Enterprise resource planning (ERP) refers to a management system that integrates the departments and functions of a 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 a medium-sized business. And while many people still think of ERP as a back-office solution, newer versions come with inbuilt CRM functionality.
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 re-engineering beyond the software. In choosing to implement ERP you are also committing to a complete change of business processes.
Enterprise resource planning (ERP) systems are typically used to replace a disparate set of individual systems strung together in a complex and clumsy manner. These isolated systems often operate on different software and hardware, and utilize separate data warehouses. Managing the interfaces between the various systems is a task in itself.
ERP software is modular in nature. It generally splits into functions such as accounting, manufacturing, HR and CRM. Within this, each module can have sub-modules with hundreds of reports, forms and functions. During the selection process, evaluate the software functions with sample historical data to find the best match. It is vital to identify the functions and features in the new ERP system that will provide meaningful and quick access to data.
A vital step in choosing an ERP system is the selection of a project manager. The project manager acts as a liaison with vendors, coordinates internal needs assessments and creates a selection team, which should represent all the business units in your organization.
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