What is an ERP?
Acronym for Enterprise Resource Planning, an ERP is software that integrates and interrelates all business processes: accounting and finance, production, sales and purchasing, logistics and warehousing, CRM, marketing, HR and more.
With an ERP it is possible to keep all business processes under control, to access data from every department at all times, and to have accurate reports on current, past and future data.
It is thanks to such systems that it is possible to centralise all data and business processes, which would otherwise remain separate entities, in a single software package.
ERP, a brief history
ERP systems have their roots directly in MRP (Material Requirements Planning), first implemented in 1964 by the Black and Decker company, which decided to apply the concepts of the EOQ (Economic Order Quantity) model, developed in 1913 by engineer Philip Whitman Harris, to the mainframes of the time.
For some, they represent the natural evolution of MRP II (Material Resource Planning), which was introduced to the market in 1983 and which presented for the first time a series of integrated modules for business management.
But it was in the 1990s that the term ERP began to be used in modern terms: the first to introduce it was the Gartner Group, who realised that such systems were geared to integrating and interconnecting all kinds of business processes, not just manufacturing and warehousing. And it is from this conception that modern ERPs begin to be developed and implemented in companies, immediately witnessing rapid growth and diffusion among companies.
As early as 1998 people started talking about ERP in the cloud (for the first time with Netsuite), and by the 2000s ERP systems, which had by then been given the name ERP II by Gartner, began their expansion and interconnection with internet services and other software that was used separately. This is the case, for example, with CRM, which began to find a place within ERP suites, according to the idea that one should try to integrate as much data as possible within the system.
Today, ERP systems, which are now unquestionably the information and decision-making centre of every company, continue their evolution by integrating AI and IoT functionalities. The advent of the internet, and webservices technologies such as APIs, has enabled such systems to interface with a myriad of software and tools, satisfying data requests and automation that were virtually unthinkable a decade ago.
Why implement an ERP system
Unless your company intends to continue to manage and organise itself according to mediaeval principles, having a good ERP system that integrates all business processes and information has become a must in order to remain competitive on the market.
Having an ERP means having more information, more accurate and in a timely manner. Despite modern times, there are still many, too many, companies that continue to manage their information through spreadsheets or documents, or databases that are totally disconnected from each other.
Workers waste many hours manually populating data, and lose just as many hours just finding the correct information they need at that moment. Work centres feel a certain disconnection from other work centres, while communications and notifications do not travel as they should. In general, therefore, all operational phases are slowed down and the quality of work suffers significantly.
With an ERP, the company can focus on the quality of business processes, rather than forcing employees and managers to chase after them, freeing up time and energy. Generally speaking, the adoption of an ERP can significantly reduce a whole range of costs related to information management, and save man-hours in almost every department. The
ERP also improves decision-making processes by providing management with more accurate and immediate information.
An ERP system today is also easily integrated with other platforms, and allows many business processes to be automated with ease.
What are the most used ERP systems today
Oracle ERP, Netsuite, SAP, Microsoft Dynamics, are fairly well known when it comes to ERP software. Each of these solutions proves to be quite good for every type of business, with SAP and Oracle tending to be adopted by medium to large-sized companies. More details on the main ERPs on the market can be found at this link.
The rise of open source ERPs
Notable within the ERP segment is the rise of open source software and solutions. In particular, two products are receiving increasing attention from the market, and more and more companies (even large ones) are deciding to adopt these solutions: we are talking about Odoo (formerly OpenERP) and ERPNext.
Odoo, in particular, has recorded impressive growth figures in recent years, and ERPNext is also proving that it can make its way and have its say.
Behind such software are communities of developers who support the development of new modules, as well as improving existing ones, thus enabling a compatibility of unattainable solutions. Local communities also make it possible to cover regulatory gaps and make the software solution compatible with the laws and taxation of a particular country.
Open source software is also easily extendable and customisable, so it is easy for an experienced developer to create the bespoke solution required by the customer. This kind of flexibility, coupled with investment savings of up to 90% of a commercial solution, makes open source solutions unique and in some ways superior.