Understanding the buzzwords of enterprise resource planning

To the uninitiated, enterprise resource planning can seem like a confusing process. At first glance, the automation and efficiency that ERP systems provide are instantly appealing. However, when one digs a little deeper, the jargon and technical details become overwhelming. In truth, enterprise resource planning can be understood simply by coming to grips with a handful of key terms. Keep these phrases in mind when preparing to meet with department heads and information technology (IT) professionals about the possibility of an implementation.

Implementation

One of the most important words in the entire ERP process, implementation simply refers to the process of customizing and installing ERP systems. The actual process of implementation can go on for up to year and includes all planning sessions, meetings with software vendors, physical application installations and employee training. The period of implementation finally ends when an enterprise is using a complete ERP system and relies on it for all business practices. However, the line between the end of an implementation and the beginning of a post-ERP organization can become blurred by staggered installations and constant upgrades.

Hybrid implementation

While some ERP systems are complete or “go live” the moment that an entire suite of software applications are integrated into an enterprise’s day-to-day operations, some companies opt to bring each component of an ERP system online in steps. A department such as human resources, for instance, may wait to completely rely on ERP technology until more vital divisions have finished their implementations. This hybrid implementation style can conserve resources and help set wary executives’ minds at ease.

Agility

The more agile that an ERP system is, the better that it is able to deal with problems and crises as they arise. Most agility is derived from customization that attempts to make a suite of applications specific to certain industry or region. ERP systems that lack agility are those that cannot be easily adapted to changing conditions and will be less likely to provide a significant return on investment to businesses. Agility is an important watchword that planners should keep in mind as they begin the process of procuring the services of ERP software vendors.

Supply chain

Whether mandated because of environmental regulations or simply because it affords them the ability to track resources and supplies from one company to another, many enterprises elect to connect their ERP systems to a supply chain. Such a connection gives businesses the opportunity to note the paths that unique chemicals or substances take. A supply chain can also be used to reassure customers of the purity or pedigree of certain products.

Access control

The extent to which ERP systems will be used throughout a company is an important decision that executives and managers must make. While it is enticing to put all employees in contact with an ERP system, there are concerns that some staff members may be overwhelmed by the information available to them. Companies need to decide which personnel should be given access to an ERP system and for which ones such a service would be superfluous.

Business intelligence

Many enterprises choose to use ERP systems in conjunction with business intelligence software. Business intelligence, or BI, is essentially a financial and accounting computer program or set of applications. BI gives companies the opportunity to make projections about future spending and helps to evaluate financial decisions. The data that enterprise resource planning systems provide is very useful for using BI accurately and effectively.

Software updates

One of the most important roles that a software vendor plays once implementation has been completed is as a steward for ERP systems. Computer programs are constantly being tweaked and made slightly better. Software updates are integral in keeping ERP systems modern and agile because they often fix minor unforeseen problems that develop once a program has been used a great deal by many organizations.