Enterprise Resource Planning (ERP) - Definition, Applications & Certifications
For the uninitiated, enterprise resource planning (ERP) is a management software that helps a business integrate its essential departments. Large corporations comprise various departments, namely, sales, finance, marketing, purchase, planning, human resources, order management, and accounting. Thus, there is a need for a centralized system for these departments to share their processes and information with the rest of the organization. ERP software acts as a shared source of data for a business.
Let’s use a few examples to better understand this. The accounting department needs to know about purchases in order to keep track of the inventory. Or the order management team must be informed of sales, so product delivery can be coordinated on time. An ERP tool helps these different departments access information, so an organization can function smoothly.
While each department might have its own set of processes, an ERP software simply helps synchronise all of their efforts. As the popularity of ERPs grows, more applications have been developed to fulfill the needs of different types of businesses.
Overall, enterprise resource planning is a business process management software that allows organizations to use one single system for managing and automating back office functions related to services, technology, and human resources. It is designed specially for large businesses, often requiring dedicated teams for customizing and analyzing data, as well as handling upgrades and deployment.
ERP applications for small businesses, on the other hand, are lightweight applications, tailored to meet the needs of a specific vertical or industry. A few top ERP systems include Netsuite ERP, SAP ERP, and Sage ERP. Common ERP modules include those for material purchasing, product planning, inventory control, accounting, distribution, finance, HR, and marketing.
The Benefits of ERP
ERP systems are considered as an asset to an organization. Enterprise resource planning helps a business run smoothly by unifying information, automating processes, and illustrating trends in an easy-to-understand manner. They help improve the efficiency of an organization and make long term planning easier.
Here’s a detailed look at why an organization might need an ERP system:
- Reduced IT costs and improved efficiency – While implementing an ERP system can be expensive, its benefits outweigh the cost. Where an organization might have to implement various systems, staff, support, and licensing in order to run different departments, an ERP holds all information in one place and helps cut down on overall IT costs. Further, employees in the organization would only have to learn how to use one software, thus reducing training time and expense.
- Centralized and complete access – Touted as one of the major benefits of ERP, it allows teams have complete access to each process in the organization. Thus, different teams can simultaneously monitor inventory levels, consignments to be received, and stock in transit. Closely monitoring inventory will help an organization better control its working capital.
- Better insights – This is another major benefit of having an ERP: having a single reporting system. This feature helps organizations get access to better analytics and reports, which they can use to make better decisions.
- Reduced time and effort – An ERP reduces effort and time required by the workforce to complete daily activities. If implemented correctly, an ERP will eliminate routine, manual processes, and help teams spend more team on revenue generating activities.
- Customer service – Having an ERP benefits customers too. As an organization gets better insights and becomes more efficient, it is the customers that ultimately reap the rewards of improved services and experiences.
- Collaboration – Collaborating with different teams can prove to be challenging when the right tools and processes are lacking. On the other hand, an ERP system streamlines collaboration by giving users access to data when and where they need it. They can share and also edit data when needed. The interdepartmental information database helps funnel all data into one central location.
Types of ERP Systems
There are three different types of ERP implementations, namely:
- Cloud ERP – Cloud enterprise resource planning (ERP) software is hosted on a cloud computing platform, rather than on premises, within an enterprise’s own data center.
- On-Premise ERP – On-premise enterprise resource planning (on-premise ERP) refers to a company’s decision to source ERP software in-house and maintain it at a physical office for maximum flexibility and control.
- Hybrid ERP – Hybrid ERP is also known as two-tier ERP. This is a combination of core on-premises ERP capacities combined with cloud-based capabilities.
ERP vs. Supply Chain Management
Supply chain management systems are generally focus on the external movement and storage of goods, while enterprise resource planning systems are internally focused. Supply chain management software is highly specialized and detailed. It focuses on operations that help get raw materials into a company’s inventory. ERP systems, on the other hand, are not as detailed. They are more geared towards internal work processes, and are aimed at in-house departments.
More and more businesses are now realizing the importance of enterprise resource planning (ERP) systems, which makes it necessary for professionals to be acquainted with them.
In order to improve job prospects and salary, professionals are now opting to become certified in this booming field. Earning an ERP certification, professionals enhance their technical and managerial skills. They become well-equipped to employ their knowledge of ERP systems in any software environment, learn about the ins and outs of the ERP software, and gain proficiency in the utilization, configuration, and strategic application of ERP software.
What’s more, professionals with an ERP certification in a specific business process or module indicates to managers and recruiters that the candidate specialized knowledge about the business process or module. In a time when specialization is coveted, it helps these candidates get first preference for jobs and higher pay. Working professionals can also leverage an ERP certification to move up in their career, and take up higher paying, lucrative opportunities.
Integrating an organization’s corporate functions into one single ERP software system can be challenging. Therefore, there is a demand for skilled employees that can successfully implement and upgrade ERP software. Here are some common roles those with ERP credentials can look forward to:
- Functional consultant
- System administrator
- IT manager
- Project manager
- Technical consultant
- Application administrator
- Database administrator
- Business relationship manager
Featured ERP Degree Program: The University of Scranton Online MBA
The University of Scranton offers an online MBA with a specialization in enterprise resource planning. The 100 percent online program is offered in collaboration with SAP, the world’s largest ERP software. Students in the program also have an opportunity to participate in the SAP Bootcamp, which is an intensive two-week certification session.
Admission requirements for the program include a bachelor’s degree from a regionally accredited U.S. college or university (or its equivalent), a minimum undergraduate GPA of 3.0, an online application, a statement of intent, letters of reference, official transcripts, a current resume, and proof of English proficiency for international students. Students are not required to have prior experience with ERP.
While the program is made up of 36 credit-hours, the specialization comprises nine credit-hours. The program’s core coursework includes topics such as accounting for management, managerial economics, operations management, and an introduction to business analytics. Courses in the specialization include integrated enterprise management systems, production planning and control, customer relationship management, treasury management, accounting integration and configuration, and business intelligence.
Students in the program learn about the ins and outs of ERP software, enhance their technical and managerial skills, and become proficient in the use, configuration, and strategic application of ERP software across a wide range of business functions.
At the end of the program, graduates can pursue opportunities in a broad range of industries such as aerospace and defense, telecommunications, sports and entertainment, banking, and public sector. They can take up roles such as director of ERP development, ERP consultant, ERP application analyst, ERP operations director, and ERP trainer.
- Location: Scranton, Pennsylvania
- Accreditation: Association to Advance Collegiate Schools of Business (AACSB International)
- Expected Time to Completion: 24 months
- Estimated Tuition: $965 per credit-hour