Enterprise resource planning (ERP) refers to a management system that is used integrate the various departments and functions of business into a unified system. The single system is composed of various software modules and components that handle all the different processes of each department, from manufacturing operations to finance and human resources. An ERP system will generally require both hardware and software components. The system is most likely to have a single data warehouse (a central database). While ERP systems originated from the need for manufacturing planning systems, they are now enterprise-wide in their functionality.

 

ERP suites come in many forms and many are scalable to the requirements of any business. And while many people still think of ERP as a back-office solution, newer versions come with inbuilt CRM functionality.

 

The original ERP systems were integrated monolithic packages, but newer ERP systems are more flexible and can be installed as separate components. This is a much better solution. It means you can install the ERP modules incrementally, as needs or costs dictate. And you won't have to worry about interoperability as you expand your ERP solution.

 

The aim of ERP is to aid interaction between departments and allow all the different business functions access to vital information. But this can lead to concerns about data integrity and security. A company like yours must handle this issue carefully. Plan appropriate dissemination of data in collaboration with your ERP consultant.

 

You'll hear talk about huge and expensive ERP implementation failures. To avoid finding yourself in a similar situation, it is essential that you take ownership of the ERP implementation. Even a well-planned ERP implementation will lead to a great deal of upheaval in your business, and will change the way your business functions. You'll need to focus efforts on employee retraining and formulating new work processes to make it a success. This is another area in which your ERP supplier or consultants can help you.

 

While ERP is introduced into an organization as a software solution, it is really a work methodology that requires a great deal of business process analysis and system reengineering beyond the software. In choosing to implement ERP you are also committing to a complete change of business processes. The good news is that this will lead to business benefits and cost savings in the long run.