Did you know: Along with CRM, ERP is one of the software systems that businesses are most interested in today? However, in Vietnam, not everyone knows “What is ERP?”. If you are looking to learn the basics of ERP, this article will give you the most “expensive” information. Surely after following, you will understand why ERP is studied and used by so many companies.

ERP? Summary of benefits, limitations businesses should know

ERP?In simple terms, it's business administration software
What is ERP? Simply put, it’s business management software

What is ERP?

First, let’s define “What is ERP?”. ERP or “Enterprise Resource Planning” means “Enterprise Resource Planning” is a common name for a software system built to serve the resource planning work for businesses with the following jobs:

  • E-Enterprise: Connect, synchronize work between departments, update information in real time, perform automatically, reduce errors when processing business.< /li>
  • R-Resource: Make effective use of all company resources – especially human resources.
  • P-Planning: Support planning, building business processes for production and business. ERP outlines the direction for the business by calculating and forecasting the possibilities that may arise in the future.

The common challenge of all companies and organizations today is how to store, access information, and use enterprise resources effectively, thereby optimizing business management and getting a competitive edge over the top. dominant. ERP links all information, applications, and functional modules serving each department in the enterprise. This system provides leaders with a comprehensive overview of the company’s resources.

What is ERP? It's an all-in-one technology model that combines many management tools
What is ERP? It is an all-in-one technology model that synthesizes many management tools

ERP software is a collection of business process management tools, information management in an organization. To put it simply, this system receives and processes internal data to manage the entire operation of the company. This intelligent software system proposes the optimal use of resources for businesses. Therefore, ERP is considered an all-in-one technology model.

For example, based on the actual data on productivity and progress entered, ERP calculates and provides a reasonable material supply plan to limit large inventories of materials that cause capital stagnation.

Some key features of ERP

Some of the above content must have partly helped you understand “What is ERP?”. Learn more about the following key characteristics, you will better understand what an effective ERP system is.

Connectivity and sync

First of all, the ERP system needs to ensure the ability to connect with all departments as well as production and business processes in the enterprise. This ability is evaluated on 3 aspects:

  • IT connection: Synchronize connection and maintain stable connection between software and hardware.
  • Department coordination: 2 or more separate departments are effectively linked.
  • Operations of the enterprise: Ensure connection and coordination between processes in the enterprise.
The management screen of an ERP software shows the management process is synchronized
The management screen of an ERP software shows the unified management process set

Flexibility

Flexibility is reflected in the ability to change and update information promptly and quickly in real time. Effective ERP system minimizes information delay when operating. The system’s database allows editing and adjusting the design to suit each business (Open-source).

Compare ERP and individual management software

Because of the management function, many people will put ERP on the balance sheet compared to other single management software. Typical here are software for accounting, sales, human resource management, …

ERP is more integrated and comprehensive than single software
ERP integrated and more comprehensive than single software

The most obvious difference here is the integration. The transfer of information in single software is often difficult to control and less secure when it is done manually through copying, sending files, folders via email or USB. Meanwhile, ERP is a single piece of software that provides all the individual functions and uses a common data language. Therefore, sharing and using data between departments is faster, safer and more secure.

Not only that, special modules for each part of ERP have professional processing processes. ERP simulates operations, collects step-by-step insights from various processes, thereby enhancing business management efficiency.

Benefits of ERP in business

Positive benefits are the reason why businesses have understood “What is ERP?” should consult and implement this system.

Meet the general needs of employees

The core of ERP is to reduce manual processes with automation, giving employees access to information. Each employee is entitled to share basic and necessary information to serve their job such as: Working department, time sheet, salary and bonus, document repository (company regulations, training documents, contract templates) copper,…). Decentralizing access helps control important documents and track work efficiently.

Define business processes, improve production efficiency

To successfully implement ERP, the business process must be seamless, the division of work must be really clear and uncomplicated. Standardize business processes with an ERP system for optimal production planning. This plan makes full use of the machine’s capacity and workers’ labor, avoiding miscalculation and bottlenecks in production plans.

This system provides full information, identifies, optimizes processes, limits errors in manage
This system provides full information, defines, optimizes the process , limiting errors in management

Improve order handling

ERP participates in the entire process from order receipt, warehouse release to revenue recognition. Information is entered completely, accurately and synchronously thanks to the close connection between departments. Customer-related information such as credit limit, purchase history is stored and combined, synchronized with inventory, delivery schedule … All optimize and complete order processing row.

Limit errors when entering data

Errors are quite possible when translating data manually. For example, an invoice “16 orders” from the sales department may be entered as “10 orders” by the accountant due to unclear handwriting in the invoice. All errors affect the business as well as the reputation of the business. This situation will be minimized when departments can share documents and information with each other.

Reliable accounting

The accounting module in ERP is designed according to international standards and is adapted to Vietnamese accounting standards. Therefore, the use of ERP reduces confusion in manual accounting.

ERP limitations

Despite its many benefits, ERP cannot be 100% perfect. When implementing ERP, businesses not only need to understand “What is ERP?” but need to understand and be willing to accept the following limitations:

Large implementation cost

Because of the synchronization and scale, the implementation of ERP is a big expense of the enterprise. Want to use the copyrighted ERP, the cost can be up to hundreds of millions of dong. Obviously, the high upfront cost is what worries many SMEs. The solution to this problem is to use cloud computing (Cloud ERP) that allows monthly payments.

Deployment time and manpower

In order for ERP to work effectively, the supplier side as well as the acquaintance of the enterprise’s personnel need to take place at the same time. This process requires quite a bit of time. If not closely monitored, deployment can cost up to 4 times the initial investment. At that time, the wrong roadmap and incorrect investment and system upgrade can cause a worryingly low ROI.

Understanding what ERP is, but choosing which software and how to deploy it is a matter of particular concern for businesses. special interest
Understanding what ERP is, but what software to choose, how to deploy it Business issues need special attention

However, it can be said with certainty that ERP has been and will continue to be the choice of many businesses in the near future. Especially in the fiercely competitive environment, the need for optimal management and resource management has become the top concern of many managers.

The above article hopes to help you understand “What is ERP?”. As mentioned above, because it is a software system, ERP is built and provided by many companies. If you want to implement ERP, you need to invest in learning about each product on the market. Do not forget to take advantage of our shares to have the most appropriate evaluation and choice. VSM wishes you to find the most suitable and wise decision according to your needs.