Enterpriseresource planning (ERP) software is a prerequisite for any organization seeking to become an integrated enterprise. In many respects, ERP provides the structural and architectural foundation upon which an integrated enterprise is built.
In a nutshell, ERP is a tool that enables a company to achieve cross-functional integration, transactional efficiency, and timely and accurate reporting.
For example, when a customer accepts a quotation for a product, sales has an ability to convert that quote into a sales order with a click of a mouse. If the terms of an order require pre-payment, the ERP system can be configured to electronically trigger the activation of accounts receivable invoicing functions. From an operational perspective, the order can become visible to an MRP or DRP2 engine that issues make and/or buy recommendations. And, those recommendations can be converted into a work order or purchase order at the click of a mouse. These are but a few examples of the myriad of opportunities offered by ERP – opportunities to process transactions quickly, efficiently, and with reduced scope for error.
The above scenarios largely focus on processes that can be automated with ERP. Obviously, an organization still needs people to receive and store product, manage the shop floor, and make business decisions. However, it will need far fewer people (and associated payroll expenses) to perform mundane and time consuming data entry and reconciliation tasks. The system can perform those tasks, with greater efficiency, accuracy, and reliability.
An ERP system can accomplish these tasks with precision because it draws upon a single version of data residing in a common database. For example, in an ERP environment, a company isn’t likely to find itself with a sales order that conflicts with an invoice packet. Both document sets will pull common data from the same source, with minimal need for human intervention.
With data stored in a common database, a company can also position itself to achieve timely and accurate BI (business intelligence) reporting. Gone are the days of needing armies of business analysts to export data from various Excel spreadsheets and Word documents into other spreadsheets. Also gone are the days where analysts spend weeks analyzing data only to make recommendations based on data that has since become stale.
With the volatility of markets and the pace of change, today’s businesses don’t have the luxury of time. Decision-making has to be based on analysis of the most current data.
Fortunately, business intelligence tools provide powerful reporting algorithms that can efficiently slice and dice data. Today’s business analysts are no longer mere data miners and aggregators. They can provide value-add in the form of data analysis, data interpretation, and recommendations thereupon.