What is ERP?
What is an ERP system?
The acronym ERP stands for ‘Enterprise Resource Planning’. It refers to the software modules, all integrated in one application. These modules are used by organizations to manage everyday business activities, such as accounting, bills payable, bills receivable, treasury, fixed assets, HR & payroll, sales, inventory and procurement. Each module is responsible for monitoring and managing a manageable resource of the organization, which is usually figured out from its name.
An ERP system ties together business processes and enables the flow of data through modules without having to do it manually every time. It eliminates data duplication in the process and provides data accuracy and consistency.
There was a time when each part of an organization’s business activities had its own software solution before ERP systems were adopted. All the functions of an organization were separate from each other. Each function had its own program and its own unique user interface. There was no element of integration. That’s where ERP systems stepped in.
To sum it up chronologically in bullet points, it maybe goes like this:
Before accounting computer programs were mainstream:
● Entries were done manually
● Mistakes could mean hours of recalculation
● Finding errors was tedious work
Before ERP systems: That was a better stage in that software partially took over the process reducing the amount of manual work, but it still lacked elements of integration.
● All the functions of organizations were separate from each other.
● Each function had its own software solution and its own unique user interface.
● There was no element of integration.
After ERP became the norm for organizations, that led to:
● eliminating calculators, paper ledgers, and pencils
● lowering the margin for error
● finding and correcting mistakes in a more efficient way
● getting the job done faster
Today, ERP systems are critical for managing businesses of all sizes and in all industries.