EPR is short for enterprise resource planning. An ERP is an organisation’s management system which uses a software application to incorporate all areas of the business. It automates and facilitates the flow of data between critical back-office functions, which may include financing, distribution, accounting, inventory management, sales, marketing, planning, human resources, manufacturing, and other operating units.
To get a deeper understanding of how ERP solutions can transform a business, it helps to get a better sense of what ERP actually is and how it works. ERP is an acronym for Enterprise Resource Planning. Even its full name however, doesn’t shed much light on what ERP is or what it does. For that, you need to think about all of the various processes that are essential to running a business, including inventory and order management, accounting, human resources, customer relationship management (CRM), and beyond. At its most basic level, ERP software integrates these various functions into one complete system to streamline processes and information across the whole organization.
The main feature of ERP systems is a shared database that supports multiple functions used by different business units. In practice, this means that employees in different divisions such as accounting and sales can rely on the same information.
ERP software also offers some level of synchronized reporting and automation. Instead of forcing employees to maintain separate databases and spreadsheets that have to be manually merged, some ERP solutions allow staff to take reports from one system. For example, with sales orders automatically flowing into the financial system without any manual re-keying, the order management department can process orders quicker and accurately, and the finance department can sign off faster. Other common ERP features include a portal or dashboard to enable employees to quickly understand the business’ performance on key metrics.
A History of ERP
The term ERP was coined in 1990, but its roots date to the 1960s. Back then, the concept applied to inventory management and control in the manufacturing sector. Software engineers created programs to monitor inventory, reconcile balances, and report on status. By the 1970s, this had evolved into Material Requirements Planning (MRP) systems for scheduling production processes.
In the 1980s, MRP grew to encompass more manufacturing processes, prompting many to call it MRP-II or Manufacturing Resource Planning. By 1990, these systems had expanded beyond inventory control and other operational processes to other back-office functions like accounting and human resources, setting the stage for ERP as we’ve come to know it.
Today, ERP has expanded to encompass business intelligence (BI) while also handling “front-office” functions such as sales force automation (SFA), marketing automation and ecommerce. With these product advancements and the success stories coming out of these systems, companies in a broad range of industries—from wholesale distribution to ecommerce—use ERP solutions.
Moreover, even though the “e” in ERP stands for “enterprise,” high-growth and mid-size companies are now rapidly adopting ERP systems. Software-as-a-Service (SaaS) solutions—also referred to as “cloud computing”—have helped fuel this growth. Cloud-based solutions not only make ERP software more affordable, they also make these systems easier to implement and manage. Perhaps even more importantly, cloud ERP enables real-time reporting and BI, making them even valuable to executives and staff seeking visibility into the business.
As a result, companies of all sizes and a wide range of industries are transitioning to cloud ERP systems. In fact, it is predicted that SaaS-based ERP adoption will rise 21 percent annually upto 2015. When you stop to consider the benefits of ERP, it’s easy to see why it’s become so popular and why its use will continue to grow so rapidly.
The Business Value of ERP
At its core, ERP helps employees do their jobs more efficiently by breaking down barriers between business units. More specifically, an ERP solution:
- Gives a global, real-time view of data that can enable companies to address concerns proactively and drive improvements
- Improves financial compliance with regulatory standards and reduces risk
- Automates core business operations such as lead-to-cash, order-to-fulfillment, and procure-to-pay processes
- Enhances customer service by providing one source for billing and relationship tracking.
When you add up these advantages, the value of ERP—particularly cloud ERP—is clear. With an ERP solution, employees have access to accurate information that enables them to make better decisions faster. Not only that, but ERP software helps to eliminate redundant processes and systems, dramatically lowering the cost of doing business overall.