ERP Defined

What is ERP Software?Wondering what ERP software is? Wh

January 27, 2020

What is ERP Software?

Wondering what ERP software is? What ERP means? ERP is an acronym for Enterprise Resource Planning. ERP software is a series of integrated modules that share a common database to manage day-to-day business processes, operations, and workflows. Incorporating industry best practices, ERP helps organizations streamline business processes while staying on top of continually changing regulatory requirements.

What does an ERP system consist of?

An ERP system consists of a series of integrated modules that share a common database and can be scaled based on the size and requirements of the organization. Each module is designed to work independently, or together and therefore modules can be implemented using a phased approach. Core modules typically include General Ledger, Accounts Payable, Accounts Receivable. Purchase Order and Sales Order and if needed, Manufacturing & Inventory. In addition to the basic core modules, more specific modules like Human Resources, Customer Relationship Management, and MRP can be added to meet a wide variety of business and industry-specific requirements.

How is ERP software deployed?

Unlike days of the past where the only option available was an expensive, inflexible legacy system, today ERP systems can be deployed on-premises, in the cloud, or as a hybrid ERP solution. Of these options, the cloud provides a point of entry for smaller & Midsize organizations. Note that if you are evaluating ERP solution then there are multiple factors you have to consider like Flexibility, Costing, ROI (Return of investment), Ease of use for key users as well as Management users, Integration capability, etc.

Deployment/Implementation Strategy

When it comes to deployment or implementation of ERP solution most of us get confused about which method should we follow? Is it Waterfall or Agile?

The Waterfall approach was once used on most ERP implementation projects. Over the last 10 to 15 years, however, a new methodology that recognizes the difficulty of managing technology projects over longer periods of time in an environment of change has come to the fore. This methodology is called Agile development, or the Agile methodology, and it has started to replace the Waterfall approach on many ERP implementation projects. Like Waterfall, Agile development requires a lot of requirements gathering early in the project, and these requirements are used to guide the project plan. However, what Agile projects do with this information and how the project is managed through the Development and Deployment process is somewhat different. Rather than completing all the work in a linear progression prior to testing, Agile divides the project plan into short intervals called sprints. Testing occurs at the end of each sprint, and adjustments are made accordingly, rather than spending a great deal of time doing development for the entire project and only discovering and addressing issues late in the game. Agile, as its name suggests, allows project teams to respond more quickly to issues and changes as the ERP implementation project progresses. It does not assume that the project environment will remain static.

Benefits and goals of ERP software

ERP systems vary as do the goals that organizations are looking to achieve with an ERP deployment or upgrade. Today ERP options are available for businesses from the SMB market to large enterprises. Regardless of the business size, there are some commonalities amongst business goals because today businesses are looking for ways to:

  • Improve productivity

  • Improve decision-making process

  • Be more competitive

  • Create an environment for growth

  • Meet the expectations of today’s younger workforce

  • Meet the expectations of a new generation of customers

  • ERP trends, goals and benefits

Amongst today’s trends, organizations are looking for end-to-end solutions that best meet their requirements today plus provide the flexibility to change and grow with the organization over time. The difficulty of using or maintaining older ERP systems that typically consist of multiple point solutions with multiple databases is a major driving force behind ERP upgrades. With that, today’s ERP’s are aligning themselves with third party products and offering the integration to their ERP systems in an effort to expand the functionality of their ERP modules. For ERP software, integrating point solutions allows them to better focus on the core functionality while letting the third-party software companies serve as the experts in their area. ERPNext, for example, which provides all the solutions under one umbrella and also integrates with Google services, Payment gateways ( PayPal, RazorPay, GoCardless, Stripe, Braintree, etc.), E-commerce ( Amazon, Woocommerce, Shopify), Dropbox, etc. to automate the processes. In addition, unlike ERP of the past, ERPNext systems offer tools for collaboration, social, and mobility. In the end, today’s focus is all about the customer and the younger workforce and meeting their needs while also sustaining your business.

The list that leads to ERP decisions:

  • Single database vs multiple disparate systems

  • Single database for improved accuracy, consistency, and security of company data

  • Standardised business processes based on industry best practices

  • Improved visibility

  • Access to real-time data

  • Improved Business Intelligence and Analytics

  • Easier reporting, without IT ’s involvement

  • Collaboration capabilities

  • Mobility

  • Improved workflows

  • Streamlining processes, such as the financial close process

  • Eliminating paper transactions and paper

  • Easier access to information

  • Improved Supply Chain Management

  • Improved inventory management

  • Automation of taxation

  • Improved Productivity

  • Cost Reduction

  • Regulatory compliance

  • Scalability

Now that you understand the definition of ERP and a few of the benefits of a modern solution like ERPNext, it’s up to your management team to decide the timing of an ERP upgrade.

If you would like to learn more about the capabilities or cost of a modern ERP system like ERPNext, do check out our Awesome product & connect with us.
Salman Mulani
Salman Mulani
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