ERP is an industry term for Enterprise Resource Planning. ERP is an information system software that integrates departments and functions across an organization into one computer system. ERP runs off a single database, enabling various departments to share information and communicate with each other. ERP systems comprise function specific modules, designed to interact with the other modules. A properly planned ERP solution can facilitate zero redundancy, helping you to increase your organization's efficiency and productivity.
The term enterprise resource planning was coined in the early 1990s. The ERP project yields a software solution integrating information and business processes to enable sharing throughout an organization of information entered once in a database. While ERP had its origins in manufacturing and production planning systems, the scope of ERP offerings expanded in the mid-1990s to include other back-office functions such as order management, financial management, asset management, and human resources management. The range of functionality of ERP systems has further expanded in recent years to include more applications, such as grants management, marketing automation, electronic commerce, student systems, and supply chain systems.
The Diagram below shows the sequence of events in an ERP project. It usually starts with a needs assessment and requirements analysis, and ends in the first cycle with training and a phased implementation. The continuous circle of development shown in the diagram below suggests that soon after completion of the first phase or cycle of an ERP project, we're back to planning the next phase. Each successive round of development arises from the need to add functionality and the rapidity of upgrades to ERP software.
Benefits of ERP Systems
Many reasons prompt people to start an ERP project. First let's consider the main benefits of an ERP system:
- Improves access to accurate and timely information
- Enhances workflow, increases efficiency, and reduces reliance on paper
- Tightens controls and automates e-mail alerts
- Provides user-friendly Web-based interfaces
- Streamlines processes and eases adoption of best business practices
- Establishes a foundation for new systems and integrates existing systems
A main advantage of ERP systems is improved access to accurate and timely information. As presidents, chief financial officers, or boards attempt to understand a university's overall performance with existing legacy systems, they may find many different versions of the truth. An ERP system creates a single version of the truth because everyone uses the same system. Furthermore, some legacy systems make developing reports or tapping into transaction data stored on the computer quite challenging. Modern ERP systems often improve upon this process by offering a strong foundation for moving to a data warehouse that can provide even more capability to extract data from administrative information systems.
Another reason to consider an ERP project is to improve workflow and efficiency. For example, following completion of online requisitions, workflow processes can forward the form along the approval path more rapidly than with traditional paper methods. This can shorten the time to complete the process, reduce the likelihood of lost or missing documents, and return quick feedback on the status of a request.
ERP systems can also improve controls and program alerts. Alerts, for example, can use automated e-mail to warn budget managers about budgets in danger of running out of funds. Similarly, controls can be implemented to prevent individuals from overspending budgets.
One exciting development in modern ERP systems is the availability of easy-to-use Web interfaces. These interfaces now enhance some integrated portals with one-stop shopping for a wide range of administrative functionality and information.
The ERP project often prompts significant process reengineering and can breathe new life into ineffective and inefficient departments or processes. During an ERP project you have an opportunity to correct broken processes and replace them with modern, system-enabled, state-of-the-art business practices you don't just want to pave cowpaths!
The ERP project also creates a foundation for new business processes, such as e-procurement, that can yield significant returns on investment. Other forthcoming applications that will be integrated into ERP systems include e-commerce, customer relations management, and pre- and post-award grants management. You can view the ERP system not only as the foundation, but also as your starter house, integrating a wide range of administrative system functionality that you'll add to over time. ERP vendors continue to develop new functionality you can take advantage of usually at additional cost, of course.
Finally, one additional benefit we've observed from the ERP process is that the individuals involved often bring away from it a new work ethic that spreads to the surrounding workplace.