ERP refers to Enterprise Resource Planning. It is an integrated software system that aligns all the business processes and functions to work in a system in an interconnected way such that the data of each module of an enterprise can be available to other modules anytime which reduces time wastage and ensures efficient data and timely completion of work.
It interconnects various departments of an organization like -
Finance, Hr, supply chain, Inventory, Product and manufacturing, customer relationship management, project management, analytics and reporting etc.
So, the primary goal of enterprise resource planning is to provide a common platform to all the departments of a business to access and share information seemingly
This integration can lead to improved efficiency, data accuracy and better decision making.
ERP software can be customized and made according to the needs of an organization.
➢Types of ERP
There are various types of ERP:
1} ON PREMISES ERP
This type of software has been implemented only on the premises or the area of an enterprise. It can only be accessible when the person is inside
the area of the enterprise. this type of software provides more security and data efficiency but initially it needs a lot of investment as it is installed on campus devices and computers.
2} CLOUD ERP
This type of ERP has been accessed by everyone having internet connection and system availability. It can also be accessed on a person's mobile also. They are often subscription based and have a large scalability.
3} INDUSTRY SPECIFIC ERP
This type of ERP system often depends on organization needs and demands; it can be based on anything: healthcare, hotel, retail, education etc.
4} HYBRID ERP
This type of erp is a mixture of cloud erp and on premises erp in this the whole authority and access is with the owner. It depends on owner how much authority they are giving to their employees and how much they are keeping under their control.
5} AI POWERED EMPLOYEES
With the increase of technological automation some erp systems are incorporating artificial intelligence for predictive analytics, automation and improved decision making.
ADVANTAGES OF ERP
1} DATA CENTRALIZATION
ERP system centralized data storage, making it easier for employees to access information they need in real time. This reduces data manipulation and ensures data consistency.
2} IMPROVED DECISION MAKING
ERP helps the organization to take the decisions more wisely as they have the repository of updated real time information.
3} COST SAVING
ERP saves the cost as the manual work has been reduced and also the errors. This can lead to significant cost saving in the long run.
4} INVENTORY MANAGEMENT
ERP systems have a complete information about inventory levels which updates about excess stock, reorder level, product availability which ensures cost saving and improves customer satisfaction.
5} DATA SECURITY
ERP system secures the data by managing access to its ownership.
6} COMPETITIVE ADVANTAGE
ERP systems can provide competitive advantage by improving overall efficiency and customer service allowing the organization to respond quickly to market changes.
7} CUSTOMER RELATIONSHIP MANAGEMENT
ERP helps to manage the relationships with customers by regularly solving their issues and taking feedback.
DISADVANTAGES OF ERP
WHILE ERP systems come with a lot of advantages they also come with some disadvantages and challenges the organization should consider before implementing them. Here are some challenges:
1} Costly for smaller organization'
ERP cost a very high implementation cost for the business with small scale of operations as it needs a lot of system cost with training and especially skilled employees..
2} Customization challenges
Customizing ERP according to the needs of organization is a very difficult task as making changes need a technical expert and a lot of time
3} Resistance to change
Employees initially resist the implementation of ERP as they are not comfortable with the technology and sudden impacts of the erp.
4} Training requirements
Implementing ERP raises the need of training to the employees as no employee is well versed with the erp system so hiring trainers and parting training can be a challenging task to introduce erp.
5} Data Security
Being a centralized repository of data has a lot of risk of data security and cyber-attacks as once the data leaked it can cause harm to the entire organization.
6} Resource Intensive
Implementing ERP needs a lot of time, money, personnel which make it a resource incentive.
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