Importance of ERP
Enterprise resource planning (ERP) is business process management software which allows an industry or a company to use a system of integrated applications to prosper the business and automate many back office functions related to handling the overall process of their businesses.
Those who’ve never used the software may find it difficult to understand why ERP is important to their business. But as globalization crushes the market for many industries, it’s important to seek out any and all tools to give your business a competitive and reasonable edge. Now many companies in world realized that it can be achieved by using an ERP software in their businesses.
ERP stores all entered data into a single database, permitting all departments to work with the same information simultaneously. Additionally, all this data can be planned, evaluated and converted into consolidated reports. ERP systems bring together CRM ( Customer Relationship Management), Procurement and Inventory Management, Human resources, Supply Chain Capabilities, Financial Management , Business Intelligence into one system. Some examples of the industries that are better off because of ERP software are Healthcare, Hospitality, Professional Services, Manufacturing & Distribution, Retail & Supply Chain, Construction and E-Commerce.
ROI in the context of an ERP :
Return on investment does not just imply in terms of financial advantage. It can be in terms of the growth in productivity, efficiency, or in terms of overall improvement in the performance of the company or even to the extent of better transparency in the operations being carried out by the firm and of course, the satisfaction of the users.
While going for ERP implementation, it is very essential that the return on investment does not just imply in terms of financial gain. Of course yes, there are financial gains in the long run. But, let us see, what the other ways of realizing a significant return on investments are.
Streamlined processes:- Existing processes are streamlined properly due to proper flow in data across departments.
Data Consistency:- Streamlined processes result in consistency of data across the organization as it is centralized. There is no need for every department to store data separately.
Improvements in productivity:- Data consistency removes the burden of impertinent work from staff and managers. This helps them concentrate in their core duties and hence results in improved productivity.
Reduction in redundancy:- Centralized database ensures that the customer order need not be stored in separate departments redundantly. One unique id generated per customer or per order, helps various departments access the same data.
Increased transparency:- As told before, a unique id for every order helps departments know the status of the order well in advance. This results in transparency across the organization and helps individual process manager’s plan in advance