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What is ERP Software?

published : 05-10-2018

These days, ERP seems like the next hot topic. Every MSME to SME to large enterprise is introducing ERP software and if you are not, it feels like everyone is telling you that you should otherwise you’d be left behind. But let’s take a step back – what does ERP stand for and what does it actually mean?

Here's a brief overview about ERP systems and what they actually are:

Image of a computer with analytics

ERP stands for Enterprise resource planning and can be summarized as software that allows an organization to manage their business processes more efficiently by automating tasks, streamlining processes and by providing employees and management with an all-encompassing vantage point of business operations. Usually within an ERP system one has access to various modules that are required to manage all business operations such as accounting, supply chain management, inventory management, human resource management, customer relationship management.

An ERP system should be three things: flexible, integrated and synchronized.

  1. Flexible: meaning that the ERP software should accommodate all business needs and requirements, it should allow for changes that occur over time and support all business functions.

  2. Integrated: meaning that all modules and functionalities share the same database. This enables all employees across the organization to access information relevant to their individual department, but if needed also be able to access cross-departmental data.

  3. Synchronized: refers to all processes within a company that need to be synchronized and accessed in real time. Being able to do so, allows employees and managers to access business analytics and reports in matter of seconds. Furthermore, an ERP system should have a dashboard to allow employees, key stakeholders and decision makers to quickly capture key business metrics.

An ERP system should generally reduce the workload for your employees by automatic certain processes, however keep in mind that initially, it may require some processes to be changed to suit the new software process flow. Furthermore, a good ERP system that suits your company’s business operations should decrease intra-departmental barriers and improve communication as well as access to and availability of key information. More specifically, the reporting tool of the ERP system should give your company’s managers and stakeholders an overall and real-time view of key metrics which allows for more proactive actions and agile decisions. This access in turn leads to an increase in business controls and decreased operational risks. Given that all the above are met, an ERP system can dramatically increase your company’s efficiency while streamlining process flows, lowering operational costs and increasing overall profitability.

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