ERP, which is an abbreviation for Enterprise Resource Planning, is principally an integration of business management practices and modern technology. Information Technology (IT) integrates with the core business processes of a corporate house to streamline and accomplish specific business objectives. Consequently, ERP is an amalgamation of three most important components; Business Management Practices, Information Technology and Specific Business Objectives.
Integration is Key to ERP Systems
Integration is an exceptionally significant ingredient to ERP systems. The integration between business processes helps develop communication and information distribution, leading to remarkable increase in productivity, speed and performance.
The key objective of an ERP system is to integrate information and processes from all functional divisions of an organization and merge it for effortless access and structured workflow. The integration is typically accomplished by constructing a single database repository that communicates with multiple software applications providing different divisions of an organization with various business statistics and information.
Although the perfect configuration would be a single ERP system for an entire organization, but many larger organizations usually deploy a single functional system and slowly interface it with other functional divisions. This type of deployment can really be time-consuming and expensive.
ERP Systems Improve Productivity, Speed and Performance
Prior to evolution of the ERP model, each department in an enterprise had their own isolated software application which did not interface with any other system. Such isolated framework could not synchronize the inter-department processes and hence hampered the productivity, speed and performance of the overall organization. These led to issues such as incompatible exchange standards, lack of synchronization, incomplete understanding of the enterprise functioning, unproductive decisions and many more.
For example: The financials could not coordinate with the procurement team to plan out purchases as per the availability of money.
Hence, deploying a comprehensive ERP system across an organization leads to performance increase, workflow synchronization, standardized information exchange formats, complete overview of the enterprise functioning, global decision optimization, speed enhancement and much more.
Advantages of ERP Systems
There are many advantages of implementing an EPR system. A few of them are listed below:
- A perfectly integrated system chaining all the functional areas together
- The capability to streamline different organizational processes and workflows
- The ability to effortlessly communicate information across various departments
- Improved efficiency, performance and productivity levels
- Enhanced tracking and forecasting
- Improved customer service and satisfaction