ERP Systems: Concepts, History and Foundations

ERP system has been gradually being used by many Vietnamese enterprises in the management and administration of the organization's business. The fact has shown that the outstanding values and benefits that the ERP system brings to the business is extremely great, therefore, many people liken this system as the "backbone" in management activities. , run the business. In today's post, let's Johnson's Blog Find out detailed information about the ERP system that is gradually becoming a trend! 

Concepts What is an ERP system?

ERP stands for Enterprise Resources Planning, understood in the Vietnamese sense as enterprise resource planning. 

Enterprise resource planning (ERP) is a business management software system that helps organizations integrate and manage their key business processes. It enables organizations to automate and streamline their operations, including finance, human resources, manufacturing, supply chain management, customer relationship management, and other business functions. .

ERP software consolidates data from different departments and business units into a central database, allowing different teams to access the same information in real time. This integration helps organizations improve their decision-making processes and provide better customer service.

ERP systems often include modules for different functions, such as accounting, stock management, Supply chain management, Purchase manager, Sales Manager, Financial accounting, Smart business (BI) and project management. They also often include reporting and analytics capabilities to help businesses track their performance and identify areas for improvement.

Benefits of an ERP system include increased efficiency, reduced costs, improved data accuracy and visibility, enhanced collaboration and communication, and better customer service.

History of the ERP system

The history of enterprise resource planning (ERP) systems dates back to the 1960s and 1970s when businesses began using computer systems for inventory management and production planning. These early systems were standalone applications that focused on specific business functions and lacked integration with other systems.

In the 1980s, businesses began to integrate their computer systems into a more comprehensive solution encompassing multiple business functions. The term “Enterprise Resource Planning” was coined in the early 1990s, when businesses began to adopt integrated software solutions that span multiple departments and functions.

The first ERP system was developed by the German company SAP (Systems, Applications and Products in Data Processing) in 1972. SAP initially developed software for inventory management and expanded to other business functions over time, ultimately creating a comprehensive ERP solution.

Other ERP systems emerged in the 1990s, including Oracle, PeopleSoft, and JD Edwards. These systems provide a more comprehensive solution than previous stand-alone applications and allow businesses to integrate their operations and improve efficiency.

In the 2000s, cloud-based ERP systems emerged, providing businesses with a more flexible and scalable solution. Cloud-based ERP systems offer advantages such as lower costs, easier scalability, and improved accessibility.

Today, ERP systems continue to evolve with new features like artificial intelligence, machine learning, and predictive analytics built into the system. An ERP system is an essential tool for businesses of all sizes and industries, providing a comprehensive solution to manage operations and improve efficiency.

How ERP System Works?

ERP software works by integrating various business processes and functions into a single system, often through a central database. The system is designed to automate and streamline various operations and provide a real-time view of business activities.

ERP systems often have modules for different business functions, such as finance, inventory management, procurement, and customer relationship management. Each module has specific features and functions that allow businesses to perform various tasks, such as recording financial transactions, tracking inventory levels, managing production schedules and deliveries. contact with customers.

ERP systems also provide reporting and analytics capabilities, allowing businesses to track their performance, identify areas for improvement, and make informed decisions based on real-time data. Software often includes dashboards, visualizations, and other tools that allow users to access and analyze data easily.

To implement an ERP system, businesses typically go through a process that includes assessing their needs, choosing the right vendor, customizing the software to their requirements, training employees, and testing the system. system before launching.

Once an ERP system is implemented, businesses can expect to see increased efficiency, reduced costs, improved data accuracy and visibility, enhanced collaboration and communication, and services. better customers.

An ERP system helps streamline everything from collecting, storing, and using an organization's data consistently, quickly, and easily.

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Benefits of ERP System?

There are many benefits to implementing an enterprise resource planning (ERP) system in an organization. Here are some key benefits:

• Improve efficiency: ERP systems automate many business processes, which can save time and reduce errors. This increased efficiency can lead to higher productivity and lower costs.

• Better data accuracy: ERP systems integrate data from multiple sources into a single database, which can reduce errors and improve data accuracy. This can help businesses make more informed decisions based on reliable data.

• Advanced cooperation: ERP systems provide a centralized platform for employees to share information and collaborate on tasks. This can improve communication and teamwork across departments and business units.

• Improve customer service: ERP systems provide real-time access to customer data, allowing businesses to respond quickly to customer needs and provide better customer service.

• Better visibility: ERP systems provide a comprehensive view of business operations, including financial data, inventory levels, and production schedules. This increased visibility can help businesses identify improvement opportunities and make better strategic decisions.

• Better regulatory compliance: ERP systems can help businesses comply with regulatory requirements by providing tools to track and report on compliance-related activities.

An ERP system can help businesses become more efficient, productive, and profitable by improving collaboration, increasing data accuracy, and providing better visibility into operations. business activities.

Disadvantages of ERP system

While there are many benefits to implementing an Enterprise Resource Planning (ERP) system, there are also some limitations and challenges that organizations need to be aware of. Here are some of the main limitations of an ERP system:

• High cost: ERP systems can be expensive to implement, especially for small and medium businesses. Hardware, software, and customization costs can add up quickly, and ongoing support and maintenance can also be costly.

• Deployment time: Implementing an ERP system can be a time-consuming process, especially if the system needs to be customized to meet the specific requirements of the organization. This can cause disruption to business operations and may require significant resources.

• Complexity: ERP systems are complex and users may need extensive training to use them effectively. This can lead to employee resistance, especially if the system is difficult to use or does not align with existing business processes.

• Data security: ERP systems store large amounts of sensitive business data, including financial information, customer data, and intellectual property. Ensuring the security and integrity of this data is important, but can be challenging in the face of growing cyber threats.

• Integration challenges: Integrating an ERP system with other software applications can be challenging, especially if the organization is using legacy systems or has a complex IT environment.

Organizations need to carefully consider the costs and benefits of implementing an ERP system, and should be prepared to address the challenges and limitations that come with it.

Components of an ERP system

An enterprise resource planning (ERP) system typically consists of several components that work together to integrate and manage different business processes. Here are some key components of an ERP system:

• Central database: The central database is the core of an ERP system. It stores all the data for the different modules of the system and allows different departments and business units to access the same information in real time.

• Business Process Automation: ERP systems automate many business processes, such as order processing, invoicing, and inventory management. This can help reduce errors and improve efficiency.

• Modules: ERP systems often include modules for different business functions, such as finance, human resources, supply chain management, and customer relationship management. Each module has specific features and functions that allow businesses to perform various tasks, such as recording financial transactions, tracking inventory levels, managing production schedules and deliveries. contact with customers.

• Reporting and analysis: ERP systems provide reporting and analytics capabilities, allowing businesses to track their performance, identify areas for improvement, and make informed decisions based on real-time data. Software often includes dashboards, visualizations, and other tools that allow users to access and analyze data easily.

• Custom tools: ERP systems can provide custom tools that allow businesses to tailor the software to their specific needs. This could include modifying workflows, adding new data fields, or creating custom reports.

• Integration capabilities: ERP systems can integrate with other software applications, such as customer relationship management (CRM) or enterprise asset management (EAM) systems. This can help provide a more holistic view of the business and improve data accuracy.

Central database

The central database is the primary repository for all the data that ERP systems use and manage. A central database that integrates data from different modules or applications in an ERP system, such as finance, sales, inventory, and manufacturing. This integration ensures that all data in the system is consistent, up-to-date and accessible in real time.

Essentially, a central database usually consists of many tables that are related to each other in a structured way. These tables contain information about various aspects of the business, such as customer information, supplier information, product information, transaction data, and inventory levels. Data in a central database is organized, indexed, and secure according to business requirements and security policies.

A central database allows different departments and users in an organization to easily access and share information. This eliminates the need for separate databases and separate information, which can be time consuming to manage and can lead to inconsistent data.

Business Process Automation

Business process automation involves using software and technology to automate and streamline business processes, reducing the need for manual intervention and improving efficiency. The goal of business process automation is to eliminate errors, reduce costs, and increase productivity.

ERP systems use business process automation to manage a variety of business processes, including financial transactions, supply chain management, production planning, inventory management, and human resource management. force. Automating these processes typically involves a series of steps, such as:

• Workflow design: ERP systems allow businesses to define workflows that automate specific business processes. A workflow typically consists of a set of rules and procedures that guide how tasks are performed.

• Assign tasks: The ERP system can automatically assign tasks to specific users or groups of users based on predefined rules and priorities.

• Notices and warnings: The ERP system can send notifications and alerts to users when a task is assigned or when certain events occur, such as changing inventory levels or receiving payments.

• Data validation and error checking: The ERP system can automatically validate the data entered into the system, ensuring that it meets specific criteria and is correct. The system can also check for errors and inconsistencies, reducing the need for manual intervention.

• Reporting and analysis: ERP systems can generate reports and provide analysis on various business processes, helping businesses identify areas for improvement and make data-driven decisions.

Modules

Modules are a key component of an enterprise resource planning (ERP) system. They represent different functional areas of a business integrated into the system. Each module has a specific set of features and functions designed to support and automate specific business processes.

Here are some common modules included in an ERP system:

• Finance and Accounting: This module includes features like accounts payable, accounts receivable, ledger, cash management and financial reporting. It helps businesses manage their finances, track expenses and revenue, and generate financial reports.

• Human Resource Management: This module includes features such as employee data management, payroll processing, benefits management, and performance management. It helps businesses manage their workforce, track employee data, and automate HR processes.

• Supply chain management: This module includes features such as inventory management, procurement, order processing, and logistics management. It helps businesses manage their supply chains, optimize inventory levels, and streamline procurement and fulfillment processes.

• Customer Relationship Management: This module includes features such as sales automation, marketing automation, and customer service management. It helps businesses manage customer interactions, track sales opportunities, and provide customer support.

• Production manager: This module includes features such as production planning, scheduling and control, quality management, and production site management. It helps businesses manage production and production processes, optimize production schedules, and improve quality control.

• Project management: This module includes features such as project planning, resource management, and project tracking. It helps businesses manage their projects, track progress, and allocate resources efficiently.

The modules in the ERP system work together to provide a comprehensive solution for managing different aspects of the business. By integrating these modules into a single system, businesses can improve efficiency, reduce errors, and gain better visibility into their operations.

Reporting and analysis

Reporting and analytics gives businesses the ability to access and analyze data from different modules of the ERP system and generate reports that help with decision making.

ERP systems often include a reporting module that allows businesses to create custom reports based on their specific needs. These reports can be generated in a variety of formats, including tables, charts, and graphs. Reports can also be filtered and sorted based on various criteria, such as date range, department, or product category.

ERP systems also provide businesses with advanced analytics capabilities that allow them to better understand their operations. Analytical tools enable businesses to analyze large volumes of data from disparate sources, identify patterns and trends, and make data-driven decisions.

Some of the benefits of reporting and analytics in an ERP system include:

• Improve visibility: ERP systems give businesses a centralized view of their operations, allowing them to access data from different modules and gain better visibility into their operations.

• Make better decisions: Reporting and analytics tools help businesses identify patterns and trends in their data, and make data-driven decisions that can improve their bottom line.

• Report faster: ERP systems automate the data collection and report generation process, allowing businesses to generate reports quickly and easily.

• Custom: ERP systems allow businesses to create customized reports that meet their specific needs, and filter and sort data based on different criteria.

Custom tools

Customization tools give businesses the ability to customize their ERP system to meet their specific needs and tailor the system to their unique business processes.

Here are some popular customization tools included in an ERP system:

• Customizable forms and fields: ERP systems typically include a set of pre-built forms and fields that businesses can customize to fit their specific needs. For example, businesses can add or remove fields, change field labels, or modify the layout of a form.

• Customize Workflows: ERP systems allow businesses to create custom workflows to automate specific business processes. Workflows can be customized to include specific rules and procedures, and can be tailored to fit the unique needs of the business.

• Custom dashboards and reports: ERP systems allow businesses to create custom reports and dashboards that provide real-time insights into their operations. Reports and dashboards can be customized to include specific metrics, filters, and visualizations.

• Integration with third-party applications: ERP systems can be customized to integrate with third-party applications and services, such as CRM systems, platforms ecommerce or marketing automation tools. This allows you to extend the functionality of your ERP system and create a more comprehensive solution.

• Customize UI: ERP systems allow businesses to customize the user interface to fit the needs of different users and departments. For example, businesses can create custom dashboards or views for specific users, or modify the layout and design of the interface.

Integration capabilities

ERP systems are designed to integrate with other software applications, databases and systems to provide businesses with a comprehensive solution that can streamline their operations.

Here are some common integration capabilities of an ERP system:

• Data integration: ERP systems can integrate with other data sources, such as databases or spreadsheets, to pull data from different sources and create a holistic view of business operations.

• Application integration: ERP systems can integrate with other software applications, such as Customer Relationship Management (CRM) software or Human Resources (HR) software, to provide a complete solution that streamlines business operations.

• Integration ecommerce: ERP systems can integrate with e-commerce platforms, such as Shopify or Magento, to synchronize orders, inventory, and customer data between the ERP system and the e-commerce platform. death.

• Integration supply chain: ERP system can integrate with other systems supply chain management, such as warehouse management software or transportation management software, to improve logistics and supply chain management.

• Business intelligence integration: ERP system can be integrated with software business intelligence (BI), such as Tableau or Power BI, to provide real-time data analysis and business insights.

Overall, integration is critical for ERP systems to provide a comprehensive solution that can streamline business operations and improve efficiency. By integrating with other software applications and systems, ERP systems can give businesses a holistic view of their operations and help them make data-driven decisions.

Outstanding features of ERP system

Below are the outstanding features of the ERP system, bringing outstanding benefits to businesses using this system in business activities.

Enterprise-wide integrated ERP system

Using ERP, all business processes will be integrated from a to z in all departments of the business. 

For example, when a business has a number of potential customers, the system will have data from the first touch point when the customer contacts, then the data of both the care stage, the sales stage, the stage. Invoicing, inventory control, delivery, warranty, product inspection, etc., the whole process is so data used is unified, unique for all other departments. each other in the business.

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ERP happens in real time 

In fact, all business operations performed on the ERP system are real-time. The manager has complete control over any issues that arise in practice without any delay. For example, the manager can make statistics and search for information related to customers, sales orders, purchase orders, work orders, inventory, financial report… at any time in a fully proactive manner.

ERP shares a common database

The biggest advantage of the ERP system is that it has a common database, so it allows data synchronization for all departments in just one entry. Accordingly, each department will be based on an approved database standard and predefined editing rules.

ERP has a consistent interface

Currently, most businesses that provide ERP systems soon realize that, ERP software interface Consistency with users is the best way to save training costs, and also ensure more professionalism. That's why every ERP system software today is consistent with its users.

What is the difference between an ERP System and a Financial Software?

ERP and finance are two different software systems that serve different functions in a business. While ERP is a comprehensive business management system that covers many business functions, financial software focuses specifically on financial management.

An ERP system integrates and automates various business processes, including finance, manufacturing, supply chain, inventory management, and customer relationship management, among many more. It provides a centralized database to store data from various business functions and enables real-time reporting and analysis. The ERP software also provides modules for financial management, including functions such as general ledger, accounts payable, accounts receivable and financial reporting.

Financial software focuses specifically on financial management processes such as accounting, financial reporting, and financial analysis. It provides tools for managing financial transactions, such as accounts payable and receivable, and for generating financial statements such as balance sheets, income statements, and financial statements. sales and cash flow statements.

ERP implementation model

There are several different implementation models for Enterprise Resource Planning (ERP) systems, each with their own advantages and considerations. Here are some of the most common ERP implementation models:

• In place: An on-premises ERP system installed and maintained on the company's own servers and infrastructure. This model requires a significant upfront investment in IT hardware and resources, but offers the highest level of control and customization over the system.

• Cloud-based: Cloud-based ERP systems are hosted entirely in the cloud and accessed through a web browser or mobile app. This model requires no upfront hardware or software investment, provides scalability and flexibility, and reduces IT requirements, but may have limitations on customization and control.

• Combine: A hybrid ERP system combines on-premises and cloud-based components, allowing businesses to take advantage of the benefits of both models. For example, a company might use an on-premises system for mission-critical functions that require maximum security and control, while using a cloud-based system for less critical functions that require maximum security. demand scalability and flexibility.

Each deployment model has its own benefits and considerations, and the choice of model will depend on the specific needs and priorities of the company. Factors to consider include cost, control, scalability, customization, and security.

7 reasons to switch to a Cloud ERP solution

Switching to a cloud-based enterprise resource planning (ERP) system can bring many benefits to businesses. Here are seven reasons why businesses might consider moving to a cloud-based ERP solution:

• Lower upfront costs: Cloud-based ERP solutions require no upfront investment in hardware or software, reducing the initial cost of implementing an ERP system. This can be especially beneficial for small or growing businesses with limited budgets.

• Scalability and flexibility: Cloud-based ERP solutions can easily scale up or down as business needs change. This flexibility allows businesses to adapt to changing market conditions and organizational growth.

• Accessible ability: The cloud-based ERP system is accessible from anywhere with an internet connection, allowing employees to access the system remotely or work from home. This can increase productivity and collaboration, especially for businesses with multiple locations or employees working remotely.

• Faster Deployment: Cloud-based ERP solutions can be deployed faster than on-premises solutions, since there is no need to install and configure hardware and software. This can help businesses get up and running faster and start realizing the benefits of an ERP system sooner.

• Automatic update: Cloud-based ERP solutions are regularly updated by vendors, providing businesses with the latest features and security updates without requiring additional investments or IT resources.

• Improved security: Cloud-based ERP solutions are generally more secure than on-premises solutions, as they are managed by security experts and use advanced encryption and security protocols. This can help protect sensitive business data from cyber threats and data breaches.

• Costs are predictable: Cloud-based ERP solutions often have subscription-based pricing models, providing businesses with predictable costs and easier budgeting. This can be especially beneficial for businesses with volatile revenue or uncertain market conditions.

Three signs that you need ERP software

Here are three signs that your business may need ERP software:

• Business Process Disconnected: If your business relies on multiple systems to manage different functions like finance, inventory and sales, it can lead to disconnected business processes, duplicate data entry and an error occurs. An ERP system can integrate and automate various business functions, provide a single source of accurate information for your data, and streamline your business processes.

• Difficulty with data analysis and reporting: If your business relies on manual data entry and reporting, this can be time consuming, error prone, and limit your ability to make data-driven decisions. An ERP system can provide real-time analytics and reporting, allowing you to track key performance indicators (KPIs) and make informed decisions based on accurate data.

• Growth and scalability challenges: As your business grows, it can become more complex with more departments, processes, and systems. Managing this complexity can be challenging and can limit your ability to scale your business. An ERP system can provide a unified view of your business processes, allowing you to manage growth and scaling more effectively.

Three challenges of implementing ERP for businesses

Implementing an ERP system can be a complex and challenging process for a business. Here are three common ERP implementation challenges that businesses may face:

• Customize and configure: ERP systems can be highly customizable, but this can also make them complex and difficult to configure. Businesses need to determine what features and modules are needed for their operations and how to configure the system to meet their specific needs. Software customization may also require changes to existing business processes, which can be time consuming and disruptive.

• Data migration and integrationData migration and integration can be a significant challenge when implementing an ERP system. Migrating data from legacy systems and integrating data from different departments and functions can be a complex process. Data quality issues can also arise, which can affect the accuracy of data in the ERP system.

• User adoption and training: One of the most important challenges of ERP implementation is getting employees to accept and use the new system. User training and strategies change management is essential to ensure that employees understand how to use the system and the benefits it provides. If employees don't like change or don't understand how to use the system, it can lead to low adoption rates and reduced efficiency.

Enterprises implementing ERP systems need to carefully consider customization and configuration, data migration and integration, and user acquisition and training to ensure a successful implementation. Addressing these challenges requires a structured approach, effective communication, and support from all stakeholders.

Viindoo – Comprehensive ERP system solution for all businesses

System Viindoo business management software is the perfect solution for all businesses, helping to manage all businesses from purchasing, sales, warehouse, production, human resources, finance and accounting, CRM, DMS, ecommerce…

So, what is the difference between Viindoo ERP system and other ERP system providers on the market today?

• Provide solutions corporate governance on the SaaS platform, helping businesses optimize initial investment costs, no need to build an internal technical team, reasonable monthly costs "pay as you go".
• Allows businesses to process large amounts of data at a fast speed, ensuring that it does not degrade after a long time of use.
• Combining many intelligent features, helping businesses to quickly operate, process and check reports of administrators.
• Easily connect to different devices, applications... flexible applications, helping businesses save many fees incurred.
• As a unit with many years of experience in the field, is committed to providing customers with the most perfect and comprehensive solution.
• ….

Epilogue

ERP system is a powerful software tool that allows businesses to integrate and automate various business functions, including finance, inventory, supply chain, manufacturing, and customer relationship management. They provide a centralized database for real-time data storage, reporting and analysis, and customizable modules to meet specific business needs.

Here are the shares of Johnson's Blog ERP system is currently chosen by many large and medium enterprises nationwide. If you have any further questions regarding this, please do not hesitate to contact us.