ERP

Definition enterprise resource planning

The definition of enterprise resource planning is an integrated computer-based application used to manage both internal and external resources.  Some of these may include assets, finances, materials, inventory, order tracking, and human resources. The goal of ERP is to make the flow of information between all business functions much easier. This data needs to run back and forth between departments inside the organization as well as connect with the shareholders. Built on a centralized database and typically utilizing a common computing platform, enterprise resource planning consolidates all business operations into a standardized, enterprise-wide central system.

The most notable benefit of enterprise resource planning is its ability to correctly follow and adapt for customer orders –from the placement of the order all the way through to sending the invoice for work completed and delivered. After an employee enters a customer order into an ERP system, information detailing the order (the customer’s credit rating and order history from the finance module, the company’s inventory levels from the warehouse module, and the shipping dock’s trucking schedule from the logistics module) can be viewed immediately.

Creating a single software program that serves the needs of finance as well as it does the people in human resources, and those who work in the warehouse is not easy.  And yet software designers have been able to accomplish just that.  Today there are hundreds of vendors selling their own ERP software solution.

Before enterprise resource planning, every business department had to have its own computer system optimized for the particular way it functioned. An additional benefit of ERP is that all business departments are now able to see the same information, and all have access to making necessary updates and corrections, so the entire company has real-time information.

Once ERP became more readily available, most businesses purchased ERP software systems that would reside on a centralized server.  However, the definition of enterprise resource planning also allows for the ERP to be distributed across modular hardware and software units that communicate on a local network. This second method of purchasing an ERP solution not only allows a company to assemble modules from different vendors, but it does away with the need for the business to purchase expensive hardware in which to store the software data.

About 5 years ago the business world began to buzz with comments that ERP has lived out its use. Some businesses began relegating it to the area of “legacy systems.”  Recent research, though, reports that is not true. In fact, an overwhelmingly high percentage of respondents stated their companies could not survive without ERP.

Written by :

Amy Cruz