Summary: What is and what is an ERP? Business software.
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WHAT IS AN ERP?
ERP stands for “Enterprise Resource Planning”. So in the first place we can say that ERP are an acronym, but what is behind those acronyms? What is an ERP? In short, an ERP is an information management system for a company.
An ERP is a unique management and data system, where all the information of a company converges and is used to make decisions. To say this is to refer to something very broad and without clearly defined limits: for that is an ERP, something that can be so variable in size and functionality as variables can be the size and purpose of the millions of companies that operate in different countries.
Another simple definition of what an ERP is is: “An ERP is a computer system that facilitates the management of a company in all its areas (human resources, purchases, sales, etc.).”
The origin of the ERP can be attributed to the needs of planning and management of war resources that generates a great military event: the Second World War. Armies require great logistics: planning and controlling where personnel, materials, stocks, etc. are destined. With this initial “military” approach, information systems evolved to support all types of companies in their day-to-day management needs.
WHAT IS AN ERP FOR?
The basic utility of software of these characteristics, is to help manage companies of any type, automating all their processes. It also helps control what an organization has (stock and inventory) or does (workflow).
A company with an ERP may be at an advantage over another that does not have such a system. Why? Because thanks to an ERP the company automates its management: it has greater control of what it does and a cost saving (efficiency and effectiveness). This makes companies more competitive: it costs less to fill out a form on the screen and press accept (which will automatically reach the entire company) than filling out a paper form, sending it by courier, and arriving at its destination. In addition an ERP integrates all the activities of all the departments of a company in a single application, allowing to modify data, to make consultations and to generate reports quickly.
There are basically two types of ERP, the generalists and the specialized ones. General ERPs, also called horizontal ERP, serve any business. Specialized ERPs, also called sectoral or vertical, try to provide solutions to specific sectors such as health, distribution, audio-visual media or construction to indicate several examples.
MODULARIZATION IN ERP
The nature of a business management system is modular (divided into separate parts), as it attempts to organize and structure all departments of a company. Just as a company is organized into departments, ERPs are organized into modules (roughly corresponding to company departments). The fundamental modules are:
– Finance: keeps information from the treasury of the company, financing (loans), investment, accounting, etc.
– Shopping: maintains information and procurement management (procurement) of the company, suppliers, etc.
– Sales: maintains information and sales management. Sales data, shipped items, sales prices, etc.
– Logistics: stores information and warehouse management, inventory, transportation, etc.
– Human resources: maintains information and personnel management, payroll, job categories, overtime, taxes, etc.
– CRM (Customerrelationship Management System or customer relationship management) is a subsystem that maintains information and management of customer relationships (data, contracts, etc.).
Depending on the size and type of company can be added different modules, such as: project management, marketing, production and manufacturing, document management, business intelligence and many more.
HOW TO SELECT AN ERP COMPANIES
Not all companies have an ERP, but we can say that all medium and large companies have an ERP (or something similar to an ERP). A company is faced with a first initial dilemma: to develop an ERP of its own (entailing significant software development and maintenance costs) or to use an existing one in the market (it saves costs, but will it fully adapt to the reality and philosophy of the company? ).
The trend in recent years seems to favor the use of existing ERPs in the marketplace, perhaps with additional modules developed specifically for the company, or tailored to fit specific needs. However, there are still many companies that use their own ERPs.
Once the ERP is chosen (either its own development, or among those existing in the market), a next step no less difficult is to implement the ERP within the company. An ERP has a way of working and an organization of data to which the employees and managers of the company will have to adapt.
It is estimated that 10% of the implementation projects of an ERP do not come to fruition due to difficulties in being adapted by the employees, to be poorly designed, to present failures, etc. A big failure was the multinational “Nike”, which not only spent tens of millions of dollars developing an ERP, but its implementation was a disaster with dire economic consequences, until it was abandoned and abandoned.
In order to choose an ERP a company must take into account several factors, such as the degree of specialization (it is not the same as a pharmaceutical laboratory that a supermarket chain for example), size (it is not the same to have 50 employees that 50,000), the ERP scalability (will it fit the company’s growth forecast?), Security (it is not the same as a nuclear power plant management company or a vegetable bottler) and other factors.
PROGRAMMING LANGUAGES IN ERP
There are some market ERPs for which there is little information about the language in which they are developed because they are marketed as a “black box”. The term black box is often used to refer to something that is known what it does, but not how it does it internally. These systems are installed, initialized and can be used (enter invoices, make accounting notes, extract status reports, etc.).
In this sense, if you want a special report or different from the ones that the product carries, you would have to ask the implantation company to add the required functionality. This is usually managed through a maintenance contract that is usually included in the ERP implementation project itself.
It is also very common for one or several people in the company to be trained in the tool and able to provide technical support to the other members of the company. This usually happens in medium or large companies, where there is a small or large computer department.
If the company is a company whose business processes are very changing or vary a lot in the short and medium term, it is important that the chosen ERP have ways to adapt the established circuits in an easy way. In the market there are some ERPs “open source” (open source, anyone with knowledge can modify the software). These ERPs are in theory free, and we say in theory because what is really free are the software licenses, the implementation of the same, ie the consulting services are not free. So having the software for free may not be useful if we do not know how to deploy it, configure it and make it work.
Another mode of access to ERPs is what is called payment for use, ie, you get an ERP that is accessed via the web and paid by time used or by number of users. This is a recommendable way for small or medium sized companies, for the cost savings in terms of maintenance and hardware, as the company can forget about these factors. As an inconvenience, the company’s data is ultimately stored by a third party when in the cloud, which can have security risks. However, companies offering services via the web maintain backups and access to data with securization and encryption, which in general makes these systems qualify as secure.
The programming language is fundamental if you choose at the end the option of developing an own ERP and from scratch. In this case one of the first questions to ask is: Do I need to be web or not? If we need to access the data remotely from multiple points the answer is that we need web technology.
The most used programming languages are ABAP (SAP proprietary language), Java and .NET languages like C #, in addition to the web development languages when it comes to web applications.