What is Enterprise Resource Planning?

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Enterprise resource planning is a business component that usually brings a lot of mixed reactions. Some companies fear it because they think it is complex and costly while others do not see the importance of embracing it in their production chain. Embracing ERP can bring a lot of benefits only if you know what it is and recognize its importance.

What It Is

Enterprise resource planning refers to a process by which a business monitors and integrates the important parts of its production processes. All ERP initiatives are done via a software designed with the latest features. The software brings together areas such as planning, acquiring inventories, sales, finance and human resources. It offers a perfect platform that encourages perfect flow of information from one area to another. There are several software out there that can help both small and large companies implement ERP perfectly.

The first ever ERP system to be developed was SAP, a software used to help companies formulate their customer relations management strategies. Many software have cropped up since then, making ERP initiatives affordable and flexible.

Benefits of Embracing ERP

A business that uses an ERP software reduces the need for manual entry of information, leading to more streamlined data entry and collection processes. Through the ERP interface, businesses are able to centralize and update data easily. This enables the employees to work without wasting a lot of time looking for data from various departments.

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Companies and individuals can use ERP to make reporting easier and more customizable. This is possible due to the improved reporting capabilities that come with the software. Companies and individuals can now respond to complex data without relying on IT experts. It is also easier to provide quality customer service due to easier access to more accurate market data on ERP platforms.

The Cost of Implementing ERP

The cost of implementing ERP depends on the type and size of the business. Small businesses pay between $10,000 and $150,000. Mid-sized businesses part with $150,000 to $1 million while larger enterprises pay up to $10 million. A larger percentage of the cost goes to human resource while the rest cover database management, software and infrastructure.

Best Practices for Implementing ERP

About 50 percent of companies who use ERPs take longer than expected to realize benefits. This happens because they use wrong methodologies during the installation and implementation stages. A good installation and implementation process requires proper planning.

Begin by ensuring that all departments know the goals they want to achieve. This should include the processes they want to improve and the ones that should be scrapped off. After that, ask for collaboration and commitment from everyone to ensure the project is implemented smoothly. Let them understand why you want to use the ERP and what benefits they should expect. Ensure you provide quality training to everyone who is expected to use the software. Also, ensure that the ERP service provider has highly skilled consultants to help you if a problem arises.

The ever-expanding population and increased rate of doing business leave companies with no any other option but to implement effective planning strategies. An enterprise resource planning software will help you manage all the departments and streamline your business processes significantly, leading to fewer interruptions and increased work efficiency.