ERP News – worldwide – erpnews.com – Enterprise Resource Planning (ERP) systems are reporting systems that companies have used for more than 20 years in their business operations. ERPs create reports from all departments in a company and store them in a centralized database for management use. An important function of the ERP is reporting financial information on business operations, giving management a clear picture of the company’s current fiscal situation.
The Facts
ERP systems are company-wide software used to provide management with information regarding company operations. The ERP gathers information from all departments and places it into a shared database or a distribution list, allowing multiple users access to the information. Because the ERP is such a large software package, most companies will contract with a third-party to implement the ERP into business operations.
Third-Party Software
Several software companies offer ERP programs, with the most well-known companies being Oracle, SAP and PeopleSoft. While some ERP customizations are available, most providers have developed industry-specific ERPs that fit customer needs. Configuring the software for companies can be difficult, based on the current systems in place and the needs of the individual companies. Adding “hook-ups” to tie in vendor software is also part of the configuration process. The amount of customization and configuration can quickly add costs to the ERP system.
Modules
Several ERP modules are available, including manufacturing, supply chain management, financial/accounting, human resources and project management. ERPs can be customized for each module a company chooses to implement and how in-depth the module will be when reporting information. Once the modules are implemented and placed in the company’s reporting functions, an internal IT specialist or the ERP provider provides support.. Most times, external support will be an added service and the company must pay for the option.
Advantages
ERPs are a great advantage because they can consolidate the reporting functions of a company and allow users to review each department using centralized reports. It also can report on the financial aspects of departments, furthering good management decisions on company improvements. ERPs also eliminate the need for multiple software systems for each department and reduce the costs of internally integrating these systems. Updating individual departments systems can also be costly, difficult to implement with other existing systems, and cause a loss in productivity.
Disadvantages
The main disadvantage to ERPs is cost; depending on the software package and data entry needed in the company, ERPs can quickly become expensive. Re-configuring the ERP for new divisions or departments can also add costs, causing future profitable activities to be turned down, due to increased software expenses. Over time, the information ERPs consolidate for management may become ineffective. This can lead to more updates, loss of productivity and higher expenses for the company.
