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What Does ERP Mean?

What does ERP mean?

The concept of enterprise resource planning, or ERP, involves the understanding that business operations are intertwined. Understanding the relationships between core business processes, and capitalizing on them, is a strategy. As technology advanced, ERP systems were introduced as a technology solution to help businesses take that ERP strategy and execute it more effectively and efficiently.

Businesses didn’t always have a choice between deploying a bunch of specialty software applications or an integrated system that can be customized. Cost still remains one of the key differentiators. There is niche software for nearly any business operation, ranging from accounting to inventory management to point of sale (POS) systems and everything in between. While each software program may be cheaper alone, and work sufficiently for managing that one business process, they can’t connect data or support the complex relationships the way an ERP system can. ERP systems are designed to alleviate the challenges of inflexible and disconnected systems, data and processes.

Remember Y2K? This seemingly innocuous computer glitch motivated companies to make an upgrade to their business technology before losing everything as the year 1999 turned to 2000. ERP grew in popularity as a new concept and new technology for managing a business.

What does an ERP system do?

A modern ERP system is much like an all-in-one business management solution, without the price tag of a custom developed solution. Businesses of all sizes and types can tailor ERP to manage specialized accounting and financial processes, inventory, supplier and vendor relationships, customer relationships, manufacturing and distribution activities, human resources and payroll, and other core business processes. Centralizing data within a single, integrated solution makes it easier for employees and managers to enter, access and analyze real-time information—and put that data to use.

Today’s ERP systems also offer mobility, flexibility and scalability. Cloud-based systems make ERP more affordable and mobile than ever. Users can enter and access data through a secure web connection on laptops, smartphones and tablets. Many ERP systems also offer the flexibility to remain aligned with core business strategies, even through periods of change. Similarly, businesses can scale systems up and down based on seasonal trends, changing headcount or other variables.

What are the benefits of an ERP system?

ERP empowers business leaders in several ways:

  • Real-time data backed by in-depth business intelligence (BI).
  • Dashboards spin up key performance indicators (KPIs) on the spot.
  • Advanced analytics and reporting make it easier to share meaningful data and information.
  • Managers can monitor and measure metrics and uncover new ways to make improvements, whether it’s reducing wasteful spending or practices or expanding product lines or into new regions.
  • Sales teams have a 360-degree view of customer engagement and trends.
  • Leaders can unlock data to take advantage of new opportunities, respond faster to exceptions, and find new ways to drive growth.

What’s next for ERP?

ERP will continue to grow smarter and more intuitive, with some solutions bringing in next-generation artificial intelligence (AI) features. The cloud has made ERP more affordable with a scalable pay-as-you-go model for IT, and can pick and choose only the features and functions needed at that time. ERP is making it possible to connect people, processes and data in the “always on” digital world we live in.

ERP has come a long way and it continues to evolve. We are excited about the future of ERP and strive to keep you informed. Please contact us with any questions.

By The Wolcott Group, providers of RealSTEEL, a ‘real world’ ERP solution for the steel and metals industry

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