In this article, I am going to highlight some of the benefits that an ERP system can bring to yourorganisation. Since, ERP systems cover a wide spectrum of processes; I will only limit the discussion to the key functionalities that an organisation can benefit from.
What is an ERP system?
The Acronym ERP stands for Enterprise Resource Planning System. An ERP system is an integrated system that is meant to be used by the entire organisation. The classical systems were meant to be used for instance by one department in an organisation. The most common classical systems were accounting packages as well as payroll systems. Having such classical system meant that different departments within the same organisation could essentially use systems from different vendors.
Such a scenario might seem easy to maintain and cope with, but in this era, where the management and use of information used by a system has become the critical success factor, the classical approach can no longer be relied on. Such challenges have given birth to the proliferation of ERP systems that provide an organisation with a suite of integrated systems that can be used by all departments within an organisation. Having explained the concept of ERP, let's move on to the benefits.
Benefits of an ERP system
An ERP system provides you with a single information systems platform for the entire organisation. That implies for instance that; the accounting system, sales system, production system, finance system, business intelligence system, purchasing system, among others, are all integrated into a single application. All the applications will share a common database thus reducing data redundancy unlike the classical systems which would result in each department within an organisation having its own island of information (own database).
Running an ERP system has also shortened the data retrieval cycles and made it easier to define and create reports that Query your database. Let's just imagine how tedious and difficult it would be to create a single report in the classical system that shows the quantity and value of stock acquired by your purchasing department for a particular material, the sales values and quantity generated by your sales department, the revenue and profitability realized from the sale of the material, the stock turnover ration of the material an sales forecasts of the material. Generating such a report in an environment where each department uses its own system would have been tedious if not impossible. One would imagine the complexity of trying to extract the data from a different set of databases. Let alone, these systems will not even be running on a single server. The ERP systems have addressed these shortcomings. Popular ERP systems include; SAP, Oracle, and Microsoft Dynamics.
Whilst most of the traditional systems that were developed to address the functionality of each department, like Accounting Packages were either bought off the shelf or bespoke packages developed either in-house or by a team of external programmers, ERP has transformed the information systems development approach. The traditional approach involved resulted in complexities during upgrades or process improvements. ERP systems such as SAP have an additional layer for customising the system according to the client's requirements. The layer contains a host of tools which present information systems implementers with a host of permutations which can yield several different results. Such an approach takes away the need to hard code programs as outlined in the traditional systems development life cycle. Hard coding becomes a rare act and this has resulted in companies across the globe benefiting from the availability of best business practice processes that are embedded in these ERP systems.
This article was written by Luckson Midzi. Luckson is an ICT consultant specialising in implementing SAP ERP Sales and Distribution systems and SAP Direct Store Delivery Systems. He is writing in his own personal capacity and can be reached on