The what, when and how of ERP software
1st August, 2016
If you’re into business you’ve probably heard of ‘ERP’, but you’re not alone in not knowing what it is.
You may have heard someone talking about ERP software transforming their business or helping them streamline their processes but you may still be confused about what it is (or does).
At MYOB, we think it’s important that people understand what they’re getting into before they choose ERP software.
Confusing lingo and buzzwords don’t help anyone, so we make it our mission to make it as clear and easy to understand as possible.
Here’s what ERP is, where the term comes from, and what it can do for your business.
The what: What does ERP mean?
ERP stands for Enterprise Resource Planning, but that doesn’t really tell you anything about what it does.
In short, ERP is business management software that lets your business integrate applications and automate business functions.
Typically a suite of integrated applications, ERP can be used to collect, store, manage and interpret data from different parts of your business, including operations, planning, development, HR, payroll, accounts, and even sales and marketing.
It brings all those things together to offer an integrated view of core business processes, often in real-time.
It facilitates information flow between the various departments of a business.
Because every business is different, ERP software can be customised, with a range of application to suit your needs and processes.
It’s all aimed at helping your business do what it does, better.
READ: The ROI of ERP: The true investment of an ERP solution
The when: A brief history of ERP
The acronym ERP was first used in the 1990s, seen as an extension of existing Material Requirements Planning software.
ERP eventually became an umbrella term for application integration beyond the manufacturing sector.
ERP experienced rapid growth in the 1990s, moving beyond manufacturing to be used in all types of business, including not-for-profits and government organisations.
Faced with potential software issues at the millennium, many companies chose to replace old systems with ERP just before the year 2000.
Later, as more companies began to take advantage of web-based systems and mobile technology, ERP adapted to fit.
The term ‘ERP ll’ describes ERP software that can be accessed through the web or mobile devices.
The how: How does ERP software work?
All ERP software is not created equal, but most systems do share some common features.
The one feature all ERP systems include is a shared database used by different business units.
This common database allows different people across the business – whether in sales, accounting, HR or anywhere else – to access to the same information when making business decisions.
Increasingly, ERP software also offers automated reporting, giving businesses accurate information in real-time.
This makes it easier to plan for the future and make good business decisions.
Newer systems include a user-friendly portal or dashboard where employees can access instantly information about key performance metrics.
But it’s not just about data – ERP systems also allow companies to automate processes and streamline functions, taking some of the boring, repetitive grunt work from employees.
This is a positive for obvious reasons — it gives staff more time to do work which actually grows the business, and decreases the chance of human error.
It’s about giving people the tools to do their jobs as quickly and effectively as possible.