What is ERP system – The software industry has made an impact on every modern field of life. From the convoluted areas of astronomy to simple but fascinating arts. The use of the software is getting popular, take ERP software for instance.
Like every other professional community, business management systems or ERP software have also been rapidly growing with the passage of time. The business community has widely used Enterprise Resource Planning (ERP) software solutions.
Specifically, an ERP system is implemented by companies to collect, interpret, store, and manage data from business activities. With this ERP system, companies can manage all their business activities effectively.
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What is ERP System?
So, what is an ERP system? ERP, the abbreviation of Enterprise Resource Planning, is a system and software package used by companies to manage their daily business activities. For instance, financial management, e-procurement, production, projects, HR, and others.
In addition, ERP systems can facilitate business with real-time and accurate information. Making it possible for you to make good business decisions based on the data generated. By collecting transaction data together from multiple sources, ERP systems prevent data duplication by providing data integrity. These systems use a centralized database. ERP systems also share a common computing platform to ensure consistency across the system.
The Benefits of ERP System
Companies, after using this integration, get benefits of this in various ways: competitive pressures and market opportunities. Companies may now handle both competitive pressures and market opportunities with quick reactions.
Product configurations are more flexible. Inventory is reduced, and supply-chain management is tightened. Apart from managing the in-house system of a company, these systems assist in organizing connections to outside stakeholders.
In addition, this system also helps the organization to enhance performance management consequently. These significances have grabbed the attention of software developing companies to work on these systems.
In fact, if we try to answer one of the most important questions “Why an organization would require to have an ERP system”. Then, ERP software solutions have the most direct impact on reducing the cost for a corporation. This is due to the fact that better planning of resources makes it easier for the managing personnel to use them in an optimized manner.
The Characteristics of ERP System
A typical ERP system usually has the following characteristics:
- A real-time operating integrated system that does not rely on periodic updates
- All applications of the system are supported by a common database
- All the modules have a consistent look and feel
The scope of ERP implies drastic changes to staff work processes and practices. Most of the time, three types of services are there to aid the implementation of these changes. Namely consulting, customization, and support.
The implementation time of an ERP system for a specific company depends on various factors including the business size of the organization. It also varies based on the number of modules of the system. Most importantly, the readiness of the customers of the system to take ownership of the project. Business owners may now implement such a system in stages. Since the ERP system has more than one module
According to a case study jointly done by Indiana University and Purdue University, a typical project for a large enterprise takes about 14 months and around 150 consultants for it to be fully functional deployment. Compared to this, small corporations should take 6 – 7 months and large enterprises can take years to complete the implementation.
Related article: 16 Best ERP Software in Singapore You Should Know in 2023
‘Tier’ in Software Applications
First, to completely understand the architecture of a traditional ERP system, one must know the concept of ‘Tier’ in software applications. Different tiers of an application refer to different layers of the application. Depending on the tasks that need to be done by the application. Besides, these layers are made and advised to work independently.
Most of the time, applications have three tiers: the first tier interacts with the user and it is responsible for taking users’ inputs and transferring them forward. The second tier usually interacts with the backend of the system. Most of the time, the database form kept this backend. The third tier is called the ‘Business layer’ which contains all the necessary logic and computations of the system.
Mapping this knowledge into the ERP system, most ERP systems also follow this architecture. Applications in the system are modeled in such a way that functionality is divided into layers to make it efficient for the system to do the computations. In truth, currently, in the global market, the latest client-server version of the product is R/3 and the corresponding latest release is 4.0 b.
Nowadays, ERP systems have been able to grab the attention of business giants. There are different levels of investors who are putting their investments in the ERP market. The first level in the hierarchy contains players like SAP (System Analysis and Program Networking), Oracle, Baan, and PeopleSoft.
Out of these companies, SAP relies only on its products related to engineering management and its total assets were €41.39 billion by the end of 2015. This depicts the potential of these products for the business community. Similarly, the second-level players are J. D. Edwards, Lawson, and QAD.
Conclusion
In short, cloud-based ERP systems, which were introduced in the era of 1990s, are a fast-growing industry and due to their necessity for enterprises, will become one of the leading businesses in the future. At the moment, the only drawback that these products have been it is difficult to deploy as compared to conventional software applications.
In reality, organizations have considered these systems as the vital tool that will help them to manage everything related to their enterprise in a smart and efficient way to reduce the cost and the hassle of managers. Business gurus are predicting this industry as one of the safest and most profitable for business in the future as the process of deployment is improving.
