD Edwards from oracle
- SAP from SAP AG (With total 60% market share).
ERP related interview questions
- What is ERP (Enterprise Resource Planning)?
- What are the major components of Enterprise resource Planning?
- ERP Systems overview?
- What are the advantages and disadvantages of ERP systems?
Read more for SAP Training Tutorials that explains step by step with screen shots.
You are come to know exactly what is ERP systems software and its importance for business process.