What is ERP (Enterprise Resource Planning)?

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What is ERP (Enterprise Resource Planning)?

Introduction

Technological developments, the heating and even the slowdown the economy, the increase in the supply of credit and the range of new markets are among the factors that significantly increase the competitiveness of enterprises. To stay at this level or to continue growing, companies need to rely on appropriate management of its resources, data, and procedures. One of the most used paths for this is the adoption of Enterprise Resource Planning (ERP), enterprise management systems. In this text, the InfoWester clarifies what this type of software means for a company, what are its advantages and disadvantages, and provides other explanatory details about the concept. Come on?

What is ERP and what its usefulness?

In essence, ERP is a business management system. Imagine you have a company that has several systems, one to deal with the Bills, one to generate payroll, one to track sales, one to manage taxes, one to analyze goals and performance, among others. Instead of one or more isolated software exists for each Department of the company, wouldn’t it be better to have an integration between them, so that all were part of a unified system? That’s precisely what ERP solution offers.

With a single system integrating all departments – or at least the most critical sectors, internal communication becomes easier and less costly. The Finance Department, for example, can learn quickly how much money to allocate to the discharge of taxes and how much direct the payment of employees, according to the information that the human resource management sector make available in the system. The head of a particular department can evaluate an employee’s performance and discuss together the HR Manager as the company can offer. The marketing department can consult the sales control, realize that a given product is not having the desired output and develop a new strategy to reverse this picture, while checks whether the funding provided is sufficient for this work or if it is necessary to set up a meeting to request additional resources.

You see, with these examples, there are many situations where systems integration proves advantageous. Note that, with separate systems; each sector would have more difficulty in communicating with each other, resulting in greater consumption of time, more spending and even in excessive bureaucratic procedures. Also, with an ERP system, the company is fewer software vendors, which decreases costs with licenses, technical support, servers, training, among others.

At this point, you’ve probably noticed how important management systems may be for businesses: reduce costs, make communication more efficient, help in decision-making, allow for a more accurate calculation of what’s going on in the company, anyway. It is no less than many companies consider this type of software is essential to its activities.

Implementation of ERP systems

ERP is not the kind of software that is purchased on a store shelf to be installed on a computer and then be ready for use. It turns out that each company, in the face of its activities and its operational strategies, has distinct needs. Therefore, ERP systems are functional only if at least the most important features of the company are taken into account.

Just understand that a company that manufactures medicines, for example, has very different needs from another who works in the field of transport. The first have to worry about obtaining raw material, payment of patent licenses, laboratory research, among others. The second, in turn, have to worry about the age of the fleet, with fuel costs, with tolls and so on. A company can also act in more than one branch of activity or exercise its operations in several States of the country, so as to be obliged to pay different taxes in each location, for example. Anyway, as you can see, every company needs a management system that suits her.

In order to control expenses, the company also needs to define what type of licensing is best suited to its operations: System installation on servers or virtualized system use outsourced servers (generally, offered by the provider of the solution), computing in the clouds-based solution, pay per user (or computer), a mixture of one or more of these methods , anyway.

Cloud computing-based solutions often have lower cost, because the company doesn’t have to worry about servers, maintenance, updating, among others. Also, offers easier access for users who are on the premises of the company – a seller who is in another city visiting a client, for example. On the other hand, can generate larger spending in the long term because, in General, your type of licensing requires periodic payment, as occurs in a newspaper subscription, comparing roughly.

Note that it is important to analyze the company ERP solutions available on the market and licensing arrangements offered to know which answer best. If the enterprise does not have a team of information technology able to do this analysis, it may be worth looking for a consulting service.

Implementation time is also an important parameter. ERP systems do not begin the work overnight. solutions providers need time to adapt the software to the company’s activities, not to mention they need consider the infrastructure, the security features, testing, staff training, integration between departments, migration from legacy systems, among others. In addition, the implementation generally occurs in stages, so that certain modules of the system are installed only after this process has already occurred with others. Therefore, the implementation of an ERP can consume many months.

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