What is an ERP – Enterprise Resource Planning

An ERP stands for Enterprise Resource Planning, it is a business software systems that support entire business or enterprise throughout the project life cycle in organizing, planning, maintaining, tracking and utilization of resources (Man, Machine, Material and Money) effectively.

Let discuss briefly about what is an ERP software and how it helps in business achievements.

  1. History of ERP systems
  2. Why do we need ERP software
  3. ERP Advantages and Disadvantages
  4. Common ERP modules
  5. Why ERP
  6. Top ERP Vendors List
  7. ERP Software Packages

What is ERP – Enterprise Resource Planning

ERP stands for Enterprise Resource Planning. It is a gateway to integrating the data and processes of an entire organization into a single system with all modules that supports the core business areas.

  • ERP systems cover all basic functions of an organization
  • Enterprise Resource Planning is developing into a Multi-Module Application Software Package that enables business processes across the supply chain management.
  •  Allows to integration all the operational units such as financing, human resources, manufacturing, sales, marketing, finance & accounting, procurement, inventory management and so on.
  • ERP software system allows the business to achieve real-time business process, increase productivity, improve delivery, reduce cost and increase profits, increase product quality,improve information and performance management.

In Simple terms, we can explain an ERP as : –

ERP is a business suite with number of applications that are integrated together between system and assist a organization in collecting, managing and reporting information on real time throughout the business process.

Enterprise Resource Planning

History of ERP Systems

  • ERP System have took years to emerge and is still evolving. These systems are transformation and ever-changing.
  • In 1970’s manufacturing chain was the center of business operations. This led to the development of MRP systems.
  • The second phase of ERP development occurred in 1980’s which focused more on quality measures which led to the evolution of MRP II Systems.
  • In the 1990’s, Enterprise Resource Planning started using multi-module application to increase organizations process. ERP Systems integrates with all the modules of organization’s business modules and this led to the evolution of ERP System.

Why do we need ERP Software

ERP is an integrated systems of different business process for e.g. if a company has different departments like sales department, production department, material management, finance department, etc, so in ERP we have an integration of all the departments and they all use common database.

  1. We can have standardization of systems across locations. For e.g. for MNC companies can have different plants in different locations with standard systems.
  2. ERP systems helps to have a better controlling over the different process.
  3. An ERP is a integrated systems, it helps to provide the better reporting.

ERP Software components

What is ERP - ERP System components

The important and major components of ERP systems are manufacturing, SCM, Financial Accounting management, Human resources management and Customer relationship management.

ERP Advantages and Disadvantages

Advantages of Implementation of an ERP system :

  • Reduced redundancy in entering data
  • ERP system provides real-time information on all needs of the organization in a single system.
  • It allows everyone to access the same source and share the same source of information
  • It allows access, updates instantly, and saves a lot of time.
  • Integration among different functional areas to ensure proper communication, productivity, and efficiency
  • The Accounting for all of these tasks, tracking the Revenue, Cost, and Profit on a granular level.
  • Allow standardization of business processes and enterprise information.
  • It is a single source of systems that can be used throughout the organization.
  • ERP software enables real-time information availability and reduction in inventory and cycle times.
  • The benefits of ERP systems are customer satisfaction, better information, productivity, increased quality and decreases in time to market, product cost, delivery time, and inventory levels.

Disadvantages of ERP Systems:-

The disadvantages of ERP systems are as follows :-

  • Takes a lot of effort and time and requires a lot of training
  • Customization of the ERP software is limited, you may not allowed to design application as per business requirements.
  • ERP systems can be very expensive to install.
  • ERP Systems centralize the data in one place and this can increase the risk of loss of sensitive information in the event of a security violation.
  • The usage of ERP system can be difficult for users, so appropriate training is to required to use the ERP software.

Read more for ERP Advantages and Disadvantages

Common ERP Software Modules

  1. Sales Order (SO)
  2. Purchase Order (PO)
  3. Finance and Accounting
  4. Manufacturing Resource Planning
  5. Customer relationship management (CRM)
  6. Human Resources
  7. Procurement
  8. Marketing

Erp systems modules

The important modules in ERP SAP Systems are as follows-

Manufacturing – A manufacturing company could use an ERP system to track and manage virtually every operation in the organization. Requests for Proposal (RFP) and corresponding quotes can be entered and assigned to any large database of customers. Quotes can be changed to Sales orders upon receipt of purchase orders, with line items and corresponding prices that represent goods to be delivered to a customer.

Why ERP

  1. It is a single application integrated software program.
  2. It is a single database system.
  3. ERP systems allow to share the of information and communication more effectively.
  4. It automates customer orders, order fulfillment, billing, shipping and tracking, and so on.

The difference between before ERP and After ERP systems shows, why ERP software is important to implement for any business.

Before ERP Before ERP systems After ERP systems After ERP Systems

Top ERP Vendors list

ERP Vendors are classified based on the clients they serve. We have three types of ERP vendors they are Tier I, Tier II, and Tier III. Here we are going to list the top ERP Vendors in the following sectors.

  1. Manufacturing and Distribution Industry.
  2. Transport, Communication, Energy, and Sanitary service.
  3. Service Sector and finally
  4. Retail Sector.

Top ERP vendors in Manufacturing and Distribution Industry.

SAP Oracle Microsoft Infor Epicor IFS lawson Others
Market Share 28% 15% 12% 7% 5% 2% 2% 29%

TOP ERP vendors in Transport, Communication, Energy and Sanitary service.

SAP Oracle Microsoft Infor Epicor IFS QAD Others
Market Share 35% 23% 15% 4% 2% 1% 1% 19%

 

Top ERP Vendors in Service Sector.

SAP Oracle Microsoft Infor Epicor Netsuite lawson Others
Market Share 30% 21% 15% 2% 3% 2% 2% 25%

 

Top ERP vendors in Retail Sector.

SAP Oracle Microsoft Infor QAD SAGE lawson Others
Market Share 31% 22% 22% 2% 2% 2% 2% 17%

 

ERP Software Packages

  • Baan by Baan corporation.
  • Peoplesoft from oracle corporation
  • Oracle Application
  • JD Edwards from oracle
  • Navigen
  • SAP from SAP AG (With total 60% market share).