Previously, enterprise resource planning was used only of large business companies. It required lots of money to be invested. Small scale and medium sized companies were not ready to invest a large amount for buying software and employing staffs for managing ERP software.

Keeping this in mind, ERP vendors started diversifying their enterprise resource planning software by releasing many versions of the software which could assist small companies too.

Also, small sized companies might not require all the tools and customizations available for the big companies. The ERP software got tailored particularly to meet the small sized companies and for increasing the productivity. After this, small sized business people also started buying ERP software which matched their investment amount.

From the early 1990’s ERP helped the companies in driving down their cost and also helped them in operating more efficiently. Effective data management also helped streamlining the business process effectively. Planning, manufacturing, marketing, sales and quoting services kept on improving. Stock control, financial tracking and customer service also got better with ERP. Many time consuming and labor related processes were eliminated by the small business with the usage of enterprise resource planning software.

The flexibility which ERP offers is definitely a very big advantage which interests the small business. Flexibility and the real time control over the price and the jobs are the key features for a small sized company. Concise reporting is also a main factor which decides the quality of the company.

Based on these needs, ERP vendors have made installation of the related software as very less complex with much less manual job needed. The user friendliness of the applications also got improved. Adding more users or customers will no way affect the functionality of ERP.

Many small businesses are already enjoying the benefits after successful ERP implementation. The profit of the company has certainly increased after the usage of ERP provided the implementation procedures are followed perfectly. Business which implemented ERP successfully saw their business profit increasing within one year itself.

A good ERP system comes with essential features that will provide the functionality of comparing the hours of working of the professionals and the actual hours of work which was paid as a salary. In fact, many small businesses just doubled their return on income with just using this service effectively. With this ERP, they were able to monitor the time of production, cost, employee activity, overall performance of the company and many more crucial information.

Before setting up ERP systems, small business must first identify the business requirements. The impact which the ERP is going to have on the business should be well analyzed. Cost factor involved in implementation should be set aside initially. Once the requirements are well planned, then comparison can be made on different vendors available and the vendor which provides cost effective service and be opted.

For example, the sales unit should be aware of how many products are there in the inventory and the inventory department should be aware of how much products are in the middle of manufacturing and the manufacturing unit should be aware of the raw materials available for further manufacturing. If these data are properly communicated, then the productivity of the company can be increased to a huge level.

Synchronizing the information is of most important to manufacturing company because every part of their business units requires communication with the other part. In order to achieve this synchronicity usage of Enterprise resource planning software is necessary. Enterprise resource planning software is designed specifically to integrate all data available across the company and produce meaningful result from the data. Every data is collected and integrated into a unified system.

Though enterprise resource planning is an integrated system, it requires many software and hardware modules for its functionality. If the requirements posed by the vendors who provide enterprise resource planning software are successfully met the company, then the ERP system implementation should be successful. There are a very few challenges involved in the ERP implementation. If those hurdles are crossed and if the ERP system in is installed successfully, then it is definitely going to serve the company in raising the productivity to a high level.

Here are some of the benefits which the enterprise resource planning software gives to its clients specifically to the manufacturing companies:
1. Integrated service – ERP systems helps in integrating the data and providing synchronized service to its users.

2. ERP systems require feeding of data only once. When data is fed to one of the systems, then it gets automatically populated to every part of the software in no time.

3. The amount of paper work required is reduced to a huge amount. There is no need to keep loads of records in paper to keep track of the company’s performance. There are lots of applications and customizations available with the tool itself which could produce reports with a single click.

4. The inventory cycle time can be reduced to a huge level. The inventory cycle is the time taken for the product to get fully manufactured and delivered to the customer. Reduction in inventory cycle time means increase in the production. With this, the satisfaction level of the customer gets improved and also attracts more customers.

5. Labor costs are reduced to a considerable amount of time. With the availability of data in real time managing employees and managing real time production data can be in control.

6. Production time can be decreased with the usage of enterprise resource planning software. It helps in eliminating repetitive process and helps in breaking down the production time.

These benefits over takes some of the minor disadvantages of the ERP software and because of this reason many companies opt for enterprise resource planning rather than any other methods.

Every company is looking to increase its market value. For, this they are re-looking into the factors which affect the company’s productivity and management. Every company is looking to use their resources effectively so that their business is done more effectively and efficiently. Most of the companies decides to use software which could manage their whole enterprise and the information should be available with the enterprise.

With this need, enterprise resource planning came into picture. Enterprise resource planning is a software based system which helps in managing every functionality and operation of the company. It ensures that there is proper and reliable data communication between various parts of the business units. This helped many businesses to increase their productivity and cut costs on management related funds.

Usage of enterprise resource planning software have helped many companies in analyst and optimize their business process, enhancing the supply chain management, efficient control of inventory, enhanced decision making by providing precise reports, integrating various business units and developing transparency all over the business.

In a typical corporation which implemented ERP successfully , the customer sales department can get access to the purchase department, inventory department data can be viewed by the sales department and the top management can see the overall structure and the work flow of the company with a single click. This is what a comprehensive enterprise resource planning software is capable of.

The impact of the enterprise resource planning can be seen evident with the company even before 12 months of implementation. With proper planning and successful implementation ERP can provide a strong platform for better productivity. The implementation of ERP helped many companies in increasing the value chain in the market. It also created confidence among its customers. Share holders also bought shares of these companies with confidence.

In previous stage before ERP comes into practice, companies used separate software for each service. Separate tools were used for sales tracking, financial management and for human resource management. Lots of employees were employed for managing separate software. This resulted in redundant technology, service was poor and the staffs found it very difficult to integrate data from these services and create a report out of it.

Critical information could be extracted from such independent software. But, with the advent of enterprise resource planning software, managing all the resources under a single system was made much easier. Also, lots of manual work involved in resource management was cut down to a large amount.

Compared to the big industries, small and medium sized industries used the ERP efficiently. In general enterprise resource planning can be used to introduce standard industry process, implementing integration across various inter related business units within the company, real time access to the information and creating analytical report with a single click.

Material resource planning is also a software based management of inventory and product productivity managing. It was also used for managing the process of manufacturing. Enterprise resource planning got evolved from material resource planning when the software architectures got ‘routing’ as one of its major part.

Material resource planning didn’t take care of capacity planning of a company. The method of finding the capacity of production which the organization requires and meeting the demands in the market is termed as capacity planning. As with increase in the demand and supply of products got increased, demand for software which could manage capacity planning also got increased.

By incorporating capacity planning, material resource planning got changed into enterprise resource planning. Enterprise resource planning handled improvement in planning of every operation within a company like inventory, shipping, invoicing, manufacturing, accounting and logistics. Every business units present in the company like human resource management, quality management, marketing, sales, billing, delivery and inventory management are also covered by ERP.

Before ERP was developed, many software were available just to manage an individuals to manage their income. But, with the complexity involved in managing resources for corporations, many vendors started developing software in the name of ERP.

During the 1990’s period, many companies faced the Y2K problem. The systems other than ERP didn’t have the capability to eliminate this problem. Many companies which foresaw this Y2K problem thought wisely and they started replacing existing systems with ERP systems.

From then on, the ERP systems had a boost in their production. We can say that, a considerable amount of risk involved in the Y2K was reduced to a huge amount by the ERP systems. There was a rapid growth in sales after companies started implementing ERP.

ERP systems are sometimes called as back office. This is because, ERP systems doesn’t include data which are related to customer or general public. They are not directly involved in this system instead only the information which are closely related to the company are take into account by ERP. But this may not be 100% correct. Because, a type of ERP called as customer relationship management ( CRM ) deals with data directly related to customers. This type of ERP is called as front office.

In the early 2000’s, the term ‘ERP II’ got evolved. This is to indicate that the next generation of ERP software was available. ERP II based software had many more new features included. The key feature is that they came as web based software tool. This ensured that there is a real time access to the systems for everyone including customer, suppliers and to the employees. Now, the ERP software is being called as Enterprise Application Suite or EAS. EAS systems are now including every segments of the business and using browsers as thin clients, information is made available to its users.

Advantages:
A company which doesn’t use ERP really finds it difficult to have proper communication with each other business units. Even though many software applications are available to share the resources efficiently, ERP overtakes every other software with the fact that ERP are centralized service for any kind of information available related to the company.

Some of the major advantages in using ERP are discussed below:

1. ERP systems have many software components included within it which helps in forecasting data. Forecasting can’t be done more efficiently with other software. Since ERP includes many software which tracks past history of information, forecasting is done in simple way. This also helps in efficiently managing the inventory and thus the productivity of the company increases automatically.
2. Different business units should have proper communication. Proper communication ensures good productivity and efficiency. ERP software acts as a medium through which proper communication is made between the business units.
3. Using ERP helps in making design engineering better. It helps in shaping the product better.
4. Tracking the order and fulfilling the customer needs is also a main task of the company. ERP provides this service with simple user interfaces. Orders are tracked efficiently and delivery is also monitored for the fulfillment of the customer.
5. ERP tracks every financial data starting from the invoice to the cash receipts. So, using ERP software makes it easier to track the revenue cycle.
6. The inter dependencies between the different materials in the process of making the product can be best managed by ERP.
7. Matching of costs of the product, inventory and order purchasing can be easily managed by ERP.

Above mentioned advantages are generic advantages of ERP systems. Benefits of system centralized ERP are discussed below. System centralized ERP have data in one place. Some of the advantages of this kind of ERP are:

1. The problem of synchronizing complex systems like human resource, finance, sales and marketing are handled and eliminated by these ERP systems.
2. Cross functional services which need communication between different business units are permitted by this system.
3. A top down view of the organization can be easily figured out.
4. A considerable amount of risk in losing important data is eliminated.
5. Production time and delivery time can be reduced to a high level.

Disadvantages:
One of the common problems which ERP implemented companies now face are the inadequate funding required in providing training for using the ERP. Other than these, some of its disadvantages are discussed here:

1. The customizations options available in the ERP software are limited.
2. ERP systems are expensive.
3. After implementation, migration of the system might become expensive.
4. Sensitive information regarding a company can’t be shared efficiently with ERP.

To successfully implement an enterprise resource planning software, the company should clearly mention its requirements to the vendor and there should also be sufficient software managing staffs employed by the company solely for operating and maintaining the ERP applications.

Studying enterprise resource planning requires studying different areas. This is not as simple as to learn single software. There are many areas involved in its study which varies from the implementation of the software, outsourcing of ERP, studying impact which it can cause to the international business economy, job opportunities, etc.

The main for the development of ERP is ultimately to increase the productivity and value of a company by assisting the company in fine tuning the manufacturing process. The first software which was implemented for a similar kind of management was named as ‘Material resource planning’ (MRP) in 1975. And later by incorporating many new technologies MRP got evolved into enterprise resource planning (ERP).

The enterprise resource planning systems will collect the data related to the company and stores into a single repository. It also takes into account the several processes and the data sources pertaining to the company. For implementing these data and product services, various software and hardware modules will be used. These hardware and software modules are integrated to form a single enterprise resource planning system.

If the ERP system is planned and implemented successfully then it is undoubtedly going to serve the company is raising its productivity. But there are many challenges involved in planning, implementing and integrating the ERP system.

The challenges involved starts from the point of selecting the right vendor. Failure of enterprise resource planning can never be analyzed or traced back. So, before implementing the software, lots of planning should be done. Also, the requirements posed by the vendor should be fulfilled completely. The vendor also should be in a position to provide successful implementation within time and the quality should also be good.

Some of the other challenges are lack in knowledge level of the employees. The management should thoroughly understand the process and should choose the right vendor. Lack in expertise might cause huge loss. Some companies limit the budget of implementing ERP software to a very minimal level. This in turn will result in less customization and templates.

The real usage of ERP software might be in a toss. Sufficient information can’t be managed and leading to very minimal information to be available. The other major challenge which every organization faces is the lack of support staffs. For a successful ERP implementation, there should be sufficient number of employees assigned by the company to work on the tools. If the companies are able to overcome these challenges, then certainly ERP is going to yield them a lot of profit.