We all have heard this term ERP, that is Enterprise Resource Planning during our career at some point of time. Due to technology demands, most of us haphazardly did courses in ERP, but when it comes to explaining it to a lay man, can we break it down in common language?  

ERP in simple terms means a system that single handedly manages all the departments of the company. It gathers, maintains, manages and provides actions on the data from various departments like HR, finance, Supply Chain, Manufacturing, Procurement, Sales, Marketing etc. For e.g., you want to launch some new product in the market, ERP takes care of end-to-end process that is from assimilating the collected data of the market demand for the product; costs incurred in manufacturing process; procurement of raw materials, finished goods; manpower & machinery planning for estimated production; salaries & expenses incurred for whole process etc. Following are some of the benefits of ERP.  

Cost effectiveness 
Companies adopt IT systems to reduce the costs incurred, thus ERP increased the productivity by helping all the departments to lower the costs. 

Error free system 
Managing information from various ends, makes a bigger chance for errors in the information, which is avoided by ERP by integrating the data efficiently, by being the single point of contact for all the information.

Accelerated reporting  
Apart from being cost effective, companies adopt automated systems for reducing time in the process, thus ERP creates fast track reporting of data, with easy reports and deeper insights in the facts and figures. 

Paves for new opportunities  
Since ERP saves time, it makes a way for employees to add inputs and ideas to grow the business, instead of occupying their minds with data handling.  

Types of ERP 

Traditional 

Here, the software and hardware required for ERP systems are installed at the office/factory premises. The maintenance and functioning have to be taken care by the employee on the premises individually.  

Cloud based 

Today, the world is moving fast towards online data maintenance. Here, the provider has ERP cloud computing on this system, and he looks after the data integration. This is gaining importance due to its cost and time effectiveness.   

Mixed  

Sometimes, companies opt for hybrid ERP system. E.g., company’s factory location needs to have procurement and supply chain related data in factory site for decision making and planning purposes, while rest of the data is saved on cloud which is not required at the location.  

Blog by  

Aishwarya Parchure 
HR Head 
Addend Analytics LLP