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What is ERP System?



September 13th, 2019 ERP

Enterprise Resource Planning (ERP) has been defined in a variety of ways. This is mainly due to the fact that it has many different functionalities. If you search the internet for ERP, you will notice that various websites have defined it in their own way based on how businesses are using their ERP. To better understand what it is, you need to know almost all of its uses and how your business can benefit from it.

What is ERP software?

ERP doesn’t really mean much from its name alone. You will need to understand how businesses function, the various departments, processes, etc. to get an idea of what is meant by ERP. If you are an entrepreneur, take a look at all the processes and departments that are in the business. Now, think of an application that can manage all those processes and departments effectively, that is what an ERP does.

ERP definition

It is a system that simplifies the management of your business. It enables the flow of data between various departments like accounting, finance, project management, risk management, customer relations management, or whatever department created in your enterprise. An ERP software provides a shared database for all the sections of your company. For example, the sales and HR departments are provided with the same data for accurate analysis and better decision making.

History of ERP

Gartner was the person who came up with the term ERP back in 1990. But before this, in the 60s, the concept was used for inventory management in the manufacturing industry. Software developers built programs to manage inventory, finances, and status reports. By the 70s, it became Materials Requirements Planning (MRP) systems for managing the process of production. In the late 80s, the term evolved to MRP-II or Manufacturing Resource Planning because the process of manufacturing was much more involved. In the 90s, it already involved all other business processes like HR, finance, accounting, etc. that created a platform for ERP to become what it is today.

ERP systems can be used by any business; it all depends on their needs and how far they think into the future. Many companies have started using ERP systems, especially with the coming of Software-as-a-Service solutions. This has made ERP software cheap, easy to implement and manage. We should not also leave out the fact that cloud-ERP systems give users real-time reports and encompass other business-critical apps like sales force automation, marketing automation, and business intelligence.

Types of ERP

  • Cloud ERP

    Software-as-a-Service or cloud-based computing is a technology that permits users to access apps through the internet. These apps run on shared computing resources that are managed in remote data centers. Therefore, cloud ERP is a SaaS that can be accessed by members of a company via the internet.

    It generally has a lower cost to run because the enterprise does not need to spend money on hardware equipment and security updates. All of these are taken care of by the hosting company. The enterprise has to pay only a monthly subscription fee. The Cloud ERP gives the members of the enterprise access to the ERP at any time and from any location where there is internet.

  • On-premise ERP

    In this case, the enterprise decides to source ERP software in-house and maintain it at their office, instead of buying a subscription from another hosting company. This option is more costly since your enterprise has to manage the hardware requirements. But some companies still prefer to use an on-premise ERP if they have the means because it gives them more control.

  • Hybrid ERP

    This type of ERP gives companies the ability to use cloud-based applications to supplement their on-premise ERP. From the name, it is evident that hybrid solutions give users the advantages of both the cloud and on-premise ERP. It has a much lower cost than the on-premise solution while giving users other advantages of the cloud-based solution.

Business value and benefits of ERP software

  • Cost reduction

    ERPs reduce the cost of running your company, eliminate delays, and use automated processes to manage operations. They also decrease costs by preventing the waste of resources and eliminating unnecessary steps in your business process.

  • ERP streamlines business processes and operations

    All departments in your enterprise have access to the same real-time data that can be used to make important business decisions.

  • Improves the productivity of your employees

    Automation of tasks is one of the many advantages that an ERP system provides for its users. This process cuts down the workload of employees who can now focus on more critical tasks.

  • Is created to fit the needs of your enterprise

    ERP systems can be customized according to the specific needs of your business. Vendors offer different modules that companies can implement depending on their needs. Each module can function alone or can be integrated with other applications. This is very useful because enterprises can get an ERP interface to solve their specific problems and will not have to pay for features that they are not using.

Signs that you need an ERP

  • The basics are hindering your growth

    Many businesses are not able to grow because they are stuck with the basics. At the start, basic software can cover most of the needs of your business, but once you begin to see some growth, it is always advisable to switch to an ERP. This is because the basic software will not be able to handle most of your business process; therefore, will be hindering growth.

  • You are finding it difficult working with separate systems

    Most people are adamant to change for various reasons. If you are one of those and you are still using different systems to run your enterprise, then it is time to change. For example, updating the system used in the sales department may make it incompatible with the system used in the HR department. This may cost you significant time and money trying to synchronize the systems. Your best option is to switch to an ERP that encompasses all the departments in your business.

  • Failure to meet customer expectations

    Customers are the most important part of any business. Failing to meet their expectations can only lead to your downfall. If the current system you are using cannot accommodate your staff and customers, then it is time you switch to an ERP that will provide your staff with the tools necessary to satisfy your customers.

Getting started with the Codejig ERP

This is a system that is designed for all types of businesses and that will automate the core processes of your enterprise. It is one of the best ERPs you will find. The Codejig ERP is easy to use and can be modified to meet the specific needs of your business. You will be able to easily and quickly adjust application logic - this feature is unique only to the Codejig ERP. Third-party apps can be integrated into the ERP seamlessly. Take your business to a new level with the Codejig ERP.