Benefits of Enterprise Resource Planning (ERP)

Enterprise resource planning, commonly known as ERP, is a computer software system used to manage the organizational resources. It provides a way for integration of data and processes within an organization. Thus, depending on their authorization, the different departments can check upon this unified database. ERP systems are used in both large and small organizations, covering functions, like, payroll maintenance and accounting. The common functions, like, Supply Chain Management (SCM), Human Resource Management (HRM), Customer Relationship Management (CRM), Warehouse Management, etc., are integrated with their own database and network, by the ERP system.

Increased Cost Effectiveness
Despite the huge initial investment, once installed, the ERP system significantly reduces the cost of operations in a company. However, it requires adequate training and a lot of manual effort. As the work-flow in ERP software is far more complex than any other average business softwares, the training becomes necessary and expensive. The employees of the company have to perform their daily tasks and learn the usage of the ERP software system at the same time. To lessen the company's burden, there are many training firms which are specialized in coaching employees about the functionality of the ERP softwares from different vendors.

Enhanced Work Efficiency
ERP systems enhance the efficiency of the whole organization by smoothly integrating its various divisions. It also helps in reduction of paper documents and provides an online format for quick storage and retrieval of information. ERP ensures a quick response to changes in market conditions and also improves the productivity of the company by providing each department with their own computer system, data and database. Cross computer system communication can also be done within these departments, in order to store or retrieve information. This results in a unified working of all aspects of an organization, instead of every single system needing to be compatible with each other.

Integration of Business Functions
As the ERP system integrates data and process from different divisions of an organization, it enables easier access and work flow. Its multiple software modules aid the coordination of various business functions in an organization. This integration provides an opportunity for the various divisions to share a unified database and ensures proper business communication within the organization. This centralization of data in one place eliminates the problem of synchronizing the changes made by different departments and people. It also reduces the risk of loss of confidential data, by applying difficult-to-crack network security models. ERP systems also provide an efficient method for data recovery, in case of a system crash.

Improved International Operations
ERP systems support a variety of tax structures, different currencies of the world and multiple languages, which makes it a truly international software. It is suitable for global operations because of its diversified accounting standards and the ability to manage world wide clients and resources. ERP also assists the improvement of the supply - demand linkages with the remote locations and branches in different regions or countries.

There are basically three types of services that are provided by the vendors, namely, consulting, customization and support. Consulting services are responsible for the initial phase of ERP installation and deal with product training, work-flow, etc. Customization services make changes according to the needs of the organizations, by creating customized interfaces or underlying application codes. Support services include the maintenance and support of ERP systems and deal with the trouble shooting part. They are all necessary for an organization, to avail the benefits of Enterprise Resource Planning (ERP).