What Is ERP And Why Do Businesses Use It?

Posted by Deltek on March 8, 2016

What Is ERP?

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ERP is an acronym that is often banded about in business - especially when it comes to project management. But what is ERP and how are businesses using it to their advantage?

What Is ERP?

ERP stands for Enterprise Resource Planning. This is the process of integrating each part of a business as a way of improving it and making it more profitable and aligned. An ERP system digitalises this process. Through its automation and data management capabilities, an ERP system will help the user to make more accurate, better informed decisions, faster.


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Who Uses ERP?

ERP software burst onto the scene back in the 1960's and has gained ground as the world became increasingly computerised. In those early days, ERP software was mainly used in manufacturing companies who saw the benefit of integrating the various departments of their operation, production and back office processes. Today, its popularity has grown and it's reported that 88% of business across a broad spectrum of industries use some sort of ERP or business management system.

what is an ERP system

ERP For Project-Based Firms

Many firms that use ERP systems are project based; for instance architects, consultants, marketing agencies, accountants and law firms. The complex needs of these companies have led to the development of specific, project-based software. These systems are proving fundamental for providing a centralised view of multiple activities, budgets and timescales that may run simultaneously.

What Is An ERP System And How Does It Work?

To meet varying needs, ERP systems are designed, developed and built to do different things for different companies with different needs. However, they tend to follow the same basic principle.

Consider the various processes that your business depends onto function: Finance, HR, CRM, sales, for instance. Then think about these separate processes linking to one, centralised database that stores your firm's critical business information. Instead of having a separate system for each department working in isolation, this centralised data vault allows every business process and operation to work harmoniously with one another and provides more relevant and insightful information.

Three-Dimensional ERP

Some firms - like those in professional services - need a system that takes things even further. This has led to the development of project-based ERP systems that are "three dimensional" in their approach. Such systems are able to link transactions to accounts, organisations and projects, giving a 360 degree view to those who need it.

what is an erp system

ERP System Benefits

Linking business processes. Three dimensional visibility. It all sounds impressive, but what does it mean in practical terms?

The benefits of installing a project based ERP system into a professional services firm are well documented. Here's what companies using ERP systems tend to experience:

1. A boost in efficiency and productivity

With project data on hand it's possible to establish certain ways of getting more done for less.

2. Better financial decision making and control

Deeper financial insight will help establish if a certain project will benefit from bringing in a contractor, or if it should be charged at time and expense rather than retainer for instance.

3. Insight from a real time picture of what's going on, when

The power to know if it's time to change direction on a project or venture, deploy extra resources or up your game in a certain business area means firms are more responsive.

4. A reduction in errors through automation

Less keying, duplication and human intervention means more reliable data - and greater wisdom as a result

5. Improved customer relations

The provision of automated reports, links to customer dashboards and improved transparency adds value for clients.

On their most basic level, ERP technology unscrambles vast amounts of data from a centralised data vault to provide meaningful, company wide information in real time. It's little wonder it's become an essential part of business life for so many decision makers.  

Understanding ERP - Introduction Series

To find out more about ERP software, the benefits of ERP and how ERP works, download the free guide 'Project Based ERP for Dummies'.


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Project-based ERP for Dummies

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