The Tangible Benefits of ERP
ERP stands for Enterprise Resource Planning, and describes any software system designed to support and automate the business processes of a medium or large business. ERP systems offer tangible benefits that directly affect the bottom line -- the net profit or loss -- of a business, and intangible benefits that are less quantifiable. Both types of benefits are central to a business's decision on whether or not it invests in an ERP system.
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Cost Reduction
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ERP systems promote integration of business processes -- traditionally independent and optimized for separate business units, or departments -- into a single, enterprise-wide information system. Integration improves automatic data exchange among the related components of a business, which, in turn, translates into reductions in inventory control, manufacturing, marketing and support costs.
Analysis and Planning
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ERP systems improve access to accurate and timely information. Decision makers within a business can gather and analyze data from a variety of sources, in real time, allowing them to make better informed decisions. As such, ERP systems support the resource planning portion of strategic planning -- a deliberate set of steps that assess business needs and resources -- and permit integration with software tools, such as decision support systems and simulations, which aid management decision making.
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New Systems
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ERP systems not only integrate existing systems, but can also provide a basis for new systems. Modern ERP systems typically incorporate intuitive Web interfaces, which allow the integration of new business processes, such as e-commerce -- business transactions conducted on the Internet -- and customer relations management, can provide significant returns on investment. ERP vendors continue to develop new functionality for their systems, so an ERP system can provide a starting point for a wide range of administrative functionality that can be added over time.
Efficiency
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The adoption of an ERP system often involves reexamining business processes and, as such, can often revitalize inefficient processes or departments. ERP typically increases workflow and efficiency, and decreases reliance on traditional, paper-based systems. Holding documents electronically, rather than on paper, means that they can be transferred quickly from one workflow process to the next -- shortening the time taken to complete the process as a whole -- and are much less likely to be missing, lost or mislaid. Furthermore, electronic documentation means that the status of any request can be quickly and accurately determined.
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References
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