Enterprise Resource Planning
What is ERP?
Enterprise resource planning (ERP) is a software system. It is for business management. It automates and integrates an organization’s functions, processes, and workflows.
How does ERP work?
A term coined by Gartner in the 1990s, an Enterprise resource planning system is designed to manage all parts of a business. It covers finance, HR, manufacturing, supply chain, services, and procurement. It also covers product lifecycle and project management. An ERP system is essential to an organization’s daily operations. ERP software consists of connected business applications that share one database. This reduces the resources needed to run the business end to end.
The enterprise modules are business applications. Each focuses on a specific area. They work together to meet the company’s needs. Since businesses vary in size and needs, modules won’t fit all. No two are alike. A company can pick and choose which modules are best suited for their business.
An ERP system delivers the most value when a company uses its modules for each business function. Enterprise resource planning implementation creates a central location for all business data. It cuts out the silos that complicate data collection and cause duplication. The new system (the ERP model) serves as a single-source-of-truth software solution.
ERP software systems come in three different forms:
– A cloud subscription model (software-as-a-service)
– A licensing model (on premises)
– A hybrid model
Read on for details on these three systems. Also, on the different modules in an ERP management system.
ERP software system types
There are three types of ERP systems: onsite, cloud-based, and hybrid. They all differ and have their pros and cons. It depends on business needs and ERP approach. Any of these ERP systems can help a company with decision-making and profitability.
Onsite ERP: This software, or on-premises ERP, is deployed onsite. It is mostly controlled in-house, or by the company’s enterprise. A business would choose this option for total control of the ERP software and its security. This ERP software needs a dedicated, on-site IT person to maintain it.
Cloud-based ERP: The cloud-based ERP system, or SaaS, means a third party is managing the ERP software in the cloud. This flexible options system uses AI and machine learning. It can automate tasks and let employees search data on any device via the internet. IBM, Infor, Microsoft, Oracle and SAP offer new ERP solutions.
This is a popular model for ERP software due to its scalability, agility and lower cost. The main disadvantage is the security risk that you take when trusting an ERP vendor. The data for your business is sensitive and requires careful handling.
Hybrid ERP: This system is for companies wanting features of both an onsite and a SaaS model to meet their needs. In this model, some of the ERP applications and data will be on the cloud and some are on premises. This can sometimes be referred to as a two-tier ERP.
Take the next step
Techformations Consulting is the driving force behind your business transformation journey. Techformations Consulting, with partners, helps businesses move legacy ERP apps to the cloud. They also redesign processes to use data, AI, and automation. This helps clients meet their business goals.