ERP software is considered to be a type of enterprise application, that is software designed to be used by larger businesses and often requires dedicated teams to customize and analyze the data and to handle upgrades and deployment.
Need for ERP:- Separate systems were being maintained during 1960/70 for traditional business functions like Sales & Marketing, Finance, Human Resources, Manufacturing, and Supply Chain Management. These systems were often incongruent, hosted in different databases and required batch updates. It was difficult to manage business processes across business functions e.g. procurement to pay and sales to cash functions. ERP system grew to replace the islands of information by integrating these traditional business functions.
Of all the software an organization can deploy, ERP has potentially the most direct impact on reducing costs. When asked in a 2010 survey conducted by the Aberdeen Group of Small and Medium Businesses (SMBs) what factors drove them to implement an ERP solution, nearly half cited the need to reduce costs to improve operating margins. Improving customer service was the second most cited reason. The distribution of responses to this survey appears below in Figure.
A survey conducted during much the same period by AMR Research confirms these findings. Fifty percent of their respondents named cost reduction and improved efficiencies among their top two priorities.
Advantages of ERP System
With Enterprise Resource Planning (ERP) software, accurate forecasting can be done. When accurate forecasting inventory levels are kept at maximum efficiency, this allows for the organization to be profitable.
Integration of the various departments ensures communication, productivity and efficiency.
Adopting ERP software eradicates the problem of coordinating changes between many systems.
ERP software provides a top-down view of an organization, so information is available to make decisions at anytime, anywhere.
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