ERP (Enterprise Resource Planning) means a class of business software intended for comprehensive enterprise management through monitoring of material, money and information flows. ERP information systems are packages of smaller programs, grouped according to areas- modules, which work on a single database where all business transactions are recorded. The purpose of the existence of an information system (including ERP) is to, as its name suggests, provide the user with accurate, high-quality and timely information. Since ERP systems are built over relational databases, they have impressive reporting capabilities (and therefore predispositions to achieve their own purpose)!
The word Enterprise in ERP means that this is a class of business software intended primarily for medium and large enterprises. What really determines the size of a company? Is that the number of employees? Or the amount of turnover and profit? When should it introduce ERP? My first association is the entry of companies into the phase of „maturity“, and Dr. Isaac Adizes would probably say that these are companies that have reached the stage of adolescence (this does not mean that they survived it, before there was an awareness that business processes need to be regulated and professionalize the company). So, when you start a business, run away from ERP or it will „suffocate“ you! Immediately after the foundation company needs to make money to survive, there is no need for detailed records (which go with ERP) nor do they serve anything. New businesses successfully introduce ERP only if they are affiliates or franchises (roll-out implementations); otherwise, especially if the company has external bookkeeping, I recommend Word and/or Excel! Later, there is a need to use a business application. Let’s face it, a lot of them don’t carry the epithet ERP, which doesn’t stop them from being great business software. When do we change them with ERP? When is there really a need to move to ERP? The answer is: the moment when business processes are regulated, when there is a clear organization of work, rights and powers of employees. You can then define which employee, at what stage of the business process, enters the required information into the system. In a chain, comprehensive information is collected that can be used for control, and corrective measures …
The word Resource means that ERP monitors all resources in one company: people, raw materials, semi-finished products, products, goods, money, fixed assets … Everything! Therefore, ERP can be called an integral (integrated) information system. This is a system that is based on all structured documents from procurement, sales, production, bookkeeping … In practice, data in ERP can also enter from external applications with which it integrates, such as: applications for: cash registers, mobile ordering, warehousing, B2B, DMS, BI and many more. The more applications, the more likely it is that the final information will not have the desired integrity. Therefore, if we plan to connect ERP with other systems this should be done in such a way as to ensure the integrity of the information.
The last letter in the abbreviation ERP Planning speaks about what distinguishes successful from unsuccessful companies. It’s planning! A good ERP should have mechanisms for planning and monitoring implementation. In practice, these are codebooks marked as: organizational units, cost centers, profit centers … They are added as a link to documents whose confirmation and posting enter the analytics and can be used to track costs and revenues according to unifying criteria.
What makes ERP significantly different from other accounting software is the project approach to its implementation. ERP systems are complex machinery, large software that needs to be parameterized depending on the activity and needs of the company. Therefore, their implementation is accompanied by a significant amount of consulting work: creating Implementation Blueprint, request analysis, development and harmonization of the Implementation Blueprint, parameterization, simulation, change of initial settings, setting authorizations, training … By introducing ERP you change the organization of the company. This is a very serious operation, and in order to succeed, it is necessary to fulfill three preconditions: the readiness of the management and the company for changes, knowledge of their own business and clear expectations of what the new solution should provide, the will to learn … a consulting team that has undergone sufficient implementation, has experience in the activities of your company, is ready to listen to customers and propose the necessary changes. In the end, it is necessary to choose a quality ERP solution. What is quality ERP? It is difficult to give an answer that is not subjectively colored. We recommend that, if you decide to purchase an ERP solution, you look for those that have a higher number of references in companies similar to yours.
Choosing an ERP is usually a long process, and good implementation requires a lot of willpower and sacrifice. The result is a business information system that can meet your needs, enabling the collection and storage of data from all business functions. But most importantly, it can provide you with timely and quality information.