What is an ERP system? In short, it’s a centralized platform that aligns all of your core business processes to improve the flow of your day-to-day activities. From accounting and procurement to human resources and compliance, ERP brings together your disparate data points into customizable, role-based dashboards.
Today, we’re going back to the basics. In this blog post we explore the definition of ERP, its history and how it can transform your business.
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What is an ERP System: A History
Enterprise resource planning systems can help your company unlock new efficiencies, facilitate data flow and improve teamwork, all while keeping your customers happy and building your bottom line.
To understand how this is possible, we’ll go back in time to look at the history of ERP software:
The 1960s: Improved Manufacturing Management
ERP was born out of necessity, during a time when the idea of centralized control was little more than a pipe dream.
Back in the 1960s, manufacturers were looking for a way to better manage, track and control their growing inventories. In response, software engineers created simple material requirements planning (MRP) solutions. These worked at the basic level and made it easier for manufacturing firms to oversee the various manufacturing, purchasing and delivery operations occurring within their enterprise.
The 1970s and 1980s: The Rise of MRP II
Throughout the 1970s and the 1980s, MRP systems continued to be popular in the manufacturing realm. Over the decades, these systems became sleeker and more sophisticated. As other manufacturing processes (e.g. scheduling, production) were incorporated into the platform, the acronym changed to manufacturing resource planning, or MRP II.
The 1990s: New Industries and Functionalities
Then, in the early 1990s, MRP systems began to expand outside the manufacturing industry. These newer systems kept the inventory control and manufacturing functions of their predecessors but added other departments, including sales and accounting. During this decade, Gartner first began referring to the newly expanded MRP systems as ERP systems.
Today: Fully Integrated for the Modern Enterprise
Today, modern ERP systems are fully integrated. This means they’re capable of streamlining every business function in your enterprise. From a central, shared database, all departments can access the same real-time data. In addition to manufacturing and supply chain management functionality, you can use ERP for:
- Finance and accounting
- Project management
- Advanced reporting
- Customer relationship management (CRM)
- And more
Today’s ERP systems are more robust than ever before. You’ll discover that many ERP vendors offer industry-specific functionality that you can implement out-of-the-box for a faster implementation.
Examples of ERP Systems
One consideration is whether you want to host your ERP system on premise, or whether you’ll opt for a cloud ERP system that operates on a software as a service (SaaS) model. Either way, our ERP Selection Guide can help you navigate the vendor landscape and various deployment options.
The Business Value of ERP
After that brief introduction to ERP, you’re probably wondering, “what does that mean for my organization?” Let’s take a look at a few of the top ways that an ERP system can help you achieve your business goals.
1. Saves Your Organization Time
How do you currently respond when a time-sensitive issue arises? Are you able to quickly access the data you need? If so, are you confident that it’s the most recent and accurate version?
With a currently implemented ERP system, you never have to waste time digging through different versions of data to find the intelligence you need. Instead, all of the real-time insights you need are in one spot, so you always know where to look.
2. Improves Data Accuracy
It’s no secret that manual data entry is laborious and time-consuming. It is also vulnerable to the possibility of human error. From payroll to time management, incorrectly inputting even one letter or number can have drastic consequences.
An ERP system eliminates this risk by automating most of your core functions. This way, you can enter, manipulate and share data with confidence.
3. Improves Team Performance and Collaboration
Your workforce is the backbone of your company, and with ERP, team members can work together more easily than before. For example, employees can send and receive data across departments without the usual siloes or bottlenecks caused by inefficient processes.
4. Streamlines Business Processes
A successful company is one where every process feeds into the next. In other words, there are certain actions that trigger others, whether that effort is applied toward generating a report, manufacturing a new product, resolving a customer complaint or reaching out to a sales lead.
Before ERP, these processes were often disjointed and rarely consistent. With ERP, you can define and streamline processes, and gain visibility into every facet of the company, from order management to customer support.
5. Unifies IT Costs
With ERP, you can unify most, if not all, your business functions into one system. You don’t have to worry about spending money on multiple systems that each require dedicated staff, infrastructure and support.
This can equal money in your pocket, which you can reinvest in your company. You’ll also save money on end-user training, as there’s fewer systems for employees to learn.
Discover How an ERP System Can Change Your Organization
This blog might have answered the basic question, “What is an ERP system?”, but the true business value runs much deeper. From simplified and streamlined workflows to easier collaboration and reduced IT costs, this is just the tip of the iceberg of potential ERP business benefits.
If you’ve been considering the prospect of implementing an ERP solution at your company, we’d love to connect. We can help you understand and align your strategic goals and select a vendor that meets those needs. From there, we can oversee every aspect of the ERP implementation process. Request a free consultation below to learn more.