Enterprise Resource and

Planning - ERP
What is ERP?
• Enterprise Resource Planning (ERP) is a software that is built to
organizations belonging to different industrial sectors, regardless of
their size and strength.
• The ERP package is designed to support and integrate almost every
functional area of a business process such as procurement of goods
and services, sale and distribution, finance, accountings, human
resource, manufacturing, production planning, logistics & warehouse
management.
What is ERP?
Business Process Integration
• Every business, regardless of the industry they belong to, require
connected systems with efficient information flow from one business
process to another.
• Business Process Integration (BPI) plays an important role in
overcoming integrating challenges that allows organizations to
connect systems internally and externally.
Business Process Integration
Business Process Integration (BPI) allows −
• Automation of business processes,
• Integration of systems and services,
• Secure sharing of data across numerous applications, and
• Automation of management, operational, and supporting process.
Business Process Integration
The following illustration shows an overview of various business processes running in an enterprise
and how they are integrated.
Evolution of ERP
During early phases of development, integrated solutions were designed for particular process
areas such as
• Material Management − the integrated system was known as Material Requirement Planning
(MRP)
• Manufacturing − the integrated system was known as Manufacturing Resource Planning
However none of the integrated systems came with a complete solution for an organization
covering major business process areas. In early 1990’s, the Gartner Group first used the
acronym ERP. 
By mid–1990’s, ERP systems addressed all the core enterprise functions.
Evolution of ERP
• In the early stages, most of the ERP solutions were focused on automating back office
functions that were not directly affecting customers or general public. Later, front office
functions such as customer relationship management and e–business systems were integrated.
Functions of ERP
An ERP system typically performs the following functions −
• Supports the integrated business process inside the organization.
• Improves capital planning and helps in executing organizational plans and strategies.
• Helps speed up the decision-making process over the analysis of accurate data.
• Helps extend the business network to wider domains, expanding the products and services to reach
more customers, suppliers, and partners.
• Identifies operational risks to improve governance.
• Provides protection against organizational data breaches and security threats to leakage of
information.
• Makes the organization adaptable to the rapid changes in the business process according to the
needs.
• Gives long-term profit by providing means to increase the customer base.
Functional Areas
ERP is a business management software is usually a suite of integrated applications that a company can use
to collect, store, manage, and interpret data from many functional areas including
• Financial Accounting − Deals with financial transactions and data.
• Human Resource − Deals with information related to employee of an organization.
• Customer Relationship Management − Deals with capturing and managing customer’s relationship,
facilitating the use of customer experience to evaluate the knowledge database.
• Sales and Distribution − Deals with order placement, delivery, shipment and invoicing.
• Logistics and Warehouse Management − Deals with storage of products and shipment.
• Manufacturing and Material Management − Deals with the production and production planning
activities.
• Supply Change Management − Deals with the movement of products, storing, managing, and controlling
supplies.
• Business Intelligence − Analyzes data and converts the same to information.
The Driving Force behind ERP

There are two main driving forces behind Enterprise Resource Planning for a
business organization.
• In a business sense, Enterprise Resource Planning ensures customer
satisfaction, as it leads to business development that is development of new
areas, new products and new services.
• Also, it allows businesses to face competition for implementing Enterprise
Resource Planning, and it ensures efficient processes that push the company
into top gear.
• In an IT sense: Most softwares does not meet business needs wholly and the
legacy systems today are hard to maintain. In addition, outdated hardware
and software is hard to maintain.
The Driving Force behind ERP

ERP is single software, which tackles problems such as material

shortages, customer service, finances management, quality issues and
inventory problems. An ERP system can be the dashboard of the
modern era managers.
Major Reasons for Adopting ERP
• Integrate financial information
• Integrate customer order information
• Standardize and speed up operations processes
• Reduce inventory
• Standardize Human Resources information
 Potential Benefits of ERP
• Internal Benefits
• Integration of a single source of data
• Common data definition
• A real-time system
• Increased productivity
• Reduced operating costs
• Improved internal communication
• Foundation for future improvement
 Potential Benefits of ERP

• External Benefits
• Improved customer service and order fulfillment
• Improved communication with suppliers and
customers
• Enhanced competitive position
• Increased sales and profits
Advantages of ERP
• By integrating the business processes, the ERP offers the following advantages −
• Saves time and expenses.
• Allows faster decision-making by the management, utilizing the data and
reporting tools designed in the systems.
• Single data source and sharing of data among all the units of an organization.
• Helps in tracking every transaction that takes place in an organization, from
starting till end.
• Supplies real-time information whenever required.
• Provides synchronized information transfer in between different functional areas
such as sales, marketing, finance, manufacturing, human resource, logistics, etc.
Disadvantages of ERP
It is not always easy to incorporate ERP in an organization. ERP suffers from the following
drawbacks −
• Sometimes business processes critical to an organization are to be re-engineered to align
them with an ERP solution.
• Cost of complex integration can be very high.
• Switching from one ERP solution to another increases the implementation cost even
further.
• End-users are to be trained for their daily operations.
• Customization is not preferred.
• Adopting ERP systems can be expensive.
• The lack of boundaries created by ERP software in a company can cause problems of who
takes the blame, lines of responsibility and employee morale.
ERP Packages
Many companies develop and implement various ERP packages
according to their budget and requirements to help them meet their
business needs and run their business efficiently.
The following link takes you to a page from Wikipedia where you can
find a list of almost all the ERP packages designed worldwide.

https://en.wikipedia.org/wiki/List_of_ERP_software_packages
All The Best for your future