The following article discusses what is Enterprise Resource Planning software (ERP), and its advantages over basic accounting software?
What is Enterprise Resource Planning (ERP) Software?
by Daniel Stockman
Enterprise Resources Planning, commonly known as an ERP, is a management software that integrates and streamlines tracking, planning, and resourcing of tangible and intangible business assets and processes. This includes everything from materials and human resources to financial resource.
Its integrated applications allow organization to use the system to manage and automate back office functions like: technology, human capital, and other business related services. The reason it is called an ERP (with a focus on “Enterprise”) is because at its core, it is designed to be used by lager businesses entities. Depending on the size of an organize and level of integration running a ERP software may require additional, dedicated teams who will use the software to analyze data, plan and manage resource allocation, and leverage customization capabilities of the software for further developments and upgrades.
Here are three types of ERPs based on sizes along with their manufacturers:
- ERP Tier I — Large Enterprise ERPs dominated by three companies namely: Oracle, SAP and Microsoft.
- ERP Tier II — Mid Market Enterprise with vendors including: Epicor, IFS, Infor, Lawson, QAD, and Sage.
- ERP Tier III — Small Business ERPs including: ant Solutions, CDC Software, Consona, Exact Globe, NetSuite, Syspro, and Visibility.
Enterprise Resource Planning Software is able to work on the following business related operations:
- Financial accounting which may involve making general ledger entries, accumulation of fixed assets, deducing payables, accounting for receivables, cash management, and financial consolidations
- Management accounting dealing with activity based costing, budgeting, costing, and cost management
- Project Management including planning, resourcing, calculating expenses, and over all diagnosis of activity management
- Supply Chain Management dealing with scheduling and planning, procurement of materials, warehousing, inventory man agent and distribution
- Order Processing such as pricing, checking credits, sales analysis, and placement of orders and their fulfillment
Here is some of the benefits of using ERP software over most other accounting software:
- It has the ability to streamline processes and workflows that can integrate the entire system
- Redundant data entry and processes are reduced hence causing an increase in sharing of information across one department to another
- Most business related process becomes uniformed that are able to establish best practices for an organization
- Better planning, forecasting and tracking make the entire process to become less costly
- Inventory, receivables, and sales are often provided as a consolidated picture that is easier to understand and mark the right areas accordingly
- Activity based costing and actual tracking of cost regarding activities is further stimulated and is easy to do
- Vendor performance can be tracked allowing decrease in vendor pricing and take advantage of quantity breaks
Perhaps the most favored and beneficial side to Enterprise Resource Planning (ERP) is the fact that it can easily integrate with advanced e-commerce platforms and make allow you to handle order tracking and processing. Since all ERP software need a database system to be implemented, as users can enjoy a centralized storage and backup system. ERP also provides integration and collaboration across all departments of an organization.
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