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What Is Enterprise Resource Planning (ERP) And What Does It Do?

Enterprise resource planning, also called ERP, involves a range of different activities that lead to improving the performance of an organization and integrating all the data and processes of an organization in a software system and the form of a continuous database.

Manages regularly and accurately. In ERP, the issue of anticipating, planning, and scheduling all of an organization’s resources is more important than integrating or mechanizing processes.

What is ERP?

ERP helps organizations and companies to manage the precise planning process of all organizational resources to reduce costs and increase revenue. Of course, there are other definitions for ERP: ERP is based on systems and applications that include several applications that seamlessly manage all the internal activities of an organization within the organization’s operational units.

These activities can include a wide range of sales management, supply management, production management, quality management, warehouse management, logistics management, maintenance management, project management, financial management, cost management, human resource management, and engineering management.

 In fact, ERP is a system that has specific goals, components, and scope.

The term ERP basically refers to systems designed to plan the use of sales resources. Although the term ERP derivative has its roots in the artificial environment, today’s use of ERP covers a wider range. ERP systems, by type, try to cover all the activities of a base or organization (regardless of organizational structure).

In addition, it may be noted that a software package is generally used to provide performance in a particular package, which covers two or more systems. Technically, a software package that provides accounting and billing activities (payroll) is called an ERP software package.

However, the term (ERP) is typically used for more uses as well. The introduction of an ERP system is intended to replace two or more independent functions, which eliminates the need for previously needed external communication between systems.

They also provide other benefits due to lower standardization and maintenance (one system instead of two or more) for easier reporting capabilities (such as all data typically stored in one database).

Examples of ERP systems include production, requirements, Financial Unit, Customer Relationship Management (CRM), Human Resources, and Warehouse Management.

A deeper look at ERP systems is a key factor in collecting data from all parts of an organization.

To implement it, an ERP system is based on a specific database with several software units that cover the various functions of an organization.

Some organizations “those who have sufficient IT skills to build multiple software products” select the components of an ERP system and develop external connections to other systems.

For example, HRM and financial systems may look better than SAP, HRMS, and SAP, CRM systems may look better than PEOPLE SOFT equations. In this case, organizations may find it appropriate to purchase an ERP system, but prefer to purchase the HRM system and financial units and meet their other demands from SAP.

This is very common in commercial sectors, where even a medium-sized factory has a separate sales product, so many specialized functions are required to work with business equipment such as warehouse management, to-do lists, advertising, and computing. Ideally, an ERP has a specific database that contains all the necessary components for software units.

These components are as follows:

Manufacturing: Engineering, Product Cost, Schedule, Capacity, Staff Management, Quality Control, Cost Management, Manufacturing and Production Processes, Manufacturing Projects, Production Flow.

Supply Chain Management: Inventory, Purchase, Product Combination, Supply Scheduling.


Schedule of claims, commodity inspections, receivables, commissions, liquidity management, payment of bills, receipt of bills, financial reports, management of accounting documents, fixed assets.

Project management: cost, construction, time and cost, activity management.

Human resource management: payment, training, time and care, profits and benefits.

Business and customer resources: sales and market, commission (commission), service, customer relationship, call center support.

Data Warehousing:

Provides a variety of service connections between customers, applicants, and employees.

Before the concept of ERP systems and branches within an organization (for example, human resource management (HR), payroll company (PR), and financial departments) emerged, the various departments of computer systems had their own and typically information within an organization. They included the reporting structure and personal details of the employees.

The PR also recorded and recorded billing information, and the financial departments stored the institutions’ financial transfers. Each system had to rely on a set of shared data to communicate with the other system. Sending HRIS revenue information to the PR system required assigning an employee number to accurately identify an employee.

These problems cause a lot of trouble for the financial sector and employees. For example, a person without an employee number could not receive his / her salary from the payroll system.

Based on this, the companies decided to go for an integrated solution that would solve such problems and accurately maintain documents and records that were on different systems.

The possibility of using the best practices (Best Practices) has another advantage to realize an ERP system.

When running an ERP system, organizations are forced to choose one of two solutions: “order software development” or “modify their business processes according to known methods in their other affiliated businesses.”

The second solution (ie, the use of methods) has two advantages: First, it reduces the risk (or risk) of the project due to the successful use of the experiences of other similar businesses. Second, the user can use the regular version of the ERP software, not the customized version; Therefore, it will have the least difficulty in upgrading to new software versions in the future.

What should be considered when implementing an ERP solution?

In the first step, you need to do a readiness assessment. If the organizational culture supports mechanization and senior managers have the necessary cooperation and support, these companies can certainly enter this field, even if they are not fully mechanized.

Another is to select a suitable consultant to assist in the selection and deployment process; What a consultant does is very different from what we imagine. The third point is to form a strong internal group that can move the work forward.

It is a misconception that when faced with a problem, we think that several companies are ready to serve with one phone call to solve the problem. In fact, organizations have to do it themselves. They should also use different specialties in the internal group; Not just IT graduates.

For example, if you want to use the financial system, be sure to use experts in this field. Respect for the user is another thing to consider. If the user feels that he has been disrespected in any way, he will not get acquainted with the system at all.

By following these tips, the system will be active. But if one of these is not met, they will have a system that is very different from what they expected. Another important issue is the continuity in improving and improving the quality of work.

In many Iranian companies, it is thought that the work is over after the system is up and running.

We at our company have never thought like this, and we still believe that data, processes, and reports need to evolve long after the system is up and running, and we are reviewing the issues we worked on three years ago.

Continuous improvement causes the organization to become interested in ERP after a while. ERP is not initially popular in any organization; Even in very large companies. At first, everyone is dissatisfied.

Due to the wide range of demand in the industry, ERP software systems are usually complex and generally make significant changes to employee performance.

Optimal use of these systems requires a lot of time, budget, and training, so even in smaller projects and organizations with limited staff that need ERP, specialists should be hired who can use this mechanism. The duration of an ERP system depends on the size of the project, the area of ​​change, and the level of customer satisfaction.

A small project (a company with less than 100 employees) takes about 3 months to plan and deliver, while a multinational, multi-location project takes years. The most important aspect of any ERP implementation is the acquisition of project ownership by the company that purchased the ERP product.

Companies often seek help from third-party consulting firms to implement ERP systems.

Consulting for a large ERP project requires three steps: system architecture, career process consulting (primarily reengineering), and technical consulting (primarily programming and tool configuration activities). A system architect designs the entire data stream for an organization. A job consultant studies an organization’s recent business processes and adapts them to similar processes in the ERP system.

Thus, the ERP system is designed according to the needs of the organization. Technical advice often requires planning. Most ERP vendors allow their customers to modify their software to match their business activities.


In the absence of an ERP system, a large manufacturer finds itself in the midst of a flood of software demands, none of which interact with each other. Important tasks that need to interact with each other are design engineering (how to build the product in the best way), tracking order status, revenue cycle (from invoice to receipt of cash), and managing the complex interdependencies of product invoices.

In general, ERP cases due to speeding up information response time, increasing interaction across the organization, improving order wheel management, reducing financial account cycle, improving customer interaction, improving timely product delivery, improving supplier interaction, reducing direct operating costs, reducing Inventory level and production cycle improvement are used.


Many of the problems that organizations have with ERP systems are due to a lack of investment in problematic but evolving crew internships, including those that implement and test changes, such as a lack of a single policy on data integrity in ERP systems and how to use them.

It protects. However, ERP has its limitations. For example, the success of using this system depends on the skills and experience of the workforce, which includes training on how to make the system work properly. Installing ERP systems can be very expensive, often costing multinational corporations.

ERP vendors can charge customers for an annual license renewal that is commensurate with the size of the company.