What exactly is an ERP?
ERP software has been considered a business necessity for decades now. But what really is an ERP?
ERP is an acronym for Enterprise Resource Planning. In other words, ERP is a tool for managing information. ERP describes a class of business management software that offers broad functionality across multiple aspects of a business operation, from back office to accounting tasks, to inventory management, purchasing, and order processing.
Companies use ERP software to help consolidate data from multiple departments across their entire business into one centralized database. This improves cross-departmental visibility, business efficiency, and improves employee collaboration.
You can think of an ERP system as a web that connects all the departments and computer systems in an organization. The central feature of all ERP systems is the shared database that supports multiple functions used by different departments within a company. For example, employees from your Accounting and Sales department can rely on the same information for their specific needs. This improves efficiency and translates to cost-savings as people spend less time digging for data.
What are the benefits of ERP?
For companies, an ERP software is at the heart of their business. Take it away, and the company would struggle to continue. Here are just a few key ERP software benefits that apply to any company regardless of which or how many elements of the software they might use:
- There’s a single source of business truths
- There’s improved business insights with access to real-time information
- Lower operational costs through streamlined business processes
- Time savings due to automation of routine tasks
- Minimize use of separate applications and the associated duplicate data entry
- Improved collaboration as users share common data across the organization
- Efficiency gains through integrated workflows spanning operational tasks
- Higher user adoption rates and lower training costs thanks to a common user experience
- Reduced risks through improved data integrity, security, and financial controls
Surprisingly, some of the major benefits of ERP software are not actually what lies within, but the world of capabilities that an ERP software provides. Modern ERP softwares support application programming interfaces which allows two applications to talk to each other, syncing data from other critical business applications such as CRM, payment processing services, and EDI service providers.
Is ERP worth it?
So is ERP worth the investment? That would depend on many factors, such as company size and budget. However, for an existing enterprise or a rapidly growing one, we would definitely recommend adopting an ERP system for your organization. While the term “ERP” may come into and out of fashion, the broad and robust functionality that modern ERP solutions provide will always be a necessity. So yes, an ERP software is a worthy investment.
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