What is Enterprise Resource Planning?

In the simplest terms, Enterprise Resource Planning, or ERP, is effectively any comprehensive system meant to organize resources across an entire organization. In this case, resources might be defined as the following:

  • Finance and Accounting
  • Manufacturing
  • Sales
  • Service
  • Customer Relationship Management

It varies from company to company, of course. A small start up or freelancer might not need a comprehensive customer relationship management system, while a larger corporation might see a list of resources several times as long as the one above.

Manufacturing

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An ERP system typically refers to the actual hardware and software used to manage the resource planning, the parts that can be automated and managed remotely according to plan. However, an ERP system is only as good as the strategy behind it. An ERP approach that is not flexible, well designed and comprehensive is not going to do a lot of good.

At one time, ERP systems were intended strictly for “back room” operations. An ERP system released in the late nineties wasn’t likely to help you solve a customer relation issue, nor was it likely to help organize relations between B2B businesses. An ERP system ten, fifteen years ago, was typically only going to help manage the day to day of the office itself, no more, no less.

Today, an ERP system is more likely to help manage and plan resources between company and client, company and partner and company and customer. In short, every important relationship that a business needs to maintain, an ERP can help them to improve it through better organization, targeted, specific behavior and innovation in the field.

A common mistake when using an ERP is to put into place a rigid and uncompromising system that you then expect all of your employees, partners and customers to adhere to. An ERP system is not there to run your business for you, but rather, to allow you immediate access to the tools and data that you need to make the right decisions.

An ERP essentially keeps the entire team on the same page, supporting a common database and an integrated system operating in real time, or very close to it, so that you can form strategies that work in regards to everything from the broader decisions regarding 401k’s and project costing, to long term concepts like product life cycle management and more immediate decisions regarding quality control and customer service.

ERP is not the solution to every resource issue in a company, but it is a means to develop a solution of your own.

Bill Gray writes about business software, enterprise resource planning, and more.

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