Definition, History, and Concept of ERP Software
ERP stands for Enterprise Resource Planning. It is the translation of Enterprise Resource Planning (ERP).
ERP software is a business process management solution composed of applications and tools that help all areas of your business communicate more effectively with each other by integrating all facets into a comprehensive information system.
With ERP systems, all vital business functions such as production, finance, sales and purchasing, marketing and human resources share a central source of up-to-date information. ERP systems streamline the collection, storage and use of your organization’s data.
In other words, an ERP software is the backbone of the enterprise.
The history of ERP dates back to the early 19th century, in 1913 to be exact, Ford engineer Whitman Harris developed the Economic Order Quantity (EOQ) model, a paper-based manufacturing system for production planning that was the standard for several decades. In the 1960s, material requirements planning (MRP) solutions that combined EOQ concepts with a mainframe computer came along and changed the game.
MRP would be used until Manufacturing Resource Planning (called MRP II) was developed in 1983. MRP II is characterized by “modules” – the software architecture – and integrates essential components including purchasing, bills of material, scheduling and contract management. For the first time, different manufacturing tasks are integrated into a common system. MRP II showed companies that they could leverage software and its data to boost operational efficiency through better production planning, reduced inventory, and less waste.
In the 1970s and 1980s, concepts like MRP II were developed to manage business activities beyond manufacturing and production by integrating finances, customer relationship management and human resources data. It was in 1990 that technology analyst named this new category of business management software Enterprise Resource Planning.
Main features and benefits
The right ERP system to ensure the best possible resource planning and, consequently, better productivity must have the following functionalities:
- Finance and accounting
- Customer relationship management
- Production management
- Warehouse management
- Inventory management
- Supply chain management
By collecting and optimizing data across these various functionalities and the various departments of your organization, ERP will offer real strategic advantages to your company:
- Streamline, make more reliable and protect your company’s inherent data.
- Real-time visibility into operations to help your business continue to operate in compliance with international laws and regulatory guidelines.
- Identify challenges, uncover opportunities, and make faster decisions that will benefit your business with powerful financial reporting and forecasting tools.
- Provide instant access to supply chains, inventory, and warehouses.
- Automate and streamline tedious tasks and redundant processes.
- Access anytime, anywhere (offsite and from mobile devices).
- Facilitate collaboration between teams and with third-party suppliers.
Why does your company need it ?
In addition to the benefits you have already received, the first objective of an ERP tool is to homogenize the company’s information system by replacing multiple files and software for a single solution.
Thanks to this system homogenization, you align your company’s information and processes and obtain significant gains: improved performance, accelerated operational impact and greater flexibility.
In practice, there are several questions that can help you determine whether your organization needs ERP software.
For example: Are you using applications that do not communicate with each other? Do you see inconsistency in data? Do you have full control on your operations? Are your company’s processes adapted to the reality of the market and the industry?
On a more factual note, in a previous article we listed some of the signs that your company needs an ERP. It gathers the main reasons why your company needs an ERP (or to change it).
Developments and Trends in ERP Software
Since the 1990s, ERP solutions have developed further to better meet the needs of businesses. Modern software now focuses on the cloud while offering the possibility to reduce implementation and support times to react faster to market fluctuations and industry trends, but most importantly to the flexibility, needs and growth of your business.
A modern ERP solution offers flexible deployment options, greater security and privacy, sustainability (upgrades, new features, extended lifecycle, etc.) and customization options. Most importantly, it strengthens your processes with information that will help you innovate quickly today while preparing your business for tomorrow.
At Inmind, we help you choose and implement these solutions of the future to better meet your business needs and transform your technological challenges into business opportunities.
We offer for your organization the entire Microsoft ecosystem as well as our innovative and patented Business Intelligence solutions.