Home Blog What is ERP? History and Benefits of ERP
What is ERP? History and Benefits of ERP

What Is ERP? History & Benefits Of ERP

ERP is a short-term Enterprise Resource Planning. For this, you need to step back and think about different processes that are essential for running a business, including inventory and order management, accounting, human resources, customer relationship management (CRM), and more.

At its most basic level, ERP software integrates these different functions into a complete system to simplify processes and information throughout the organization.

All ERP systems feature a shared database, which supports many functions used by various business units.

In practice, this means that employees in different divisions - for example, accounting and sales - can rely on single information for their specific needs.

ERP systems eliminate data duplication and provide data integrity with a "single source".

Enterprise Resource Planning (ERP) software helps businesses in managing and connect information to all key areas of the organization with the aim of improving effective decision-making.

ERP software solutions promote visibility in the entire organization, allowing decision-makers to improve business operations; Such as Inventory Management, accounting, order management, human resources, supply chain, product lifecycle, customer relationship management (CRM), etc.

ERP software should work as a central point for management in all important aspects of the business.

Why ERP is Needed:

ERP systems are designed around a common, deficient data structure (schema) that usually have a common database.

ERP systems provide enterprise data access from multiple activities using common constructs and defensives and user experiences.

The important principle of ERP is that it is the central collection of data for broad distribution. Instead of several standalone databases with an endless inventory of disconnected spreadsheets, ERP systems bring disorder to order so that all users - from CEO to accountant - can build, store and use data obtained through a common process.

With a secure and centralized data repository, everyone in the organization can trust that the data is correct, up to date, and complete.

From the quarterly financial statements to the Outstanding Receiving Report, data integrity is ensured for each task done in the entire organization.

ERP System Examples:

ERP systems usually include applications for accounting, human resources, sales CRM, and supply chain management. But you can add different modules to better suit your needs. 

For example, you can add ERP components for e-commerce, inventory and order management, and fulfillment. Or from manufacturing to retail, you can include apps designed for a wide range of industries.

An example of ERP that is being used by a Well Known Company i.e. amazon.com, is Oracle E-Business Suite. Also, there are some other companies that use ERP are:

  • Marc Jacobs 
  • Renault Sport 
  • Pandora 
  • Cambridge Judge Business School  
  • Sunkist
  • Thomas Cook
  • Bosch
  • DIXIE 
  • J. Ploenes

Benefits of ERP:

Here are some of the major Benefits of Implementing ERP in your Business:

  1. Transparency:

It is one of the main benefits of implementing ERP because by this, all the information or data can be easily accessible by any department which is knitted in the chain of ERP, which is not possible without ERP.

  1. Efficiency:

Efficiency is also a factor as it is Increased By The Use Of ERP. Because it helps in Better reporting and planning. 

  1. Customer Service:

If you implemented it in your business then your customers will also be benefited from this without even knowing this. Because your team will be able to analyze your customer's behavior and work according to that and will be able to create a Good Mutual relationship. 

  1. Complete Customization:

One of the major benefits of using ERP is its modular makeup. There are a huge number of vendors which provides applications along with ERP systems that can be implemented with ERP to make it work According to Company Needs.

  1. Data Security and Quality:

Data Security is a prominent part of the ERP System and it is also one of the major benefits that are caused by ERP. If you are using a Cloud-Based ERP then Your Data is Highly encrypted, Secure, and Accurate. The kit is beneficial for companies whose data is sensitive and can’t be disclosed to the public.


History of ERP:

The history of ERP is more than 100 years ago. In 1913, engineer Ford Whitman Harris developed it. It started to be known as the Economic Order Quantity (EOQ) model, to produce a paper-based manufacturing system, to start production.

For decades, EOQ was standard for manufacturing. Toolmaker Black and Decker changed the game in 1964. It was the first company to adopt Material Requirement Planning (MRP) solution in which the EOQ concept was compiled with mainframe computers.

Manufacturing Resource Planning (MRP II) remained the standard for MRP manufacturing until its development in 1983.

The MRP II featured module was included in the form of core software components and included important manufacturing components, including purchasing, bill of materials, scheduling, and contract management.

For the first time, various manufacturing tasks were integrated into a common system.

MRP II also provided a vigorous vision in which operation software could be used to leverage the software to share and integrate and facilitate operating efficiency with better production planning, less inventory, and low waste (scraps).

Computer technology developed during the 1970s and 1980s, and the concept similar to MRP II was up to date, which could handle business activity beyond manufacturing, incorporating finance, customer relationship management, and human resources data.

Until 1990, business management software for this new category of Technology Analysis got the name enterprise resource planning.

Also Read: Top 10 Benefits of ERP for the Manufacturing Industry

Currently ERP:

From the 1960s until the beginning of the twenty-first century, the acceptance of ERP grew rapidly, because more organizations were relying on ERP in order to simplify key business processes and improve data visibility.

At the same time, the cost of implementing the ERP system began to increase. Not only on-premises hardware and software but also expensive capital investments. Along with that, Enterprise ERP systems often required additional costs of custom coding, consultants, and training.

Meanwhile, ERP Technology has developed to embrace the Internet with new features and functionality such as embedded analytics.

As time passed, many organizations found that their on-premises ERP systems could not work with modern security demands or emerging technologies, such as smartphones.

ERP has now entered into the cloud or software-as-a-service (SaaS) delivery model for itself. This means that the ERP software is "in the cloud", not in the company's location.

Cloud provides more affordable options for ERP, which reduces both operational costs (OPEX) and capital expenditure (CapEx) as it eliminates the need for companies to buy software and hardware or hire additional IT employees.

In addition to this, without any costly basic infrastructure, the resources can be invested in development opportunities. 

Employees can focus their attention on more important tasks rather than managing IT.

Next-Generation ERP

1) Built for Any Size Business

While the past inherited ERP systems were often very expensive for medium businesses (SMBs), Claude broke this barrier.

With SaaS Solutions, small companies can take advantage of ERP software with the same certified, industrial strength that large enterprises have used over the years.

Cloud-based ERP solutions can be implemented quickly without a CapEx investment.

2) Delivering an Extended Enterprise

When Cloud ERP extends into its financial architecture to include integrated customer relationship management (CRM), supply chain management (SCM), human capital management (HCM), and enterprise performance management (EPM), the system will allow all applications With the same data repository and the common user experience.

An expanded cloud ERP system enables all departments to manage with better visibility and collaboration as if they are the same organization.

It has advanced reporting features such as Data Visualization and Advanced Analytics. 

This was all the relevant information about ERP, which is essential for Business owners should know.  Hope this blog is helpful to you. If you have any questions regarding ERP, let us know in the comment section.

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