What is the meaning of ERP? What is ERP short for?
- What is an ERP System?
- What is a Cloud ERP system?
- How it can help your business?
Also read :
- Who is Grynn & ERPNext?
What is ERP system?
ERP system is a set of tools (either one or a combination of many) that help enterprises, small or big, to record transactions and interactions, consolidate and report performance of several (if not all) areas of the business functions and their processes.
Introduction to ERP systems
ERP system is a set of process & tools that help enterprises to
– record transactions
– consolidate information and
– report performance.
So you as a business owner you can steer your ship in the right direction.
The areas which ERP systems can help your organization is track raw, pack materials, finished goods, customer orders, purchase orders, account payable and receivable and movement of goods or delivery of services.
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What are the leading ERP systems available in the market today?
Some external resources (*)
Closed Source ERP systems
- Licensing to extend SAP (“Digital Age SAP”) : SAP News & Pricing
- Licensing guidelines for SAP customers : SAP Licensing PDF download
- Licensing costs on Quora : What is the cost of SAP?
- MS Dynamics 365 on Microsoft’s website : MS Dynamics 365 pricing
Open Source ERP Systems
- Odoo pricing
- ERPNext pricing from Grynn GmbH
- WebERP
(*) links might open in a new window or a tab
What is Cloud ERP?
A Cloud based ERP system is typically NOT hosted on your premise or your data center. Usually it is hosted on a set of syndicated servers that manages the server loads, peak times, security etc. So you as a business owner don’t have to do any of it. A cloud based ERP system configured to deliver you the necessary functionality without an upfront investment. So you wont have to buy servers, install it in your premise or in a data center, back it up every night etc.
With cloud based service, all you need to do is sign up and typically provide your payment method (Credit card, Paypal, ..) and get started.
With cloud based solution, your IT team has the benefit from upgrades without having to do anything from your side. So your IT team can focus on doing what is important to keep the business running.
Finally, the big benefits come from savings on a custom built deployment & not having to manage your own IT staff.
The tradeoff is that there could be some limits on customization.
What is the acronym ERP mean?
The acronym ERP stands for Enterprise Resource Planning. It is a set of processes that help small, medium and large enterprises to organize themselves around their work functions. The functions can be related to material planning, human resource planning, payroll, purchases, sales or now to record interactions with customers and suppliers.
Some examples:
Manufacturers
Manufacturer needs to purchase all necessary raw and package materials without which the finished goods cannot be produced or delivered. If you are a chocolate bar manufacturer (or a repacker), you cannot wrap your chocolate if you run out of aluminium foils or wrappers. You cannot ship, if you are out of pallets. Hence keeping track of every essential nut and bolt required to assemble your product is critical to the success of your process.
Warehouses
Warehouses need to organize which shelf to keep what kinds of material and also track whether there is sufficient finished goods to ship to the customer on time.
Customer service and Sales team
Sales and Support teams would need to know what is in stock and what is not, so the sales order process can be executed knowing exactly what is in stock OR when is the stock being replenished.
What is the meaning of ERP?
ERP is short for Enterprise Resource Planning.
There is no one single definition that defines what ERP is or does. However it is possible to synthesize the meaning of ERP and explain how it is interpreted by different industries.
ERPs have evolved in the last 3 decades along with the ways of doing business & to support new business models.
What ERP is and what it does has evolved during the past 3 decades with companies such as Microsoft, Oracle and SAP have been leading the way in ever expanding the definition of ERP systems.
Once upon a time, it was meant to improve the material & resource planning process + system for managing manufacturing activity. But as of 2019 an ERP system also connects with customers and suppliers as a way of managing relationships.
ERP systems in 2019 is not just about materials, warehouses or staffing. It is also about managing relationships with customers, suppliers and generating new ways of creating value.
Broadly speaking, an ERP is a collection of process and systems that help record transactions, provides business insights from the data collected and has the potential to be a source of growth and competitive advantage for a business.
Can ERP help my business grow?
Yes, is the short answer.
However, it is not a silver bullet to solve all your “business” problems. However, ERP systems once implemented correctly can help identify issues in your business process. Let us take a few examples.
Without an ERP system, there is no single repository of what was purchased and what was delivered to your 10 factories around your world or how much you owe to your suppliers.
ERP system should be your single version of the truth.
Similarly, you wouldn’t know what outstanding orders still need to be delivered or whether your most profitable account is getting the products they ordered. ERP systems should record all transactions and at any point in time should provide you a consolidated view of your customer accounts or your purchase (supplier) accounts.
ERP system should to record faithfully all the transactions. Be it inventory movements, expenses, employee check in-out times, big or small.
This is where you derive actionable insights [most ERP vendors feel the system gives you insights. It doesn’t] and take suitable / corrective actions as needed.
ERP systems does not replace great employees or passionately driven people in any organization.
And it is not meant to be. However what it can do is augment their capability by taking out repetitive tasks or recording transactions ONCE so all of the organization can access and make sense of it.
A great ERP system should do what it is supposed to and get out of the way
So you and your employees can do what you do BEST. Which is to run your business and generate value for all of your stakeholders.
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