What is

ERP - Explanation and definition of ERP

What is ERP

An ERP is defined as an information system that includes all or part of the activities of a company, which unifies all the information in a single space in order to collect, store, process and distribute it to the proper management of a company or organization. The name of ERP comes from Enterprise Resources Planning

Before explaining in detail the definition of ERP described above remind you that a company or organization is a unique system which in turn is composed of other sub-areas or departments that they relate and interact with each other and with the external environment in order to provide a product and / or services that meet the needs of the users or buyers. Therefore people from different departments or areas that make up a company must work together to achieve objectives where information should flow and shared daily. With ERP information barriers between different departments disappear, information flows and is shared in real time.

Returning to the definition of an ERP indicate that this is an information system which relies on computer technology in order to make it efficient and effective, so often resembles a software, this information system is based on the following four pillars:

  • Hardware - Refers to the requirements of computers, workstations ... required to install and work with the ERP software.

  • Software - Corresponds to the ERP system itself by which it is introduced, stored, calculated and distributed all company information.

  • Server - physical or virtual place where it is stored and recovered all information on our ERP.

  • Web- Refers to all necessary system to connect all computers together with the server, so that a large number of people can use and share anywhere and anytime the information from our ERP system.

Within the software, the ERP is based on existing technologies in databases, in which all the information is entered and managed in a large and powerful database that is stored on the selected server.

With all the above we can identify an ERP as a powerful database interconnected and related with all departments of a company, where all or part of the employees, managers and directors introduce relevant information from their work (all work on a same program), which stores and works with all data to report them to the company in order to manage it properly.

As is the case in business, ERP database consists in turn in different management modules interconnected generally correspond to areas or departments, such as modules:

  • Production

  • Engineering

  • Sales

  • Accounting

  • Logistics

  • Human Resources

Users in each department work daily with all or some of the modules that can be accessed, managing the information collected by the ERP.

The ERP not only captures and stores data, one of the main functions is to work with these data in order to automate daily tasks of users, for example through information provided by the different departments ERP is able to calculate in just seconds the material requirements in quantity and date for the production of a product based on the list of materials and delivery needs, on the other hand is able to calculate automatically models taxes such as VAT or income tax in periods time that we want, our ERP can calculate the costs associated with a product, project or section may in turn make the salaries of all employees based on hours worked, age... all these reports and many more are performed by our ERP in seconds and with 100% reliability of calculation, can you imagine performing the work manually ?, undoubtedly we invest some time and exertion to find, collect and analyze the necessary information with the possibility of lack data or records necessary as well as mistakes while performing calculations.

Origins and Evolution of ERP - ERP Software

The origins of ERP systems date back to the early 50s where expensive, bulky and slow mainframe computers available to the big companies were scheduled to perform the first automatic tasks related to inventory management.

In the decade of the 60s were born the first MRP software, such software planned materials needed to manufacture a product in both time and quantity.

In the 70's the success of the MRP software and ongoing needs of companies and organizations to control and manage the process did evolve in the MRPII where computers automatically calculated staffing requirements and materials for the manufacture of products of a company. Also these software began to interconnect with other modules that share information, for example by the information provided by the accounting module MRPII was able to plan the inputs and outputs of company money.

During successive 80s and early 90s increasingly MRPII modules to systems, modules such as Human Resources, Engineering, Project Management ... coined first the term ERP in 1990 by the American Consulting Gartner Group.

At the beginning of XXI century, ERP systems evolved more and more conform is incorporating new modules and analysis tools, these new modules not only interacted and interrelated internal company information, now all the information provide by our customers or users is collected, also introduce all laws governing countries and products and / or services from the competition in order to take all the necessary parameters for excellent management of the company.

Management modules such as CRM (Customer Relationship Management), SPM (Supplier Performance Management), BI (Business Intelligence) made our system both look inside and outside our company to evolve our information system called ERPII.

Today we find different companies specializing in the development of ERP systems, these developments are costly in both time and resources, so large corporations were the first to implement ERP systems in their daily management, today these solutions have been standardized and allowed extended and implemented in small and medium companies.

Among the various developers of ERP systems, we can mention:

  • SAP - The leading and best known company in the sector, SAP is a German company founded in 1972 by five former IBM employees in 1973 they released their first management package, but it was in 1992 when they presented to the market its famous ERP system SAP R/3, today is the undisputed leader and his system is implemented in most large companies and corporations.

  • Oracle - Founded in 1977, Oracle became the pioneer in solutions and development of managers for relational databases. In 2000 this Oracle E-Business suite including its ERP system.

  • People Soft - American company founded in 1987, its origins are focused on managing the development of applications in the area of human resources, in 1997 released their first PeopleSoft ERP system 6.

Today these systems have evolved to accompany the existing technology; we can now work with our ERP anywhere in the world with a tablet or Smartphone thanks to cloud computing.

what is erp