ERP, short for Enterprise Resource Planning is a business resource management strategy that integrates various processes into one system. ERP software as it is popularly called, requires hardware and software for development and planning and engineered for integration of various departments in large corporations. In short, ERP works like a comprehensive database of important information across all system modules.
Important Components in ERP System
The success of ERP system relies on two important components – unified database and software design. ERP system should be given access to every data or information related to the enterprise, for integration as one unit. This way, information can be transmitted or shared securely, easily and quickly. The next most important component is the customizable software design. ERP software features or functions can be removed or added for optimum benefits and efficiency. While very few companies offer end-end ERP solutions, some firms also use different software from different companies for best results and maximizing efficiency in an organization. Every such application should be able to access the common database for sharing and transmitting information within the organization.
ERP System Uses
ERP systems are used in large organizations where data received, transmitted or processed is higher. In most cases, small – medium sized businesses won’t need ERP or at least, a full-fledged ERP system. However, large corporations like manufacturers, banks, retail chains and similar organizations can effectively use ERP. Individual corporations split ERP based on their functioning and probably use specific resources according to their needs for data portability.
Design & Integration of ERP
Irrespective of how large ERP systems are implemented, careful designing and thought processes play a key role in the efficiency. Originally, small ERP systems took a few months, while larger ERP systems needed 1 – 2 years for development and implementation. Large firms consult ERP firms, while small firms look at ERP for cost cutting.
Migrating data into ERP is a very important step. However, it does not receive adequate attention in most ERP systems. For successful migration of data, six steps are very important.
1. Identification of data.
2. Planned migration time.
3. Data templates’ development.
4. Freezing data migration tools.
5. Coming up with right data migration steps.
6. Archiving important data.
Advantages of Using ERP System
One of the most popular advantages is that, ERP system allows easy data transfer. Also, ERP systems come with increased security, so enterprise data is secure. Other advantages include increased employee productivity, improved customer service and reduced operational cots.
Disadvantages of Using ERP System
Undoubtedly, the major disadvantage with ERP system implementation is the cost. Most ERP systems are expensive to develop or implement. Besides, even though they’re marketed as flexible, customization options are rather limited and difficult to adapt for a few businesses. Besides, the quality of data entered in ERP systems should be high for proper utilization. Last but not the least, some businesses find the system too complicated for implementation and it is rather not suitable for smaller businesses or businesses that have many departments.