Back to Basics: What is ERP?

//Back to Basics: What is ERP?

Back to Basics: What is ERP?

Obviously, as an independent ERP Consultancy in Manchester, we talk about ERP a lot. It is not a new concept; after all, ERP systems have been around since the early 1990s, but there is still a lack of understanding around ERP systems. So, we thought it was time to get back to basics and share some of our knowledge.

ERP Defined

The International Journal of Operations & Production Management defines ERP as: “systems designed to address the problem of fragmentation of information or “islands of information” in business organisations.” Which basically means that ERP systems help your company to perform more cost-effectively by automating many of the manual labour tasks within your business and centralising much of the information created by all of the different departments – including planning, purchasing, inventory, operations, distribution, sales, marketing, personnel and finance.

It may be simpler to think of the ERP system as a collection of databases which store all the data created by all of the individual departments listed above.

Why do you need an ERP System?

The main reason why many businesses opt to install an ERP system is to improve their processes and therefore run the business more efficiently than it was before. It can also help to integrate business systems across locations better and standardise global business operations. An ERP system has also been shown to allow businesses to serve their customers better and therefore position the company for growth.

What are the Benefits of ERP Installation?

As we have touched on above, the installation of an ERP system can help improve business performance in many ways.  The associated benefits include:

  • Reduced operating expenses
  • Streamlined manufacturing processes
  • Easier management of global issues such as culture, currency and language differences as processes are now automated
  • Enhanced competitive advantage
  • Elimination of a lot of maintenance of computer systems as they are now centralised

Should you choose an On-Premise or Cloud-Based System?

An on-premise system is an ERP system where you use your own equipment and resources to deploy the software. You are responsible for ensuring the security of your data and may incur additional expenses such as hiring specialists to support the equipment.  You may also face challenges if you have branches of your business in different places who also want to access the data.

If you opt for cloud services instead, it means that your software is hosted on shared computing resources and you access your data via the internet. The computing resource is maintained in a remote data centre which is dedicated to hosting various applications on multiple platforms. The benefits of this approach are that you don’t need to purchase and support your own equipment, but you still get easy access to your data. On the other hand, you will lose total control of the data as the hosting provider becomes responsible for the security of your data. It can also work out quite expensive as well. We look more at the differences between the options in our on-premise and cloud hosting blog.

Hopefully, this article has given you a bit more of an insight into ERP systems and how they can benefit your business. To discuss this more, please get in touch with us today.

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