ERP is the acronym for “Enterprise Resource Planning” (integrated management software package), but what does it mean? To answer this question, think about all the key processes needed to run a business: finance, HR, production, supply chain, services, purchasing, etc. The basic ERP allows the efficient management of all these processes within the framework of an integrated system. We often talk about the business registration system.
An ERP is a software system that helps you manage all of your activities, including processes related to finance, HR, production, supply chain, services, purchasing and others.
Why is ERP important?
An ERP system, also known as the “central nervous system of a business,” provides the automation, integration, and intelligence required for the efficient execution of all day-to-day business operations. Most or all of a company’s data must reside in the ERP system to provide a single, enterprise-wide version of reality.
Finance needs an ERP to quickly close accounts. Sales needs an ERP system to manage all customer orders. Logistics relies on reliable ERP software to deliver the right products and services to customers on time. Accounts Payable needs an ERP system to pay vendors correctly and on time. Management needs instant visibility into business performance to make timely decisions. And finally, banks and shareholders need accurate financial records and therefore rely on reliable data and analysis, which the ERP system is able to offer.
How do ERP systems work?
An ERP system , also known as an ERP suite, consists of integrated business modules or applications that communicate with each other and share a single database. Each ERP module is typically focused on a particular business area, but they all use the same data to meet business needs. Finance, accounting, human resources, sales, purchasing, logistics, and supply chain are common entry points. Businesses can start with the module of their choice, then add modules and grow as their needs change.
ERP systems also support industry requirements, either as part of the core functionality of the system or through application extensions that seamlessly integrate with the suite.
ERP software can be purchased through a cloud subscription-based model (software as a service) or through a licence-based model (on-premises).
The most popular ERP modules
- Finance: The finance and accounting modules form the backbone of most ERP systems. In addition to managing the general ledger and automating key financial tasks, it facilitates the monitoring of accounts payable receivable, thevable, closing of accounts, financial reporting, compliance with revenue recognition standards, reduction of financial risks, and much more.
- HR management: Most ERP systems include an HR module that provides key functionality such as time and attendance or payroll management. Extensions, or even entire human capital management (HCM) suites , can plug into ERP and provide more robust HR functionality for multiple areas, from people analytics to experience management collaborator.
- Sourcing and purchases: The sourcing and purchases module helps companies to source and obtain the materials and services necessary to manufacture their products or to obtain the items they wish to resell. The module centralizes and automates purchasing, including quote requests, contract creation and approvals. It can reduce the risk of under- or over-purchasing, improve supplier negotiations with AI-powered analytics, and even seamlessly connect to buyer networks.
- Sales: The Sales module tracks communications with prospects and customers and helps sales reps use data-driven insights to boost sales and target prospects with the right promotions and upsells. It includes functionalities focused on the order management process (management of the orders themselves, contracts, invoicing, sales performance management, sales force support and others.
- Product then: the production module is a key component of the ERP software for planning and execution. It helps companies simplify complex production processes and ensure production keeps pace with demand. This module typically includes requirements deterministic planning (MRP), production planning and execution, quality management, and other functionality.
- Logistics and supply chain management: another key component of ERP systems, the Supply Chain module allows the tracking of the movement of goods and supplies throughout a company’s supply chain. This module provides tools for real-time management of inventory, warehouse operations, transportation, and logistics, and helps build supply chain visibility and resilience.
- Services: In an ERP, the services module helps companies provide the reliable and personalised services that customers expect. It also offers powerful analytics to help service reps and technicians quickly resolve customer issues and build loyalty.
- R&D and Engineering: ERP systems with a lot of features include an R&D and Engineering module.ule . This module offers tools for product design and development, product lifecycle management (PLM), pre-compliance,alliance and more, to enable companies to create new innovations, quickly and affordably.
- Enterprise Fixed Asset Management (EAM): Robust ERP systems can include an EAM module , which enables companies with large fixed assets to reduce downtime and maintain machinery and equipment in peak operating condition. This module includes features for predictive maintenance, scheduling, operations and capital planning, as well as environmental, health and safety (EHS) and other management.
Modern ERP systems are open and flexible, and can easily offer integration with a wide range of software products using custom connectors or adapters, such as application programming interfaces (APIs). Zoho CRM is also providing its ERP services. Other ERP integration methods include ESB (Enterprise Service Bus) and iPaaS (Integration Platform as a Service). iPaaS, which offers a cloud-based approach, is a very popular option among modern businesses. iPaaS platforms can quickly synchronise on-premises or cloud ERP with same-vendor or third-party SaaS applications. They typically require little to no code, are flexible and relatively inexpensive, and enable a wide variety of other uses, such as automatic API generation and machine learning data integration.