{"id":1958,"date":"2020-01-02T16:50:39","date_gmt":"2020-01-02T11:20:39","guid":{"rendered":"https:\/\/razorpay.com\/learn\/?p=1958"},"modified":"2020-06-03T12:24:03","modified_gmt":"2020-06-03T06:54:03","slug":"enterprise-resource-planning-benefits-definition","status":"publish","type":"post","link":"https:\/\/razorpay.com\/learn\/enterprise-resource-planning-benefits-definition\/","title":{"rendered":"What is Enterprise Resource Planning &#038; How Does it Work?"},"content":{"rendered":"<blockquote><p><span style=\"font-weight: 400;\">Enterprise resource planning (ERP) refers to a type of software that organizations use to manage day-to-day business activities. These include accounting, procurement, project management, risk management, customer relationship management (CRM), supply chain operations and so on. <\/span><\/p><\/blockquote>\n<p><span style=\"font-weight: 400;\">Here\u2019s a quick activity before you continue reading &#8211; open your browser and search for enterprise resource planning. Within seconds, you will see a huge amount of information coming up and it ends up getting overwhelming, doesn\u2019t it? Not to mention a little confusing.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Every website you open has its own definition of ERP and the information varies from tab to tab. To help you get a better understanding of what is an ERP and how can it transform your business, here\u2019s a read on all you need to know before getting a solution for your business.<\/span><\/p>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_80 counter-hierarchy ez-toc-counter ez-toc-transparent ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69e3d570d5d22\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69e3d570d5d22\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/razorpay.com\/learn\/enterprise-resource-planning-benefits-definition\/#What-is-Enterprise-Resouce-Planning\" >What is Enterprise Resouce Planning?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/razorpay.com\/learn\/enterprise-resource-planning-benefits-definition\/#What-does-an-ERP-do\" >What does an ERP do?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/razorpay.com\/learn\/enterprise-resource-planning-benefits-definition\/#What-are-the-benefits-of-an-ERP-system\" >What are the benefits of an ERP system?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/razorpay.com\/learn\/enterprise-resource-planning-benefits-definition\/#5-signs-that-your-business-is-ready-to-have-ERP\" >5 signs that your business is ready to have ERP<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/razorpay.com\/learn\/enterprise-resource-planning-benefits-definition\/#Youre-spending-more-time-on-daily-activities\" >You\u2019re spending more time on daily activities<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/razorpay.com\/learn\/enterprise-resource-planning-benefits-definition\/#You-have-many-unanswered-business-questions\" >You have many unanswered business questions<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/razorpay.com\/learn\/enterprise-resource-planning-benefits-definition\/#You-have-runaway-business-processes\" >You have runaway business processes<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/razorpay.com\/learn\/enterprise-resource-planning-benefits-definition\/#You-have-manual-processes-with-multiple-data-sets\" >You have manual processes with multiple data sets<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/razorpay.com\/learn\/enterprise-resource-planning-benefits-definition\/#Youre-missing-out-on-opportunities\" >You\u2019re missing out on opportunities<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/razorpay.com\/learn\/enterprise-resource-planning-benefits-definition\/#Recommended-Read\" >Recommended Read<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"What-is-Enterprise-Resouce-Planning\"><\/span><span style=\"font-weight: 400;\">What is Enterprise Resouce Planning?<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Enterprise resource planning (ERP) refers to a type of software that organizations use to manage day-to-day business activities like accounting, procurement, project management, risk management, customer relationship management (CRM), supply chain operations and so on. A complete ERP suite also includes enterprise performance management, a software that helps plan, budget, predict and report on the organization\u2019s overall financial results.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">ERP systems tie together a multitude of business processes and enable the flow of data between them. By collecting an organisation\u2019s shared transactional data from multiple sources, ERP systems eliminate data duplication and provide data integrity with a single source of truth. Today, ERP systems are critical for managing thousands of businesses of all sizes and in all industries. To these companies, ERP is as indispensable as the electricity that keeps the lights on.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"What-does-an-ERP-do\"><\/span><span style=\"font-weight: 400;\">What does an ERP do?<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">The basic purpose of any enterprise resource planning\u00a0 system is to improve efficiency and profitability through improvement on how the company resources are spent and used, whether these resources are time, money, staff or something else.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The bottom line is, \u2018if you can reduce the number of resources that are being used, without compromising on the quality and performance, it will help you run your business more efficiently and appropriately.\u2019<\/span><\/p>\n<p><span style=\"font-weight: 400;\">ERP software eases some of the most tedious business processes by combining a number of reports and metrics across various departments into the same environment or ecosystem.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In the long run, this gives you an overview of what\u2019s going on in an organisation and how are the resources being spent. An ERP system also makes it faster to find the information or report you are looking for because everything is in the same place. With an ERP in place, you no longer have to search through spreadsheets or look through different business applications to find that kernel of data you need; it\u2019s all available and accessible right from the ERP interface.<\/span><\/p>\n<p style=\"text-align: center;\">[Also Read <a href=\"https:\/\/razorpay.com\/learn\/understand-stock-keeping-unit-the-right-way\/\" target=\"_blank\" rel=\"noopener noreferrer\">Understand Stock Keeping Unit The Right Way]<\/a><\/p>\n<h2><span class=\"ez-toc-section\" id=\"What-are-the-benefits-of-an-ERP-system\"><\/span><span style=\"font-weight: 400;\">What are the benefits of an ERP system?<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">As stated above, the obvious answer to this question is that an ERP system enhances efficiency and profitability. Digging a little deeper into how ERP software achieves these overarching goals, listed below are a number of other perks to this resource management platform. An ERP system can:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Reduce overhead costs of companies by folding a number of business tools and applications into one system<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Cause individual operations\/departments (warehouse, accounting, HR, etc.) to work faster<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Automates specific processes that would otherwise require manpower to complete<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Improve business data analytics for better, more accurate and actionable insights<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Positively impact customer relationships by being an overall faster, more efficient company to work with<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Be customized to focus on the aspects of your business that are most aligned with the current goals and needs<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Outside of these benefits, it is also worth mentioning the ease of use that an EPR system can provide. If you\u2019re still handling fundamental business processes through excel spreadsheets or on paper, the modern interface of an ERP system can alleviate a lot of headaches and vastly speed up the process. ERP systems gets integrated with your existing equipment and business tools, so there are no substantial upfront costs needed to upgrade the existing equipment.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Most ERP software can be loaded into any device that is internet compliant (laptops, tablets, mobile phones etc.). This helps save on business costs because you don\u2019t need to invest in a whole new system or computer; the software will work with your existing devices.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Lastly, running your ERP system through a mobile device allows you to keep track of your business even when you aren\u2019t physically there.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"5-signs-that-your-business-is-ready-to-have-ERP\"><\/span><span style=\"font-weight: 400;\">5 signs that your business is ready to have ERP<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<h3><span class=\"ez-toc-section\" id=\"Youre-spending-more-time-on-daily-activities\"><\/span><span style=\"font-weight: 400;\">You\u2019re spending more time on daily activities<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">If it\u2019s taking longer to manage key activities, like closing the books, managing inventory etc, it\u2019s time to browse for ERPs. ERP software integrates solutions and data into one system with a common interface, making it easier for business units to communicate and do their jobs effectively.\u00a0<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"You-have-many-unanswered-business-questions\"><\/span><span style=\"font-weight: 400;\">You have many unanswered business questions<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Can you easily answer important questions about your business \u2013 such as revenue per product line or the number of returns? If not, segregated systems and a lack of access to metrics and KPIs may be holding you back. Enterprise resource planning software is designed to address these challenges.\u00a0<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"You-have-runaway-business-processes\"><\/span><span style=\"font-weight: 400;\">You have runaway business processes<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Are there areas where your processes are getting away from you? Maybe it\u2019s harder for you to manage inventory, satisfy customers, or keep costs in check. If so, your business processes may need to be restructured to accommodate growth or changing priorities \u2013 a natural fit for ERP software.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"You-have-manual-processes-with-multiple-data-sets\"><\/span><span style=\"font-weight: 400;\">You have manual processes with multiple data sets<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Are most of your departments using their own applications and processes to get things done? If so, chances are you\u2019re spending too much time on duplicate data entry. When information can\u2019t flow between systems, reporting takes longer, errors happen often, and decision making is hampered.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Youre-missing-out-on-opportunities\"><\/span><span style=\"font-weight: 400;\">You\u2019re missing out on opportunities<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Are you spending a lot of your time in running the business that you are not able to pursue exciting new opportunities? <\/span><\/p>\n<p><span style=\"font-weight: 400;\">Newer ERP systems include advanced, intelligent capabilities, like machine learning and predictive analytics, that make it easier to identify and capitalise on profitable new ventures.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">If your business growth has become stagnant or you feel that your resources aren\u2019t being used as efficiently as they could be, an ERP system may be the best solution.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">You\u2019ll have a better grasp of how your company is performing because this software combines a number of different processes into one system. This saves you a lot of time and a number of those stressful headaches because you don\u2019t have to gather reports from each operation separately. You\u2019ll quickly see overhead costs drop and your bottom line grow, once you have a suitable ERP up and running for your business.\u00a0<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Recommended-Read\"><\/span>Recommended Read<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li><a href=\"https:\/\/razorpay.com\/learn\/best-inventory-management-tips-techniques\/\" target=\"_blank\" rel=\"noopener noreferrer\">Best Inventory Management Techniques You Need To Know\u00a0<\/a><\/li>\n<li><a href=\"https:\/\/razorpay.com\/learn\/balance-sheets-types-objectives-formats\/\" target=\"_blank\" rel=\"noopener noreferrer\">All You Need To Know About Balance Sheets\u00a0<\/a><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Enterprise resource planning refers to a type of software that organizations use to manage day-to-day business activities like accounting, procurement, project management, risk management, customer relationship management (CRM), supply chain operations and so on.<\/p>\n","protected":false},"author":151156465,"featured_media":1964,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3367,1383],"tags":[3379],"class_list":{"0":"post-1958","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business-glossary","8":"category-business","9":"tag-enterprise-resource-planning"},"_links":{"self":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts\/1958","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/users\/151156465"}],"replies":[{"embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/comments?post=1958"}],"version-history":[{"count":9,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts\/1958\/revisions"}],"predecessor-version":[{"id":2370,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts\/1958\/revisions\/2370"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/media\/1964"}],"wp:attachment":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/media?parent=1958"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/categories?post=1958"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/tags?post=1958"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}