What is ERP?
ERP stands for Enterprise Resource Planning and is a system or method of integrating various business management practices and applications from different aspects and departments of a particular company. It usually involves a software system with a centralized base, wherein all business units are connected to it for the purpose of increasing efficiency across all platforms.
The ERP software or method has a sort of central data command at its core. This allows for easy exchange of information between many departments of a particular large organization. The main purpose of its existence is to integrate business practices by the different departments into one efficient and cost-effective way of running the company. Every ERP system is different and tailored to each company. For some, it will only involve internal business processes in operations, planning, manufacturing, accounting, shipment, and distribution. But some companies would allow the integration of external parts of a particular business like suppliers and outside investors. Depending on a company’s needs, ERP is a big software investment but could result into huge economic gains.
Many companies invest in having an ERP system because of its benefits on increasing employee productivity and improving overall performance. When an ERP system is in place, one department can readily interact and communicate with other departments using the same system and software tools, resulting to faster and more efficient transactions. And because of easier access to other applications from other business units, employees will have more time to improve on their own tasks and perform other vital functions for the company. And since there is increased efficiency in the internal environment, external customers will also benefit from speedier processing of transactions.
Some organizations do not want to embrace the idea of integration of units offered by ERP systems due to its complexity and high cost of investment and implementation.