Enterprise resource planning (ERP) is a software computer system that manages both internal and external resources, including financial resources, tangible assets, materials and human resources. It builds on a centralized database that utilizes a common computing platform. ERP systems bring all business operations into one uniform and enterprise-wide system environment.
As new products and product lines become available in a company, along with new customers, ERP consolidates how the information will be available for use by management. New products always pose a problem because the company has no record of product performance to which to refer. However, ERP allows tools to be used in which you lay out expectations, explain design specifications and make sure no unintended consequences ensue.
ERP also assists in supporting global business requirements, some of which may involve multiple languages and currencies. Making or selling products overseas presents its own set of issues, and ERP can advise on the different parameters that management must be aware of in dealing with business conditions in different countries.
ERP is a real-time decision support system. It can provide flexible and integrated support for complex decisions. The database that ERP uses can provide general or specific answers to queries. For instance, questions such as "what is the time frame for the production of this product, and how soon does the customer want it?" can be answered through this system, which can also provide alternatives in suggesting a better, less costly but efficient manner for deployment purposes.
Legacy systems, that is, old systems that are still used in a business, can present problems for companies. They are slow, inefficient, sometimes costly systems to maintain, and they cannot produce the results that a business my need for obtaining the best in customer or product support. ERP can address the problem by pointing out what information is necessary to produce a workable and viable system. Thus, management will come to realize that the legacy systems are not able to achieve the output or efficiency required, necessitating the input of hardware or software upgrades, or both.
As business practices are fine-tuned with ERP, business gaps may become apparent. New market possibilities develop that were unknown before, some hidden by different factors. For example, time and product delivery schedules plus cost production factors may determine how new customers can be introduced into the system and satisfied with products or services. When uncovered, these elements can yield a new way to introduce sales or other business efficiencies into the system.