What is ERP?
For many years, the applications used in information systems were presented in a functional way and were not connected to each other. Such software was small companies favorite and they could easily meet their needs with these applications. But after a while and with starting processes re-engineering in organizations, the need of different types of information systems was felt and production of integrated information systems which can handle software in various fields such as accounting, production, sales, warehousing and so on …
In 1992, the structure of an integrated information system was developed by two people named Yakhou and Rahali. In this structure, data sharing between users made it possible to easily and quickly provide the data needed by other units, and also departments
managers were able to communicate with each other in a comprehensive and integrated system. And extract the required reports from a single system What is ERP? Enterprise Resource Planning (ERP) is a comprehensive system that seeks to integrate all tasks and departments in an organization using a single computer system that can meet the specific needs of these departments. This is done using a computer software , by a single database, which makes it possible to share information and connect different departments to each other.This software consists of a number of software modules, which is responsible for part of the tasks in the company. ERP software is so flexible that companies are able to install and use some or all of the required modules, for example,company can inistall only purchase ,HR and finance modules from this software package.
How can ERP improve the business performance of a company or organization? In general, the main goal of ERP is to improve the process of receiving the order from the customer (in the industry or service sector) and processing it to the final stage. For example, when an order received by a customer (or a person referring to one of the municipal areas) register the ERP system, all the necessary information to complete and submit this order (or the need of the citizen) is available in it. Information about whether the customer has sufficient credit with the company or organization or not, is obtained from the financial module, and thus the necessary information about the inventory level of goods and raw materials related to this order is extracted from the warehouse module. . By using this system, users will not only be importers of data and information into the system, but they will now have a heavy responsibility because of questions such as “Will this customer pay his debt on time for his received order?” , “Will we be able to deliver the order on time to the customer?” And questions like these, ERP users should be able to make the necessary decisions quickly, and these decisions will affect the entire ERP process. In addition, other users in other sections also need to update the information into the system. For example, if the warehouse manager makes a mistake about the inventory level, the company may lose many of its customers due to incorrect information about insufficient inventory.
How long does an ERP project last? In companies with small organizations and those who purchase and operate only part of the ERP modules, this project may take about six months or less, but for companies or large organizations and those who wish to implement the project more fully, Due to the need to change different parts of the organization to fit the ERP software package, the implementation of this project takes an average of one to five years.
What are the benefits of using ERP for a business? In general, the main benefits of implementing ERP systems in companies can be listed as follows:
A) Information integration: Unlike other systems, where each of the financial, sales, production and other sectors may provide conflicting reports about their activities and their share of the company’s revenue, ERP will help the company obtain the required information comprehensively and completely from a system.
B) Integrated information about customer needs: ERP will help to place orders and customer needs at time of receiving the order or announcing the need or referral, receiving raw materials from suppliers to produce that order to deliver the product to the customer and receiving money ,It is maintained in one system and thus companies are able to easily track orders and create the necessary coordination between different parts of the company.
C) Standardization and speeding up the production process: ERP systems will save time and increase productivity by standardizing processes and using a coherent computer system.
D) Reduced inventory: ERP by optimizing the work process, reduces bottlenecks and removes possible obstacles in the way of many processes and makes the volume of data warehouse lighter.In other words, ERP also provides the ability to manage the supply chain (Supply Chain Management).
E) Standardize information related to the company’s human resources, save time and prevent rework
Is ERP compatible with the processes in the company or organization or not? An important point to consider in implementing an ERP system is whether this software suite is compatible with the current state of the software buyer company. This is one of the main reasons that disrupts the ERP process in the buyer companies and sometimes interrupts the multimillion-dollar ERP project. In such a situation, there are two ways: either the buyer company must change its existing processes and make it in accordance with the ERP system, or the existing software package must be changed according to the specific conditions of that company. In the first case, major changes are made in the responsibilities, the ways, personnel duties and procedures, and in other words, it is necessary to carry out the reengineering process at the company level. In the second case, the probability of problems (BUGS) in the software increases and in addition will cause special problems in software updates (UPGRADING) in later versions because later versions must be produced specifically and custom.
What kind of costs can ERP bring?
Training costs: Because employees in different parts of the company work with an integrated system, it is necessary to gain a greater understanding of the activities and processes in other parts. Because any data they enter into the system will affect the whole system. Therefore, the connection between different parts of the company through this system must be fully explained to users. In addition, a program for training the appearance of the system (INTERFACE) should be provided.
Cost of software integration and testing: To ensure the correct execution of activities, the relationship between ERP software with each other and possibly with other software used in the company should be considered, which will require costs. For example, a manufacturing company may have ancillary software for e-commerce, barcode systems, and other systems used. Therefore, it is necessary to establish a correct and calculated relationship between these softwares and ERP software package.
Customization of software (Customization): This is done when one or more ERP software can not adapt to the business conditions and existing processes of the buyer company and therefore it seems necessary that the software based on the specific conditions of the company reconstruct.
Data Conversion: There will certainly be costs involved in converting data and information about customers, goods, suppliers, business partners, and… from a previously used system to a new ERP-based system.
Return on Investment (ROI): Most companies expect to be able to quickly reap the benefits of this system after installing ERP, but this is not possible in the beginning ,It is necessary that some time has passed since the installation and implementation of the system and improvements have been made in the existing process to start the efficiency of this project.
What often causes ERP project failure? Experience has shown that the most important cause of failure in the implementation and execution of this project are employees and personnel using software in different parts of the company. If they do not accept that ERP improves the execution of their tasks and activities compared to previous systems, they resist its implementation and fail. Therefore, the implementation of change management, which is one of the major issues in management, is able to stop the process of failure.
How does ERP adapt to e-commerce? As users of different systems in different parts of the company use the integrated ERP system and meet their needs through this , the other two main groups, customers (Customers) and suppliers (Suppliers) that operate outside the company, They need to have access for a range of information in the ERP system, such as order volume, inventory levels, and so on. Therefore, it is necessary to create two new channels for these two groups and provide them with access to some of the required information. This will be possible today through Electronic Commerce, which discusses B2C for customers and B2B for suppliers. Given what has been said, it is necessary for the ERP software package to be able to establish a proper connection with the Web and thus enable the use of e-commerce in the company. Because the Internet never stops and is constantly changing, the company’s website will also be shut down when modifications, maintenance and updates to the ERP system are required. Therefore, with the appropriate flexibility between the ERP and the company website, it is necessary to ensure that e-commerce applications continue to operate when the ERP is down.
To solve this problem, software is used that is able to obtain the required information from ERP and as a translator to convert this information into an understandable format in e-commerce and other applications.