Using ERP Software Application to Streamline Business Functions
Enterprise resource planning (ERP) systems, for the buzz it had been generating lately, is not really an entirely new concept. Forty years ago, the ERP system was first introduced to manufacturing firms as a means to improve inventory control and management. An ERP software system is designed as an enterprise-wide information system coordinating all the information, resources, and activities that are needed to complete business processes like billing or order fulfillment.
In between the 70’s and the 80’s, the scopes it covered expanded to include other production and materials management functions due to the increasing numbering of companies that are deploying ERP. All the while, its design was still primarily for manufacturing company’s usage. Later during the 90’s, it became clear that other business types could also benefit from the ERP. Vendors also realized that there was a need to link in a coordinated and cohesive way all internal business processes in order for business organizations to truly achieve efficiency. This resulted to the transformation of ERP into a broad-reaching environment that covered all back-office activities of a company.
What is an ERP?
An ERP is a solution characterized as supporting varied business functions such as project management, manufacturing, human resources, supply chain management, financials, and customer relationship management using a shared database. It makes use of combined methodologies with hardware and software components to integrate varied back office tasks and processes across an organization.
Prior to the introduction of the ERP concept, most organizations had separate, customized systems for each department like payroll and human resources. HR systems which are often called HRIS or HRMS usually managed information related to employees and personnel while payroll department would compute and record paycheck information for individual employees. It is usually difficult to integrate data from the different systems usually purchased from different manufacturers or vendors and most integration and information sharing attempts often resulted to problems.
An ERP system is based chiefly on a common database with a modular software or application design. The common database enables each department in the organization to record and to access information in real-time. This makes the information accessible and easily shared. The modular application design means that any business can select the modules it needs to improve its business performance. Any business organization can mix and match available modules from competing vendors, or even add new modules of their own into it.
What are the Advantages of Using ERP?
ERP software systems are designed to improve the performance of key back office processes across an entire company; from planning all through execution, control and overall management. This is accomplished by coordinating and integrating previously separated and disjointed processes and functions. More specifically, the enterprise resource planning (ERP) software system gives you the advantage of:
1. Standardizing core procedures that significantly reduce overlapping and redundant activities which results to time and money waste.
2. Creating a sole, centralized repository of business information accessible in real time by those who need it.
3. Enabling more effective management and resource allocation
4. Facilitating more efficient completion of routine daily tasks and reducing overhead costs.
Who Needs ERP?
All types and sizes of companies implementing ERP may benefit from it even if the business processes and workflows are already relatively smooth. It is however those companies or business organizations that has cluttered and fragmented business procedures hindering growth and profitability that have the most critical need for this software solutions. ERP allows businesses to define its best practices, and streamline its activities and functions across all departments.
Revenue data that are maintained by finance department does not always match the record generated by sales department in most organizations. Disparities such as these often cause problems and make it particularly difficult to make assessments critical to planning and reporting in the case of publicly held companies. The software solutions give businesses the ability to centralize and consolidate the entire back office information so that every transaction entered by each department is recorded, handled and managed by just one system. This results to the eradication of conflicting information and integration of all applications across the different departments.
In conclusion, these software solutions offer business organizations is the consolidation and unification of all the data from previously separate applications. This greatly simplifies the keeping of information in synchronization across the entire organization and reduces the complexity of the required hardware and software infrastructure. It also contributes significantly to the standardization and reduction of the number of software specialties required. In short, ERP software application results to better efficiency at reduced cost.