What is ERP Understanding Business Management Software

You may have heard of ERP before but ain’t aware of it. This blog will explain the basics of ERP, including the latest trends, purposes of use, and benefits. By reading this blog, you will be able to understand the basics of ERP implementation.

ERP is a type of Business Management Software but where it’s a core business management software. ERP (Enterprise Resource Planning) is mostly known as an integrated core business system or core system. It is also called an ERP package, ERP system, business integration package, etc. You must be thinking: what are core business operations integrated by ERP? So those are human resources, production, logistics, and sales, to improve efficiency and centralize information.

ERP integrates the following five types of systems and provides them to users. These systems are commonly used by many companies and are essential for business operations. Each product has its unique features, so it is important to compare them.

Sample of infographic for your ease

• Accounting Management System
• Sales Management System
• Inventory and purchasing management system
• production management system
• Personnel and payroll management system

Curious About the Benefits?

Each software has its benefits and flaws. Here are some advantages of ERP:

1. Enabling Centralized Management of Information

ERP realizes centralized management of master data (products, business partners, etc.) and transaction data (various documents, etc.) that were separated for each business in conventional systems, through the concept of an "integrated database." In an integrated database, when a certain business process is executed, all data related to that business is updated at the same time. For example, when shipping, related sales, inventory, accounting, etc. data are all updated in real-time across departments.

In this way, related data is updated in real-time in conjunction with a single movement (goods or money) and consistency is guaranteed, eliminating the poor coordination between systems and departments that existed in the past.

2. Achieving Real-Time Management

In a rapidly changing business environment, the timeliness of information is extremely important. Sharing the latest information that is "visualized" about management resources (people, things, money) and making it available at any time supports management decision-making and promotes optimization of the entire company.

3. Adopt Best Practices from Successful Companies

ERP package vendors have knowledge and know-how of the most standard and benchmark business processes in their respective industries. Know-how accumulated in various forms, such as industry-specific solutions and templates, is called "best practices," and one of the major purposes of introducing an ERP solution is to be able to compare and utilize the best practices of successful companies in your own company. In addition, ERP solutions that have been introduced to many companies can be said to be effective services that make use of the examples of successful companies.

4. Effective Internal Control

When looking at ERP from the perspective of internal control, the following two are most effective:

Data consistency through centralized management in an integrated database (reduction of duplicate processing and omissions)

Application and approval management (access rights, approval management)

Let's Implement ERP

Before implementation, you should choose an ERP for your business. First, let me tell you how to choose an ERP. Although ERP is said to be difficult to select, you can choose the ERP that is best suited to your company by keeping the following points in mind.

First, identify the internal issues you want to solve by implementing the system. It is important to clarify the purpose of implementation after sorting out the current business management, business processes, and problems with the current system so that the implementation of ERP does not become the goal itself.

And then you should keep these questions while selecting ERP,

• Are there many implementation cases in the same industry and of the same scale?
• Does it have the features you need?
• Can you empathize with the system's design philosophy and vision?
• Is the implementation cost commensurate with the benefits?

The process for implementing ERP varies depending on whether it is a "full-scratch type" where the system is built to suit the company's business operations, or a "package type" where the functions are pre-installed, but this time we will focus on explaining the implementation of the package type.

The phases of ERP implementation are:

• The "early implementation phase" involves considering and deciding on the system
• The "middle implementation phase" involves preparing for the system switchover and informing the company
• The final phase of implementation involves switching over systems and migrating data
• "System cutover" provides support after system implementation

In many cases, the "implementation project members" are selected and the project is advanced. The "project manager," "project leader," and "ERP module manager" are assigned to the project.

Summary

The operation of a company is greatly affected by unpredictable social trends. In order to build a stable management foundation and ensure the company's continued growth, it is necessary to utilize accurate company information and make speedy management decisions every day.

Introducing or upgrading an ERP system is a major turning point for any company. However, there are many obstacles to overcome, from comparing systems to ensuring stable operation, to changes in laws and company growth.