An Overview of ERP

25 Apr


When I was thinking about what would be the most appropriate topic to write about in my first blog post, one immediately came to my mind. The one that strike me as a light was Enterprise Resource Planning. Maybe some of you have already heard about ERP systems and their tremendous impact on the modern organization, but maybe some of you have not. That is why I thought it would be very helpful to you, future managers of big and mid-sized companies, to have an idea what business people mean by implementing an ERP system, because these systems would play a major role in your future business career.

As I was browsing through the internet to find more information I went through a lot of interesting blogs where qualified professionals in the IT and accounting sphere were presenting their opinions about what actually ERP means and its impact on the companies that are already using such systems and the ones that are in the process of implementation. What I derived as a conclusion of all the blog posts that I read is that ERP plays a central role in modern organizations and that it is a must for most organizations. In the following paragraphs I will try to make a short introduction to what ERP is and what are the benefits and disadvantages of such a system.

In simple words ERP uses information technology to basically improve the performance of the organization by integrating the activities of the different departments, such as accounting, customer services and manufacturing departments. Maybe some of you would think that ERP is some kind of software that can be used by everybody without special training, which is not true at all. ERP includes the software, hardware, users and the business processes involved. After giving you this short introduction to what ERP is, I would like to share with you some of the main benefits and drawbacks of ERP that I gathered while searching on the web. The first and I think most important benefit is the improved internal communication between the different departments. What ERP system basically does is centralizing data in one location which eliminates the option of someone entering the same information twice. ERP also provides increased level of data security, as only authorized individuals are able to enter the system and get information out of it. Another advantage of these systems is the increased efficiency in communication with other vendors. What the majority of ERP users share is that it simplifies the manufacturing and logistics process, which results in cost reduction and increased level of customer satisfaction. Last but not least ERP brought a tremendous benefit to the accounting department by simplifying the repetitive accounting functions and bringing all numbers together.

As every complicated system used by more than one person ERP also has its disadvantages. The implementation of ERP requires a lot of effort, money, time and commitment. This fact makes such systems not so attractive for small companies.

I was not pretty sure what to write as a conclusion, but I suppose that giving the opinion of a friend of mine working with such a system is a good option. The person that I am talking about is working as an accountant in a security company, and the ERP software that he uses is produced by Baan. He told me that ERP adds a lot of stress to his work, because the process of learning how to operate this system properly never ends. But what he also shared with me was the fact that he can not imagine doing his job without such a system, because despite all the stress, the benefits exceed the disadvantages.

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