1.

ERP INTRODUCTION
ERP stands for Enterprise Resource Planning and refers to software and systems used to plan and
manage all the core supply chain, manufacturing, services, financial and other processes of an
organization.

Enterprise Resource Planning software can be used to automate and simplify individual activities
across a business or organization, such as accounting and procurement, project management,
customer relationship management, risk management, compliance and supply chain operations. 

Individual ERP applications can offer software as a service (SaaS), while a complete suite of ERP
applications forms an ERP system that can be used to effectively communicate and bring together
business processes to enable a flow of data between the applications, typically through common
databases either on-site/on-premise or in the cloud.

2. WORKING OF ERP SYSTEM :

The main purpose of an ERP system is to increase organizational efficiency of an organization by

managing and improving how company resources are utilized. Improving and/or reducing the
number of resources necessary without sacrificing quality and performance are keys to effectively
improving business growth and profitability.
ERP systems typically cover all aspects of business operations and commonly provide:

 An integrated system
 Common database 
 Real-time operation
 Support for all applications/components
 Common user interface across application/components
 On-premise, cloud hosted, or SaaS deployment.

ERP software has the ability to collect and compare metrics across departments and provide a
number of different reports based on roles or specific user preferences. The data collected makes
finding and reporting on data faster and gives a complete view of business performance with
complete insights on how resources are being spent. 

ERP synchronizes reporting and automation by reducing the need to maintain separate databases
and spreadsheets that would have to be manually merged to generate reports. This combined data
collection and reporting offers valuable insight, such as where to cut costs and streamline
processes, providing the information  to make real-time business decisions.

Types of ERP Systems & ERP Software Deployment Options

Enterprise Resource Planning software is considered a type of “enterprise application”, which refers
to software designed to satisfy the software needs of an organization and improve business
performance. There are many different ERP systems available today that range greatly depending on
the size, function, and needs of an organization. Types of ERP systems generally refer to deployment
options and include cloud ERP, on-premise ERP and hybrid ERP (some systems in the cloud and
some on-premise).

Each ERP solution system is often tailored to support different aspects of a business, meet an
organization’s business requirements and have different methods of deployment.

Big Business ERP vs. Small Business ERP

In the past, “big business ERP” addressed large organizations that often deployed onsite/on-
premise ERP solutions and had an abundance of resources to dedicate to IT and other support to
analyze, customize, upgrade and deploy their software solutions. 

The phrase “Small Business ERP” or “SME (small and medium-sized enterprise) ERP” commonly
referred to ERP software systems with business management applications typically created to meet
the specific needs for a small to mid-sized business. 
Today, these phrases are used less frequently as the important factor is not company size but
determining if the ERP system is effectively addressing current and future business requirements,
no matter the size of the organization.

It’s imperative that organizations consider and select ERP systems that eliminate the need for
costly customizations, adapt to the rapid pace of business change, address future technologies and
meet other identified requirements.

Types of ERP Systems: Cloud vs On-Premise vs Hybrid

There are three main types of ERP systems that function with different deployment model options.
The most common types of ERP systems include cloud ERP, on-premise ERP, and hybrid ERP.

 On-Premise ERP software is implemented onsite and maintained in physical office space
within an organization, hosted on the company’s own computers and servers for full control,
support and ownership of the entire system once implemented.
 Cloud-based ERP software is a web-based solution, known as Software as a Service (SaaS),
where an organization accesses and stores data on any device with an internet connection,
usually through the purchase of a subscription. Continual support, updates, training, and
flexible customizations supported by the software provider.
 Hybrid ERP software refers to a combined implementation of cloud-based and on-premise
ERP system solutions. The combination of hosting and deployment services vary by provider.
These models can provide ERP users the flexibility to migrate between delivery models, or
integrate benefits not available existing implementation. 

Different ERP vendors support different deployment model options. Combinations of options, often
referred to as “hybrid” deployment may offer a combination of hosting and deployment services.
These models can provide ERP users flexibility migrate between delivery models, or integrate
benefits not available existing implementation.

What Industries Can ERP Be Used For?

ERP software can be used in any industry to help a business become more efficient. It provides an effective
communication tool that can manage information between internal and external departments, assist with
daily activities to manage projects, track adherence to guidelines, and handle day-to-day intricacies that
come with running a business.  

Due to ERP roots in manufacturing, there are robust Industry-specific ERP systems that cater to the
various manufacturing industries. ERP software systems are very diverse and are key parts of many
industries, including but not limited to:

 Manufacturing
 Industrial Machinery and Components
  Construction and Home Improvement
 Electronics and Technology
 Automotive
 Aerospace and Defense
 Healthcare, Pharmaceutical and Life Sciences
 Agribusiness, Farming and Agriculture
 Food and Beverage
 Healthcare and Hospitality
 Clothing, Consumer Goods and Retail
Over time, ERP systems have grown to include support for other applications and “ERP modules"
that support day-to-day business function. In many ERP systems, these common functional areas
are grouped into ERP modules, including but not limited to:

 Financial Accounting
 Management Accounting
 Human Resources
 Manufacturing
 Order Processing
 Supply Chain Management
 Project Management
 Customer Relationship Management (CRM)
 Data Services

When Does Your Business Need ERP?

Business development often focuses on goals that coincide with a company’s short-term and long-
term growth, as well as analyzing potential business challenges. Conducting a regular analysis of
systems and processes helps identify when a business may need to integrate an ERP system. 

An ERP solution should be taken into consideration when existing business systems and processes
are:

 No longer function or function inefficiently (throttling/bottlenecking) 

 No longer support the growth of the company
 Lack current security requirements to mitigate risk

Identifying broken processes is important for growth and finding areas of improvement. Here are a
few examples of opportunities that may signal a process is no longer supporting company growth:
  Use/Relying heavily on separate databases/spreadsheets/programs that require manual
processes for data management and fall out of sync regularly
 Information and analytics are difficult to access and/or out of date
 Day-to-day processes are difficult or overly time consuming, such as paper-based
accounting, financial reporting, etc.
 Sales and customer experience are suffering due to inaccurate or incomplete data and
cause poor reputation for reliability and services
 Inefficient/complex/complicated IT processes. Current systems have bad scalability,
fragmented systems legacy solutions. 
 IT time is spent fixing/patching legacy systems to try and keep up with growth
 Does not support new and advanced technologies like IoT, artificial intelligence, etc.

Once broken processes are identified, businesses can take the next steps to overcome these
business challenges and support business growth.

How Can ERP Help Improve and Grow a Business?

ERP systems are used to help businesses of all sizes overcome challenges—from small businesses
to massive enterprises. Early business practices may no longer keep up with growing demand and
require more efficient business tools, like ERP, to effectively manage a business’ systems and
resources. 

ERP software systems provide many benefits to the health and growth of a business.

The Benefits and Business Value of ERP

 Cost savings and improved ROI efficiency. Increased productivity and efficiency as a result
from the integration and automation that ERP software provides
 Improve business insight. Improve decision making with a single aggregated source of truth
and real-time data 
 Manage Regulatory Compliance. Manage and monitor compliance with regulatory
standards, and even set up alerts for non-compliance
 Mitigate and reduce risk. Automate core business operations, manual tasks, and reporting.
Reduce human errors, and free up employee time and resources 
 Enhance collaboration. Break down communication barriers for efficient collaboration and
coordination to improve job efficiency.
Improve supply chain and distribution network reliability. Use demand-driven MRP to
forecast supply and demand and prepare for fluxes in orders and supply chain
 Scalability. Consistent infrastructure for streamlined operations can grow as your business
grows
 Optimize customer and partner management. service, customer relationship management,
as well as partner and supplier management with insight from seamless shared information