Whenever you conduct a web search for Enterprise Resource Planning (ERP), the sheer volume of material that appears in front of your computer can be overwhelming, not to mention a little perplexing. Every website appears to have its own meaning of this phrase, and one ERP software implementation can differ significantly from the next.

These distinctions highlight the degree to which ERP in the Philippines may be customized, which can make it a highly effective corporate tool. To gain a better grasp of how this software solution may take your company to the next level, it is beneficial to gain a better understanding of what ERP is and how it operates.

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What is ERP?

ERP is an acronym that stands for Enterprise Resource Planning, but even the name itself does not provide much information about what ERP is or what it accomplishes exactly. Take a step back and consider each of the multiple procedures that are necessary to running a business, such as inventory and order management, bookkeeping, human resources, and Customer Relationship Management (CRM), to name a few examples. 

Simply said, enterprise resource planning software (ERP) unifies these many activities into a single, comprehensive system that streamlines operations and information throughout the whole enterprise.

What is an ERP System?

In all ERP systems in the Philippines, a shared database that supports several functions that are utilized by different departments serves as the primary distinguishing feature. On the practical side of things, this means that employees in separate divisions, such as bookkeeping and sales, may see the same information at the same time for their specific needs.

The best part is that it also includes some level of synchronized reporting and automated processes. Employees can pull reports from a centralized system rather than having to maintain separate databases and spreadsheets that must be manually combined to generate reports. 

For example, sales orders can automatically flow into the financial system without the need for manual re-keying, the order management section can process orders quickly and accurately, and the finance department can close the books more quickly with ERP software. Other common ERP features include a portal, which allows employees to have a fast understanding of the company’s performance based on key performance indicators.

Origin of ERP Software

The term enterprise resource planning (ERP) was first used in 1990 by Gartner, Inc., but its roots can be traced back to the 1960s. At the time, the notion was used in the manufacturing industry to regulate and manage inventory levels and inventories. Software engineers created programs to track inventory, reconcile accounts, and report on the current status of the company’s operations.

Since the 1980s, MRP (Material Requirements Planning) has expanded to include more manufacturing procedures, causing some to refer to it as MRP-II (Manufacturing Resource Planning) or Manufacturing Resource Planning. 

Beginning in 1990, these systems had begun to grow beyond inventory management and other operational procedures to include additional back-office services such as accounting and human resources, laying the groundwork for the development of enterprise resource planning (ERP) as we know it today. This spread has been aided in part by Software-as-a-Service (SaaS) solutions, which are often referred to as cloud computing. 

Cloud-based solutions not only reduce the cost of ERP programs, but they also make these systems easier to adopt and operate than traditional on-premise alternatives. Perhaps even more crucially, cloud ERP systems allow for real-time reporting, making them even more valuable to executives and employees who are looking for reliable information about their respective business departments.

As a result, businesses of all sizes and across a wide range of industries are making the switch to cloud-based enterprise resource planning software. A number of industry forecasters anticipate that SaaS-based ERP adoption will increase by 21 percent per year. 

When you step back and look at the big picture of the benefits of ERP, it’s clear to see why it’s becoming so popular and why its use is expected to continue to increase at such a rapid pace going forward.

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Difference Between ERP and Financials

ERP software and financials are not the same thing, despite the fact that the term “financials” is frequently used when describing ERP software. The term “financials” refers to a subset of modules contained within the ERP system. In an organization, financials are the business functions that are related to the finance department. 

Financials include modules for financial accounting, financial subledger accounting payables and receivables , revenue management, grants (also known as grants management), expense management, project management, joint venture accounting, and collections. 

In order to comply with the requirements of governing bodies such as the International Financial Reporting Standards Foundation (IFRS), the Financial Accounting Standards Board (FASB) for Generally Accepted Accounting Principles in the United States (GAAP), as well as for other countries, financials software employs reporting and analytical capabilities (HGB in Germany and PCG in France, for example). 

The financials software used by public companies must be able to generate periodic financial statements for governing regulators such as the Securities and Exchange Commission (SEC) in the United States (with reports such as the quarterly 10-Q and annual 10-K), the European Securities and Markets Authority (ESMA), and other regulatory agencies. A narrative reporting tool is employed for the preparation of various types of financial reports. 

The chief financial officer (CFO) is the individual who bears ultimate responsibility for financial matters. While financials is a specific component of the organization, enterprise resource planning (ERP) spans a broad variety of business operations, including financials. Purchaser relationship management (PRM) software can include capabilities for procurement as well as inventory management and manufacturing.

It can also include capabilities for project management and logistics as well as capabilities for enterprise performance management (EPM), human resources/human capital management, and customer relationship management (CRM) (CRM). 

Several next-generation technologies, including the internet of things (IoT), blockchain, artificial intelligence, machine learning, and digital assistants are increasingly being integrated into cloud-based ERP solutions. In addition to enhancing many standard ERP activities, these sophisticated technologies also open the door to new options for enhanced efficiencies, new services, and deeper insight throughout an organization. 

Because ERP systems are comprehensive across an organization, their management frequently entails collaboration with the CFO, as well as the CIO, COO, and other key senior leaders. ERP systems are becoming increasingly popular.

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ERP Fundamentals

ERP systems are built on a single, well-defined data structure (schema), which is often stored in a single, shared database. When information is standardized and based on uniform definitions and user experiences, it is easier to ensure that it is used consistently throughout the organization. 

Business processes powered by workflows across business departments (e.g. finance, human resources, engineering, marketing, and operations) are then coupled with these key structures, which serve to connect systems and the people who use them. Putting it another way, enterprise resource planning (ERP) is the vehicle that allows modern businesses to integrate people, processes, and technologies.

ERP also ensures that all of these data fields and attributes are rolled up to the corresponding account in the company’s general ledger, ensuring that all costs are appropriately tracked and represented in the financial statements. 

For example, if front brake pads were referred to as “front brakes” in one software system (or perhaps a set of spreadsheets), “brake pads” in another, and “front pads” in a third, it would be difficult for an automotive manufacturing company to determine how much money it spends on front brake pads each year and whether it should switch suppliers or negotiate for better pricing.

Why do enterprises need to adopt ERP in the Philippines?

A variety of company operations are handled by ERP in the Philippines, but how is it superior to alternative solutions? While ERP’s goals may be similar to those of other solutions, its distinct features set it apart as a player in the software industry.

More Money Saved

Even more money is being conserved. ERP packages remain a significant investment, despite the fact that several manufacturers have developed flexible pricing models in the previous few years. The high fees alone may make it appear doubtful that the program will save your company any money at all for the majority of companies. However, after the sticker shock wears off, it’s much easier to see how ERP systems may provide a great return on investment.

Improved Collaboration

Better Interaction with Others. Depending on the program you use, ERP software qualities can differ slightly, but all systems unquestionably improve communication among the workforce in some way. The database, as previously said, is a critical component in the development of ERP software in the Philippines. You provide your firm with a single point of truth by using this database. As a result of fewer mistakes being made due to inaccurate information, prices are being reduced even further.

Better Analytics

Improved data analysis. You can improve your reporting and analytics by using a central database. Because ERP documents save all the data that users submit, they’re excellent sources of business intelligence. ERP software makes it easier and faster for your team to generate several reports if your provider delivers outstanding performance. When there is no ERP, it could take days to conduct research and compile reports.

Improved Productivity

Increased Efficiency. Difficult tasks are unavoidable while using standard approaches. Historically, tasks like generating reports, maintaining inventory levels, processing timesheets, and tracking orders took personnel hours to complete. If you enter the same line of data into many forms for the hundredth time, even the most diligent employees will make a mistake.

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