A true Enterprise Resource Planning (ERP) system integrates both internal and external information flows used by the organization within a single, comprehensive solution. An ERP solution incorporates the practical systems used by organizations to manage the basic commercial functions of their business, such as planning, inventory/materials management, purchasing, manufacturing, finance, accounting, human resources, marketing and sales, services etc. The objective of the ERP solution is to drive the flow of information between all internal business functions while managing connections, or “touchpoints,” to outside stakeholders.
ERP solutions run on a variety of computer hardware and network configurations, including “on premises” (i.e. client/server) or hosted (i.e. “cloud-based” or Software as a Service).
Regardless of the configuration, typically ERP solutions use a common database to hold information from the various business functions that are accessible in some form or another by various users. The use of an integrated database to manage the solution’s multi-module application framework within a common information system is one of the primary ERP benefits of this kind of system over “point solutions.”
Unlike point solutions (historically used by small to midsize businesses) that rely on multiple (sometimes duplicating) databases which strain IT resources, ERP solutions standardize the use of one application to run an entire business. This not only increases efficiencies but also decreases the overall total cost of ownership (TCO), thereby reducing operational costs and improving the company’s profitability.
Additional ERP Benefits:
- Tighter controls for financial compliance declaration (e.g. Sarbanes-Oxley and Basel II) as well as other forms of compliance reporting.
- The single data source for product and services information – such as information related to suppliers, vendors, customer orders and the products themselves – drive rapid product development and launch cycles which increases a company’s overall market share.
- Increased access to valuable corporate data delivers a clear, global view of the business that drives continuous improvement strategies and establishes common performance metrics and measures to gauge the health of the business.
- Effectively managing projects holistically fosters decision making at critical levels in the development and/or manufacturing process.
- Support for streamlined sourcing and procurement processes drive alignment to customer demands and also deliver a centralized buying model to reduce unauthorized and unnecessary expenses.
- Providing sales and operations planning with access to critical information fosters “closed loop” processes that ensure the business does not over promise and/or under deliver to customers.
- Automating business processes such as invoicing and sales and purchase orders within one system improves forecasting accuracy and reduces inefficiencies.
- Using a single base of information for billing and other customer interactions improve service levels and increase customer retention.
Reaping ERP Benefits: Implementing the Right Solution
ERP solutions are continually refined and updated. With the myriad of different systems that are available today, it’s critical for organizations who are considering an ERP system for the first time or migrating to an alternative ERP solution to partner with a company that first assesses their needs and helps them identify the system that will support their business objectives. Equally, if not most important is to work with a company that defines and integrates an ERP solution that seamlessly supports their business processes.
Since ERP solutions are the operational backbone of a growing or established organization, it’s necessary to partner with a company that understands your business, can improve the quality and efficiency of your organization, and delivers a solution that will ultimately save time and expense.