Enterprise Resource Planning (ERP)


What is Enterprise Resource Planning 'ERP'?

An Enterprise Resource Planning or ERP is an integrated computer-based application used to administer internal and external resources, including tangible assets, financial resources, materials, and human resources. Its use is to aid the flow of information among all business functions within the limitations of the organization and manage the connections to external stakeholders.

ERP is built on centralized database and usually utilizes common computing platform and consolidates all business operations in a uniform and enterprise wide system environment. Enterprise resource planning is an industry term for the wide set of activities that assist a business in supervising the vital parts of its business. The information is obtainable through an ERP system which provides visibility for key performance indicators essential for meeting corporate objectives. ERP software applications can be used to run product planning, parts purchasing, inventories, interacting with suppliers, providing customer service, and tracking orders. It can also consist of application modules for the finance and human resources aspects of a business.

It's an extension of the manufacturing resource planning .The aim of ERP applications and software solutions is to develop a technology that integrates all department of an organization into a particular system with one central database to provide real time information to every user in the company with accurate, present information that's formatted according to individual preferences and needs.

An ERP system can either reside on a central server or be distributed across modular hardware and software units that offer "services" and communicate on a local area network. The dispersed design permits a business to bring together modules from different vendors with no need for the placement of many copies of complex and expensive computer systems in areas which will not utilize their optimum capacity.

The use of an ERP system can involve substantial business process analysis, employee retraining, and new work procedures. This is relatively a complex development undertaking given the large number of processes, information, geography and reporting preferences inherent in any company, particularly large multinational organizations. Prior to the first ERP systems were developed, every department within every corporation had their individual technology infrastructure and computer database system modified to the way each department carried out business. Every department was used to their own "system" and way of conducting their daily business and communicating with and sharing information with external departments. However, difficulty soon escalates when companies are needed to merge and share critical information for planning, budgeting and more importantly strategic planning. The complexities and issues only increased as companies grew domestically and yet more so internationally.

Enterprise resource planning systems and applications were developed to unite the entire organization and it was quickly discovered that this was no simple task and is still not today, nearly 40 years later. The complexities were concerned with bridging many departments into single system that amalgamate with manufacturing, inventory, fleet management, shipping, scheduling, finance, accounting marketing, customer service and human resources. Therefore there are hundreds of ERP software application and solutions on the market versus just a handful of solutions existing in the 1980's. Not even an explanation seems to fit everyone and the soaring demand for a solution has brought other products in the market from new vendors and developers every year.

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