Transform Your Business with Enterprise Resources Planning

By Kate Eby | June 8, 2017 (updated April 17, 2023)

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The origins of enterprise resource planning (ERP) date back over a century. The ERP process consists of linking or integrating the numerous and disparate functions of an organization, both back- and front-office operations. Rather than relying on an incompatible, cobbled-together group of platforms, software, and spreadsheets that require manual reconciliation, you can use an ERP system. ERP enables various departments like finance, manufacturing, procurement, sales, human resources, and administration to share data in a consolidated, centralized, and reciprocal data system.

This article explains how ERP works, gives you examples of ERP systems, describes the benefits of ERP for your business, and offers guidance on determining if your company is ready for ERP.

What Is ERP in Simple Terms?

Enterprise resource planning (ERP) brings the entirety of your business operations — from sales and marketing to planning and production to inventory and finance — into one seamless experience. By pulling your data into a central system, all the information you need to drive your business is at your fingertips. A smart ERP gives you every data point you need in real time.

What Is an ERP System?

Enterprise resource planning (ERP), called government resource planning (GRP) in the public sector, has traditionally been a large in-house initiative that aims to streamline both business processes and business information. When implemented properly, it is an integrated system that provides data clarity, flexibility, and operational agility.

The foundation of an ERP solution is a shared database that acts as a central repository of information. All relevant stakeholders access this same repository of data. Reports are then culled from this singular, uniform system to provide transparency, efficiency, and consistency.

Enterprise resource planning plays a key role in computer-integrated manufacturing (CIM), which relies on automated systems, software, sensors and computer-controlled machines to manufacture products. ERP has evolved from pure manufacturing systems to integrate with accounting, human resources, purchasing, ordering, and cost accounting.

The roots of ERP go back to 1913, when an engineer named Ford Whitman Harris saw a need for greater efficiency and developed a production scheduling model called economic order quantity (EOQ). This paper-driven precursor to process planning remained the industry standard until 1964, when Joseph Orlicky developed materials requirements planning (MRP) , and toolmaker Black + Decker became the first company to adopt an MRP solution that combined EOQ concepts with a mainframe computer.

Rapid software adoption in the 1980s led to integration capabilities that expanded functionality to include scheduling, bill of materials (BOM) , and purchasing functions tied to corporate financial reporting. Encompassing considerably more manufacturing processes, manufacturing and resource planning (MRP II) replaced MRP as the standard for data management and efficiency planning. When the systems expanded beyond manufacturing processes to include human resources and accounting, they were recast as enterprise resource planning.

What is the Difference Between Enterprise Resource Planning and Enterprise Resource Management?

Enterprise resource planning can be confused with other management systems such as enterprise resource management (ERM), enterprise performance management (EPM), and customer relationship management (CRM). Here are the benefits and features of each.

  • Enterprise Resource Planning: ERP tracks your resources, materials, and transactions. It provides all the data about how your company operates in real time. Use ERP systems to operate your business.
  • Enterprise Resource Management: ERM lets you manage access for all your software systems. Typically this includes the ability for staff to sign in to multiple software systems with a single username and password, as well as let you control who has access to software systems.
  • Enterprise Performance Management: EPM software takes the ERP data and helps you monitor and analyze your organization’s performance. Use EPM for planning, forecasting, evaluating, and decision-making. It helps you strategically manage your organization’s overall performance through modeling and analytics.
  • Customer Relationship Management: Most ERP solutions include many CRM tools to help you understand your customers better. For example, you can track contacts and the purchase order history of your customers. CRMs, however, typically provide deeper insights into the sales pipeline and funnel, whether it relates to sales or to services for your customers. Many CRMs also help you organize and track your marketing efforts and time spent on converting leads into sales.

Who Is Using Enterprise Resource Solutions?

In today’s competitive climate, every organization needs the ability to gather, store, and analyze data to make better decisions faster. Enterprise resource planning helps you standardize and simplify your data for greater agility, efficiency, and collaboration.

You can implement an ERP system to streamline operational and administrative processes across every industry vertical, including healthcare, manufacturing, retail, government, and technology. ERP works to integrate disjointed processes into one data system that the entire organization can view and act upon. All users — from executives to CIOs to customer service reps — can access the same real-time, up-to-date, and complete user-appropriate data and information.

Increasingly, companies that need to streamline and integrate operational functionality are turning to the nimble ERP solutions available in the current market. Companies need fast responses to the variances in the modern business climate and market forces to succeed and profit.

The business value of an ERP system can be found in its efficiencies and ability to quickly provide clear analytics. Businesses view data intelligence as a commodity that can be leveraged to enhance market share, competitiveness, and profitability. Having the right knowledge, clear reporting, and cross-function integration provides greater opportunities to identify areas for growth and expansion. ERP systems provide companies with the ability to respond to changing operational paradigms, new partnerships, acquisitions, increased supplier lists, decision-making tools, and mechanisms in order to adapt and move forward quickly.

enterprise resources planning project

Lisa Anderson , supply chain expert and business consultant, says, “ERP systems have become essential to compete in today’s Amazon-impacted marketplace, no matter the industry. My best clients are leveraging systems to provide superior service and rapid deliveries to customers, to gain quick access to information for decision making, and to utilize advanced technologies for customer and supplier collaboration and automation in support of profitable growth.”

ERP can provide financial management, follow standard accounting practices, generate reports for business uses, and manage transactions. For manufacturers, ERP can manage your supply chain and inventory, ensuring you have the right materials on hand at the right time to fulfill orders. ERP can also provide customer insights, analyzing who is ordering your products or services, how often they order, and what their special requests or needs might be — creating a database of all your customer interactions.

In addition, developers are always finding new integrations among devices (from desktop to mobile) and among business applications. ERP vendors are constantly looking for the tools and techniques to give businesses an advantage in a data-driven world.

How Does ERP Work?

To accommodate the diverse needs of buyers, vendors offer on-premise, hosted, and cloud-based solutions to meet organizational implementation goals. Most ERP systems are based on a modular platform that vertically integrates elements — from the payroll and staffing requirements of an HR department to procurement and warehousing capacity, sales and marketing, contract lifecycle management (CLM), and administration.

ERP modules are designed for many business processes, such as inventory control and finance, and can be bundled together for your business. The benefit of an ERP solution is that the modules have a consistent look and feel, so everyone from the back office to the front office to the production floor has the same experience. These modules are integrated to ensure you have a shared system of data and workflows, as well as standardized business processes.

One of the numerous goals of an ERP system is to lower operational costs by eliminating redundant systems and tasks, improving workflow, enhancing efficiency, and encouraging cross-functional collaboration and communication. ERP systems also furnish the reports that reveal opportunities for insight, growth, and planning. An ERP system integrates modules into a consistent infrastructure and typically features the following:

  • Modules ranging from distribution and supply-chain management to human resources and payroll to project management and finance
  • Ability to capture transactional data, using radio frequency identification (RFID) scanners, readers, and tills
  • “Clean” data that avoids duplication and offers a standard source for all your business decisions
  • Data services that provide interfaces or functionality for your customers, vendors, and staff
  • Real-time data and dashboards for key metrics
  • Specialized data and analytics that track trends and ROI on your marketing efforts
  • Advanced planning and scheduling (APS) systems
  • A shared or common database with standardized data
  • A consistent look and feel for all modules in the ERP system, reducing training time, and improving staff performance
  • A services knowledge base or vendor forum, offering community support among all the customers using a particular ERP system

ERP began as a tool for manufacturing, but has been adopted by industries that provide services as well as finished goods. A strong ERP system combines integration, real-time operational support, and a centralized database. That centralized database will possess modern conveniences such as dashboards, cross-functional operations reporting, and instant views of the organization as an entire, integrated unit. However, a centralized database poses one risk: It can open the company to the threat of losing sensitive information in the event of a security breach.

ERP system solutions, software, and tools fall into several categories, based on their size and the complexity of the businesses they serve:

  • Tier I: A single-solution or general ERP. These systems, from the likes of Oracle or SAP, are designed for large organizations that need integration across a global structure, including large federal agencies. These typically adapt to the processes across industries and have the capacity to customize depending on industry requirements. These ERPs handle multiple languages, currencies, alphabets, and accounting regulations.
  • Tier II: Industry-specific or vertical ERP. These systems, such as Microsoft Dynamics or Epicor, focus on serving a single industry, such as construction, retail, or grocery. They also serve business units of global companies, as well as state and local governments, but lack some of the global capacity of Tier I solutions.
  • Tier III: Midsize ERP. These handle midsize companies that need few global functions.
  • Tier IV: Small-business ERP. These systems, such as PeopleSoft, offer one or two business processes, such as accounting, rather than a fully integrated solution. You can add other options as needed, or you can combine vendors to provide the services you need without buying unnecessary modules.

enterprise resources planning project

According to  Gary McTall, Co-Founder and Chief Technology Officer at GovSense , “Top-tier ERPs of the future must fulfill these three criteria.” He lists them as the following:

  • Have a flexible framework for innovation, such as point-and-click customization, a graphical workflow, or a true-cloud solution.
  • Possess effective compliance and controls, such as a rule-driven reporting engine that runs in accordance with multiple accounting standards (GASB, GAAP, IFRS), role and permission controls, and audit trails.
  • Offer real-time reporting that includes personalized dashboards and financial analytics.

The Leading Enterprise Resource Planning Vendors

According to most industry sources, including Gartner Research, the leaders in ERP solutions are SAP (which developed the first ERP system in 1972) and Oracle. Today, these companies continue to be the two largest providers of ERP solutions offering in-house and cloud-based technology. Gartner’s Peer Insights also cites Microsoft Dynamics, NetSuite, and Sage among the industry leaders, especially for organizations seeking small and medium-sized cloud-based solutions.

Industry-Specific Enterprise Resource Planning Solutions

The trend for developing industry-specific solutions is growing rapidly. Hundreds of ERP solutions are available; many apply generally to all industry verticals, while others possess industry-specific functionality/modules (healthcare, manufacturing, retail, government, or technology). It’s essential to evaluate your processes and determine whether a generic solution will meet your needs prior to selecting a vendor. A Software Advice analysis using Gartner's research methodology found almost 600 ERP software solutions currently available in the marketplace, offering a vast array of choices to fit any organization’s needs.

enterprise resources planning project

Angela Nadeau, CEO of CompuData Inc ., discusses the varying industry needs: “Each industry and business is different, with disparate operational requirements, variations in general accounting requirements, and industry-specific regulations. These needs will drive the transition to an appropriate ERP solution.”

Countless ERP solutions can meet the needs of all types of organizations, even in niche businesses. Here are some examples of how ERP software can meet market needs:

  • Construction: Construction is a complex project, with general contractors scheduling and managing subcontractors and all the materials needed to deliver a project on time and on budget. ERP project management allows contractors to track material delivery, schedule subcontractors, and post costs and billing.
  • Production: ERP modules can provide product lifecycle management (PLM), helping you guide a product from beginning to end, especially through design, manufacturing, and service. ERP solutions can synchronize your production process and provide quality control.
  • Procurement: While many early ERP systems focused on back-office systems, the next generation of modules integrates with supplier-relationship management (SRM), making it easier for you to work with outside vendors and your customers. Just as you would track inventory for your production and manufacturing, ERP systems allow you to track products and supplies across business lines, as well as monitor vendors and get the best value for the volume of materials you buy.
  • Distribution and Transportation: Starting with the distribution center, an ERP system can track the location and inventory of any ship, truck, or delivery, using real-time lookup and check-in. The software can also coordinate the timing of trucks that need to meet ships on the dock to receive timely deliveries, cutting the costs of waiting either in unloading or loading, as well as saving employee time in scheduling deliveries and pickups.
  • Manufacturing: Real-time ERP solutions manage the process from the time an order is placed until it is shipped. ERP triggers the production schedule, aligns it with other orders in progress, and adjusts if you encounter any delays. ERP modules are key in supply-chain management (SCM), helping you monitor your stock levels and find items in your warehouse.

The Advantages of Enterprise Resource Planning Solutions

Data is the lifeblood of any organization. It helps you track your revenue, your materials, your resources, and your performance. It helps you identify the areas for growth and reduce your costs. Here are the ways your company can benefit from the data insights that ERP offers:

  • Lower Your Operational Costs: ERP systems track your manufacturing production, customer service, purchasing, and more. With real-time data, you can see where operating costs are over or under budget, and how delays or bottlenecks can affect your costs. You’ll also have real-time inventory reports, pricing sheets, and customer data.
  • Automate Order Processing: Are you still manually creating, entering, tracking, or fulfilling orders? ERP solutions automate the process, offer e-commerce systems so that customers can order and pay online, and validate billing, order tracking, and payment. You will also be able to configure pricing and track revenue from invoice through payment or cash receipt.
  • Improve Project Management and Collaboration: By reducing the number of systems your organization uses to develop and manage products, you can work across departments to ensure key benchmarks, deliverables, and budgets are aligned with the project goals. Everyone will have access to the same data to offer and share business insights.
  • Integrate Financial Reporting: Marketing, sales, and finance all work within a single system to track revenue and expense. Accounting no longer has to reconcile reports.
  • Standardize Procurement: In large organizations, various cost centers and business units frequently buy resources independently of one another. An ERP system will unify your purchasing, resource, and vendor tracking to save time and money.
  • Enhance Government Reporting: For public sector organizations, ERP software will help you fulfill compliance requirements such as accounting and auditing, data security, and supply-chain sourcing.
  • Strengthen Security: A strong ERP system offers advanced user access and permission settings, keeping your data under virtual lock and key. Your sensitive information is no longer scattered in individual folders or computer hard drives. And everyone has access to the data they need, without opening up the data they don’t.
  • Standardize HR Information: ERP software enables you to automate the lifecycle of any employee, from recruiting to onboarding to training and development. ERP software can include payroll management, performance appraisals, and time tracking.
  • Empower Employees: When employees no longer have to work with inefficient systems, they can focus on the work, driving revenue and helping you retain focused, fulfilled staff.

You can use ERP to improve your corporate performance and governance in several ways. Data will show you where your business needs to grow or innovate, as well as help you control or reduce costs and risk. You gain business intelligence (BI) to get a truer vision of your company’s health and standing.

Advantages also include better cross-function communication and reporting, improved customer service management, better and more efficient operational management for procurement, inventory, sales tracking, and streamlined operations. Utilizing BI via predictive analytics allows for effective identification and implementation of new initiatives and opportunities for stability and growth.

According to Anderson, “Although ERP systems have many bottom-line advantages, the most compelling reason to pursue an ERP system is to gain a cross-functional — and even cross-organizational — platform to support scalable business growth.“

The Disadvantages and Challenges of Enterprise Resource Planning Solutions

On the other hand, an ERP solution can be a large and expensive initiative. It requires a lot of time, planning, and money to unify all your systems in one ERP solution. Expenses include the capital and software needed for functionality, as well as the consultants, in-house IT personnel, and administrators to manage the system. Many challenges in implementing an effective ERP system stem from hidden costs resulting from insufficient planning.

Once a business deploys ERP, users can utilize the system and maximize its functions, but there is often a lack of corporate policy to protect the integrity of the data in the ERP systems and the ways in which it is used. The key is to first plan proactively, recognize the elements of operational and cultural change, and assign the appropriate assets and human capital to the project. Oversight in these areas is the main reason for costly delays and financial overruns.

Almost as important as integrating systems is to identify any independent businesses that should not be included in the solution. If you include truly independent lines, you can create functionality, add unnecessary processes, and face unnecessary dependencies in your data gathering and reporting to fit the ERP rather finding a system that meets your business needs. Be sure that you buy the right ERP system, or combination of systems, that serve your business and strategy.

No system will align perfectly with your business right out of the box. Your business is unique, and your solution should fit your business. You will need some level of customization to integrate your systems with the ERP modules and may use third-party vendors to fit your particular needs. Be sure you have identified core business processes that require a minimal amount of customization and support. Too much development will cost you time and money in the long run.

Another widely recognized roadblock to ERP success is failing to provide sufficient training and education. As with all organizational or cultural change, supplying the tools to understand, comfort, and familiarize staff with the benefits and logistics of the new process is critical to gaining buy-in. And the time you spend on training takes away resources from the day-to-day operation of your business.

The most cited reasons for unsuccessful ERP implementation are the failures to do the following:

  • Adequately identify your needs
  • Understand the processes that need to change
  • Assign the right team or resources
  • Overcome resistance about changing systems
  • Resolve disputes among departments about sharing sensitive data
  • Install processes to ensure proper governance over the way data is gathered and entered into modules

If you are changing ERP solutions, be aware that the switching costs can boost the vendor's negotiating power, resulting in increased cost for support, maintenance, and upgrades.

McTall says the most common challenge his organization encounters is “difficulty in staying the course after we’ve defined the requirements. At GovSense, we leverage Smartsheet to help our customers organize, manage, and rank their requirements. Having a single source of truth throughout the project helps mitigate the risks.”

Is Your Company Ready for ERP? An Implementation Checklist

According to “ A Framework for Applying CSFs to ERP Software Selection ,” a study conducted by Rekha Gupta and S. Kazim Naqvi, “ERP implementation is believed to be a high-risk investment process, as it requires substantial financial commitments and has an inherent high-failure probability.” Organizations that carefully plan their search, purchase, and implementation of an ERP solution are able to minimize many of the most common risks mentioned above. Utilizing the McKinsey 7s model, a 2011 framework for assessing ERP readiness calls for the following actions when planning an ERP implementation:

  • Strategy: Align the goals of the ERP system with the overall business strategy.
  • Structure: Identify the decision makers and elements of coordination and alignment.
  • Systems: Analyze the needs of IT, usable/important data, and business processes.
  • Style/Culture: Make the appropriate changes in alignment or business culture to adopt ERP.
  • Staff: Select the right project team and provide support.
  • Skills: Provide the training and education to acquire or improve the necessary skill sets.
  • Shared Values: Adopt the elements to assure buy-in, including overall business commitment.

Once you decide to proceed with implementing or improving an ERP solution, consider the following actions:

  • Assigning an executive sponsor to lead the implementation of the ERP solution and provide oversight and direction, as well as remove any obstacles
  • Developing a dedicated team of IT and non-IT professionals to lead the initiative
  • Analyzing the current system and areas that need improvement
  • Identifying the best deployment option for your business (SaaS/cloud vs. on-premise)
  • Investigating industry options, vetting vendors, and obtaining references
  • Planning the costs realistically (hardware, software, change management, staffing, and training)
  • Creating a training protocol for ongoing education and user buy-in
  • Planning for the data transfer (what information to import to the new system and why)
  • Preparing a reasonable and actionable time frame before going live

Many of these considerations are dependent on the size of your business, the business units requiring support, and industry vertical. Factors such as general or industry-specific solution, and cloud, SaaS, or on-premise deployment will all be a large part of the decision-making process.

For example, you'll need to think about how you want data from the plant floor to be shared throughout your system. You have several options for data integration:

  • Direct integration connects the equipment on the plant floor with other vendors' equipment and products.
  • Database integration connects plant floor data to other systems through staging tables in your database.
  • Enterprise appliance transaction modules (EATM) communicate with the plant-floor equipment and your ERP system through web services, software interfaces, or a staging table. These are typically an off-the-shelf solution.
  • Custom integration solutions can be tailored to your specific business, but can cost more or require more maintenance.

Enterprise Resource Planning Best Practices

Much of your readiness assessment will vary based on your industry vertical. Industry- focused ERP software vendors place best practices procedures and reporting in many of the modules. Part of due diligence is identifying the reporting needed for function areas, such as quality and regulation. Many ERP solutions have financial and compliance reporting functions that are germane to a certain industry. The right system can assist and provide data to support issues of proper data storage and security, financial reporting, and ISO support, as well as the banking considerations of IFRS, Basel II, and Sarbanes-Oxley. Regulations and industry standards are part of the ERP software, which automates your need to monitor and review compliance in your business.

Best Practices for Implementing Your ERP Solution

When you’re ready to implement your ERP solution, one key to success is how well you migrate the data into your new system. Plan for success by identifying which data will need to move, determining and establishing a timeframe for migration (including when you will "freeze" the data and not allow more to be included in systems you will be shutting down), creating templates for migrating key data, establishing the key business accounts for those who will need immediate access to the data, and designating policies and procedures for archiving the data.

The Evolution of Enterprise Resource Planning

Gartner’s “postmodern ERP,” which recognizes that a one-suite solution may not always be in a company’s best interest, effectively articulates the continuing evolution of ERP, building on Forrester’s prediction that SaaS-based ERP adoption would rise 21 percent annually through 2015. In the same year, a survey by the Aberdeen Group found that about 90 percent of companies have implemented ERP.

A departure from a single-vendor approach, postmodern ERP advocates a multitiered plan that can solve many pertinent issues by integrating disparate systems and scaling for growth. This approach is especially useful for companies or divisions with remote teams or that are in the midst of corporate mergers and acquisitions. The key to postmodern ERP is striking the right balance between components, software, hardware, and modules, all while managing the complexity that can come with integrations.

The Future of Enterprise Resource Planning

The traditional ERP implementation was large, complex, and primarily accessible to enterprise-sized organizations. But the size of these legacy systems also meant that businesses struggled to keep them updated.

According to an article by Ron Gill, “ Why Cloud Computing Matters to Finance ,” “About two-thirds of midsized businesses are running old versions of their enterprise resource planning system. In some cases, it’s software that’s three or more versions old. This is the legacy of decades of on-premise (in-house) software deployments, incremental releases that never seemed worth the pain of a major upgrade migration project, and the fear of losing critical customization.” The article outlines the costs and inefficiencies of the continuous repair of large, complex, out-of-date systems.

Traditional ERP systems are installed on a company’s computers and servers, usually for a one-time license fee, with additional costs for upgrades, support, and training. These on-premise, or on-prem, systems, are typically considered a capital expenditure because of the up-front costs.

Cloud-based software works differently. The software is hosted on the ERP vendor’s servers and businesses access the data through a web browser and, increasingly, through mobile apps on phones and tablets. These ERP solutions can be installed quickly since they don’t require expensive hardware purchases, and pricing is based on a monthly or annual subscription, with additional fees for support, training, and updates. Many businesses initially were concerned about data being stored outside their own servers, but improved security and other benefits are speeding the adoption of cloud systems.

enterprise resources planning project

According to  Peter Contreras, P&G’s ERP Oil and Gas, Aviation, and Consumer Goods Project Manager , “These multiphased, multiyear, multi-million-dollar projects that were hugely popular in preparation for Y2K are diminishing due to the demand for a more agile approach to technology, including apps that act as more user-friendly components of ERP solutions.”

Projections for cloud-based ERP solutions are between $25-30 billion over the next five years, according to “ State of Enterprise Resource Planning Security in the Cloud,” a 2018 report by Cloud Security Alliance.  

Different types of cloud systems store and provide access to your data and ERP solution.

  • Software as a service (SaaS) hosts your software and applications, providing all the maintenance and upgrades, which you access through a subscription
  • Infrastructure as a service (IaaS) is more like a cloud-based data center, offering servers, storage, and networking.
  • Platform as a service (PaaS) provides virtual environments for developing, testing, and managing applications, without the need for related infrastructure such as servers and databases.

Some providers offer a hybrid, or two-tier, ERP approach. Some applications are on-premise, and some live in the cloud. Companies can maintain their legacy ERP system while giving individual business lines access to nimble cloud solutions, gaining the overall benefits of ERP while distributing their effort across platforms.

As technology continues to evolve, more people have the power of computing in smaller devices. Mobile ERP apps give everyone access to real-time business data (such as sales, manufacturing updates, and customer tracking) in their phone or tablet. Social tools integrate sharing with ERP solutions. The Internet of Things (IoT) makes access to data faster, better, and universal among your company.

ERP providers have adapted their offerings to meet the demands for agility and mobility. As SaaS and subscription-based cloud technologies find greater acceptance, many small and medium-sized companies can take advantage of cost savings by eliminating expensive hardware expenditures, complex licensing, and maintenance.

McTall echoes the demand for cloud ERP solutions: “Cloud ERP enables organizations to manage IT costs, optimize operational efficiency, streamline order management and procurement processes, eliminate manually intensive, spreadsheet-based reporting, and improve employee productivity, while shifting ERP expenses to OpEx rather than CapEx.”

Today’s ERP systems are shedding their reputation for costly, time-consuming, and rigid deployments, while continuing to solve and improve upon key business functions like data integrity and process efficiencies. As the world moves through the era of digital transformation, businesses continue to recognize the need to leverage data to maintain or achieve a competitive advantage. Current ERP systems provide visibility, coordination, integration, and versatility. Future systems will offer the enhanced functionality, flexibility, reporting, and centralized data vital to meet the competitive demands of business.

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Enterprise resource planning for project management

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Is your company looking for ways to increase workplace efficiencies, improve communications between departments, and reduce costs? If so, enterprise resource planning may be the solution your business has been seeking. The concept of enterprise resource planning, or ERP, has been around for years, but until recently, only large corporations invested in this technology. Today, ERP technology is a $50 billion industry  that even small businesses invest in.

When determining if ERP is right for your company, it’s important to first understand what enterprise resource planning is and how it can help your organization.

What is enterprise resource planning?

Enterprise resource planning is the strategic process of integrating all business-related software and technologies into one single system. For instance, it’s the process of merging the company’s financial software, inventory tracking platform, human resource technologies, marketing tools, and other business systems into one convenient location.

It’s important to note that enterprise resource planning is not a stand-alone application. Instead, each department still utilizes its own systems. The difference is that enterprise resource planning merges these systems into one platform. This integration allows seamless communication between departments and provides business leaders with the real-time data they need when they need it.

Although it’s possible to purchase ERP software with modules for various business functions, such as financial, HR, and inventory management, it can be difficult to find just one platform that meets your company’s needs. The good news is that many tools on the market today integrate with ERP technology. For example, our monday.com Work OS system integrates with numerous platforms, including Slack, Zoom, Canvas, Jotform, Gmail, and CRM systems.

Not only is it important to know what enterprise resource planning is, but you should also know how it works within your business structure.

How does enterprise resource planning work?

Without an enterprise resource planning system in place, what typically happens is that each department uses its own software platform to manage its everyday tasks. For instance, the financial department uses accounting software, the sales team may use a CRM system, and inventory managers might still be using Excel spreadsheets.

While these systems often provide efficiencies within each department, communication between departments isn’t as seamless. In fact, business leaders often must manually request the data and reports they need and then wait to receive this information. Enterprise resource planning software avoids these steps by merging every department’s business management software into one primary platform. By regulating who has access to various data points, ERP integration provides leaders with the business intelligence they need to make informed decisions.

ERP technology can be set up on an on-premises or cloud-based basis. While both types bring efficiencies to core business processes , such as workforce planning, budgeting, forecasting, and inventory control, cloud-based systems allow workers to access the data they need from their computers or mobile devices, including laptops, smartphones, and tablets. This mobility enables your team to track operations on any device, from any location.

To get a better understanding of how enterprise resource planning works, see the following examples.

Enterprise resource planning examples

The best way to grasp how enterprise resource planning can help your company is to look at a few examples of the technology in action.

A prime example of ERP technology in action is the merger of inventory tracking systems with accounting software. Many companies, especially smaller businesses, are still using Excel spreadsheets to track inventory. While this process may appear to be efficient, it lacks the ability to provide real-time data and fails to tie financial data to inventory management. ERP can help companies avoid these issues by merging inventory management and accounting software into one centralized platform.

Another good example is a company looking to expand its operations. Without an ERP system in place, business leaders must request various reports and information for different departments and manually merge the information. This process can both be time-consuming and lead to input inaccuracies. Enterprise resource planning removes this step by allowing business leaders to access the data they need from one central platform.

Enterprise resource planning is ideal for basic business management processes, and it can also streamline the project management process from start to finish.

Using enterprise resource planning for project management

One of the top benefits of enterprise resource planning is that it can significantly improve the project management process. Merging all aspects of a project into one central platform — including budget details, proposals, invoicing and billing, timelines, contracts, and deadlines — allows the entire team to stay up to date.

ERP can assist with all stages of the project management process, including planning, analysis, design, development, testing, implementation, and ongoing maintenance.

Not only can ERP technologies improve project management efficiencies, but they can also reduce costs, maintain compliance, enhance team collaboration, and ultimately improve project outcomes. To reap these rewards, it’s crucial for your business to understand how to maximize the use of enterprise resource planning.

How to make the most of enterprise resource planning

ERP implementation offers a wide range of benefits, including:

  • Workplace efficiencies : ERP software can improve workplace efficiencies by streamlining business processes and automating many tasks.
  • Improve accuracy : ERP technology can improve accuracy by reducing the number of times data is inputted.
  • Real-time data : With one common database to store all information, business leaders from all departments have access to the real-time data and business insights they need to make informed decisions.
  • Compliance : An ERP platform can ensure compliance with everything from OSHA to GAAP to GDPR.
  • Enhanced communication:  One of the best benefits of ERP software is that it provides seamless communication between departments and executive leaders.
  • Cost savings : An investment in ERP technology can provide an excellent return on investment.

As with most business practices, the level of benefits achieved depends on the success of ERP implementation. To maximize the use of ERP technology, it’s important to develop an implementation strategy that meets the needs of the company as a whole.

Start by assessing the needs of each department. For example, determine what data each department should collect and store, what technology is needed to analyze this data, and what business functions automation can handle. You also need to determine if the technologies already in place are efficient and if they’re compatible with your ERP system. If not, you may need to add additional ERP modules.

There are also a variety of tools and resources your company can use to maximize the use of its ERP system. For example, our OS Work platform offers a variety of tools your company can use.

Enterprise resource planning on monday.com

Our monday.com Work OS integrated systems help companies improve efficiencies with everything from project management to resource management .

In fact, our project management system not only allows you to create customized dashboards, it also provides a tool for seamless collaboration, automation, and real-time tracking. It gives your teams one centralized location to plan and monitor your projects from start to finish.

Our monday.com Project Management feature is ideal for:

  • Project planning
  • Customer projects
  • Project dashboards
  • Time management
  • Strategic planning

If seamless communication, improved efficiencies, and cost savings sound great, ERP implementation may be right for your company.

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Frequently asked questions

What does erp stand for.

ERP stands for enterprise resource planning, which is a strategy businesses use to merge all business technologies into one convenient platform. Through this merger of technology, business leaders can easily share information and access protocols to ensure leaders have access to the right data, at the right time.

What is ERP implementation?

ERP implementation is the process of developing and executing an enterprise resource planning strategy. This process includes acquiring all necessary ERP modules, technologies, and tools for each department and integrating these tools into the centralized ERP system. This isn’t a one-time process but rather an ongoing strategy to merge as many platforms as possible into the main ERP platform.

What does ERP stand for in business?

ERP is an acronym used in many industries. However, when it comes to business, ERP stands for enterprise resource planning. This business practice is the strategic process of merging all company software, including inventory management software, CRM platforms, and workforce monitoring systems, into one central platform.

Is it time to invest in enterprise resource planning?

The popularity of ERP systems and advancements in technology have made enterprise resource planning more affordable and an ideal option for businesses of all sizes. If your company can benefit from management systems that improve efficiencies, streamline communications between departments, and reduce costs while improving performance, an investment in a centralized ERP system, along with integrated tools, is an ideal choice.

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Enterprise Resource Planning (ERP): Meaning, Components, and Examples

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What Is Enterprise Resource Planning (ERP)?

Enterprise resource planning (ERP) is a platform companies use to manage and integrate the essential parts of their businesses. Many ERP software applications are critical to companies because they help them implement resource planning by integrating all the processes needed to run their companies with a single system.

An ERP software system can also integrate planning, purchasing inventory, sales, marketing, finance, human resources, and more.

Key Takeaways

  • ERP software can integrate all of the processes needed to run a company.
  • ERP solutions have evolved over the years, and many are now typically web-based applications that users can access remotely.
  • Some benefits of ERP include the free flow of communication between business areas, a single source of information, and accurate, real-time data reporting.
  • There are hundreds of ERP applications a company can choose from, and most can be customized.
  • An ERP system can be ineffective if a company doesn't implement it carefully.

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Understanding Enterprise Resource Planning (ERP)

You can think of an enterprise resource planning system as the glue that binds together the different computer systems for a large organization. Without an ERP application, each department would have its system optimized for its specific tasks. With ERP software, each department still has its system, but all of the systems can be accessed through one application with one interface.

What Does ERP Do?

ERP applications also allow the different departments to communicate and share information more easily with the rest of the company. It collects information about the activity and state of different divisions, making this information available to other parts, where it can be used productively.

ERP applications can help a corporation become more self-aware by linking information about production, finance, distribution, and human resources together. Because it connects different technologies used by each part of a business, an ERP application can eliminate costly duplicates and incompatible technology. The process often integrates accounts payable, stock control systems, order-monitoring systems, and customer databases into one system.

How Does It Work?

ERP has evolved over the years from traditional software models that made use of physical client servers and manual entry systems to cloud-based software with remote, web-based access. The platform is generally maintained by the company that created it, with client companies renting services provided by the platform.

Businesses select the applications they want to use. Then, the hosting company loads the applications onto the server the client is renting, and both parties begin working to integrate the client's processes and data into the platform.

Once all departments are tied into the system, all data is collected on the server and becomes instantly available to those with permission to use it. Reports can be generated with metrics, graphs, or other visuals and aids a client might need to determine how the business and its departments are performing.

A company could experience cost overruns if its ERP system is not implemented carefully.

Benefits of Enterprise Resource Planning

Businesses employ enterprise resource planning (ERP) for various reasons, such as expanding, reducing costs, and improving operations. The benefits sought and realized between companies may differ; however, some are worth noting.

Improves Accuracy and Productivity

Integrating and automating business processes eliminates redundancies and improves accuracy and productivity. In addition, departments with interconnected processes can synchronize work to achieve faster and better outcomes.

Improves Reporting

Some businesses benefit from enhanced real-time data reporting from a single source system. Accurate and complete reporting help companies adequately plan, budget, forecast, and communicate the state of operations to the organization and interested parties, such as shareholders.

Increases Efficiency

ERPs allow businesses to quickly access needed information for clients, vendors, and business partners. This contributes to improved customer and employee satisfaction, quicker response rates, and increased accuracy rates. In addition, associated costs often decrease as the company operates more efficiently.

ERP software also provides total visibility, allowing management to access real-time data for decision-making .

Increases Collaboration

Departments are better able to collaborate and share knowledge; a newly synergized workforce can improve productivity and employee satisfaction as employees are better able to see how each functional group contributes to the mission and vision of the company. Also, menial and manual tasks are eliminated, allowing employees to allocate their time to more meaningful work.

ERP Weaknesses

An ERP system doesn't always eliminate inefficiencies within a business or improve everything. The company might need to rethink how it's organized or risk ending up with incompatible technology.

ERP systems usually fail to achieve the objectives that influenced their installation because of a company's reluctance to abandon old working processes. Some companies may also be reluctant to let go of old software that worked well in the past. The key is to prevent ERP projects from being split into smaller projects, which can result in cost overruns.

Employing change management principles throughout the ERP life cycle can prevent or reduce failures that compromise full implementation.

Some familiar names are leaders in ERP software. Oracle Corp. ( ORCL ) originally supplied a relational database that integrated with ERP software developed by SAP ( SAP ) before entering the broader enterprise market in a big way in the early 2000s. Microsoft ( MSFT ) has long been an industry leader, with many customers using multiple software applications from the company.

As cloud-based solutions have grown in popularity in recent years, the traditional ERP industry leaders have seen challenges from upstarts such as Bizowie and Workwise.

ERP Examples

Fulton & roark.

Men's grooming product maker Fulton & Roark successfully implemented enterprise resource planning to better track inventory and financial data. Like many other businesses, the North Carolina company used spreadsheets to track inventory and accounting software to record financial data.

As the company grew, its processes lagged. Their antiquated inventory tracking system did not account for changing costs, and the accounting software could not record the metrics needed for key financial statements. These breakdowns created manual processes, which further compromised time and resources.

To eliminate unnecessary processes and centralize work, they chose the Oracle NetSuite ERP system. Immediately, Fulton & Rourk was better able to identify accounting errors related to inventory, eliminate costs from employing third parties to evaluate their financial records, and better report financial positions.

Cadbury, a global confectioner and maker of the popular chocolate Cadbury egg, also successfully implemented an ERP system. The company had thousands of systems but could not keep pace with its rapid growth and used ineffective warehouse management systems.

It implemented a system that integrated its thousands of applications, standardized processes, and restructured warehouse management systems—breaking down silos for seamless, integrated coordination of work.

What Is the Importance of Enterprise Resource Planning?

Enterprise resource planning software offers single-system solutions that integrate processes across the business. These applications allow users to interact within a single interface, share information, and enable cross-functional collaboration. They increase productivity, collaboration, and efficiency.

What Are the 5 Components of ERP?

The components of an ERP system depend on the organization's needs. However, there are key features that each ERP should include. Generally, packages include finance, human resource, logistics and manufacturing, supply chain management, and customer relationship management.

What Are the Types of ERP?

Generally there are three deployment options for ERP systems; Cloud-based, on-premise, and a hybrid of the two. Within these options, a business can choose from hundreds of types such as finance, supply chain management, and human resource management.

What Are the 2 Main ERP Applications?

Which ones are the main applications depends on the business and the industry it operates in. Most companies can benefit from supply chain management, logistics, and financial applications to help them streamline their operations and expenses.

Enterprise resource planning (ERP) manages and integrates business processes through a single system. With a better line of sight, companies can better plan and allocate resources. Without ERP, companies tend to operate in silos, with each department using its own disconnected system.

ERP systems promote the free flow of communication and sharing of knowledge across an organization, the integration of systems for improved productivity and efficiencies, and increased synergies across teams and departments. However, moving to an ERP system will be counterproductive if the company's culture does not adjust to the change and the company does not review how the structure of its organization can support it.

Oracle. “ Oracle for SAP Technology Update ,” Page 42.

Microsoft. “ Annual Report 2021 .”

Workwise. “ About Us .”

Bizowie. “ A Different Kind of Enterprise Software Company .”

Oracle NetSuite. “ Fulton & Roark .”

Oracle NetSuite. “ 3 Successful ERP Implementation Case Studies .”

Microsoft. “ Mondelēz International Moves to Microsoft Azure for Great SAP Performance and AI Innovation .”

SAP. “ How Does Support From a Dedicated Engagement Team Accelerate Digital Transformation? ,” Page 3.

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Enterprise resource planning (ERP) is a business management software system that is designed to manage and streamline an organization’s functions, processes and workflows with automation and integration.

A term coined by  Gartner in the 1990s  (link resides outside ibm.com), an ERP software system is designed to manage all parts of a business—finance, HR, manufacturing, supply chain, services, procurement,  supply chain management , product lifecycle management, project management and more—which makes it an essential part of an organization’s daily operations. ERP software consists of business applications that are all connected and share one common database, therefore decreasing the number of resources necessary to run the business end to end.

The business applications, known as enterprise modules, each focus on a specific business area but work together to meet the company’s needs. Since businesses range in size and needs and no two are alike, modules are not a one-size-fits-all approach. A company can pick and choose which modules are best suited for their business.

The best way an enterprise resource planning system can deliver the most value is when a company takes advantage of modules for each business function. By having a central location for all business data, ERP implementation cuts out the silos that complicate data collection and create data duplication challenges for many businesses. The new system (the ERP model) serves as a single-source-of-truth software solution.

ERP software systems come in three different forms:

- A cloud subscription model ( software as a service )

- A licensing model (on premises)

- A hybrid model

Read on for more detail on these three systems and the different modules commonly available with an ERP software management system.

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There are three types of ERP software systems: onsite systems, cloud-based systems and hybrid systems. They all differ from one another and have their advantages and disadvantages, depending on business needs and ERP approach. Any of these enterprise resource planning software systems can help a company in decision-making and profitability.

Onsite ERP:  This software, also referred to as on-premises ERP, is deployed onsite and is mostly controlled in-house, or by the company’s enterprise. A business would choose this option if the business wanted to be in total control of the ERP software and security. If you are to choose this ERP software option, it would require a dedicated IT resource on-premises to handle the technical and application maintenance.

Cloud-based ERP:  The cloud-based ERP system, often referred to as software-as-a-service or SaaS, means that a third party is managing the ERP software in the cloud. Using technologies such as  artificial intelligence  (AI) and  machine learning , this flexible option system can provide greater automation efficiencies and allow employees to search through organizational data on any device through the internet. IBM®, Infor, Microsoft, Oracle and SAP offer new ERP solutions.

This is a popular model for ERP software due to its scalability, agility and lower cost. The main disadvantage is the security risk that you take when trusting an ERP vendor. The data for your business is sensitive and requires careful handling.

Hybrid ERP:  This system is for companies looking for characteristics of both an onsite and SaaS model to meet their business requirements. In this model, some of the ERP applications and data will be on the cloud and some are on premises. This can sometimes be referred to as a two-tier ERP.

ERP systems are based on various different modules that are there to support specific business processes. There are a select number of modules that are foundational to an ERP system and there are third-party applications to access additional features. Some of the most popular modules are listed below and give you deployment options.

Finance and accounting:  The finance and accounting module is often most important to many ERP systems. The main purpose of this module is to help businesses understand their financial outlook and analyze the whole business. The main features of this module are tracking accounts payable (AP) and accounts receivable (AR), while also closing the books efficiently and generating financial reports and pricing. This module can automate tasks related to billing and stores crucial financial information for your business, such as vendor payments, cash management and account reconciliation. It also provides clear metrics to a company and can aid in production planning operations.

Procurement:  The procurement module, or purchasing module, helps businesses source materials and services they need to manufacture their goods. This module helps automate purchasing, along with tracking and analyzing any incoming quotes. With the procurement module, companies can maintain a list of vendors and tie suppliers to certain items, which can in turn forsters good supplier relationship.

Manufacturing:  The manufacturing module, often referred to as a manufacturing execution system, is a vital planning and execution component to ERP software. The module helps manufacturers plan out production and secures everything needed for production. A manufacturing module can update the status of goods-in-progress, along with providing real-time information for items in progress or finished goods. The module also typically includes material requirements planning (MRP) solutions, which was the original manufacturing system of toolmaker Black and Decker. 1

Sales:  The sales module is responsible for keeping an open line of communication to customers and prospective customers. It can use data-driven insights to increase sales and make targeted decisions and assist with invoicing when it comes to promotions or upselling opportunities. Other features, including supply chain solutions, offer helpful inventory management and order management include dashboards, greater business intelligence and Internet of Things (IoT) technology.

Customer relationship management:  The  customer relationship management  (CRM) module, or service module, helps companies deliver exceptional service. By storing customer information, such as previous calls, emails and purchase history, a business has the data it needs to better serve current and future customers. This module makes it easy for staff to access the required information when a customer comes in and sees that staff create a customer-specifc experience thanks to the data saved from the ERP software.

Human resources management:  The human resources module maintains basic capabilities, such as time, attendance and payroll. This module maintains data on all employees and stores documents that pertain to each of those employees, such as a performance review or job description. If a company wants, it can have an entire  human capital management  (HCM) suite and connect it to ERP to deliver even stronger HR functionality. 

While stand-alone accounting software and ERP software do present similarly, the two systems are different. It comes down to what each software system can do and cover. Accounting software typically covers financial reporting, accounts payable and receivable, banking and basic sales revenue information.

Meanwhile, modern ERP software includes a wide range of modules that can reach every aspect of your business. Accounting is just one module in a long list of other features that ERP technology can provide. The ERP software is built for industry-specific requirements and can be molded to fit almost any company’s needs.

Accounting software has other limitations in terms of sales, customer relationship management and real-time data accessibility. The ERP software has modules specific to sales management and isn’t siloed to what accounting software can do. ERP integrates all financial information into one database and can be done in the cloud for easy accessibility.

If your small business is expanding rapidly, it may outgrow traditional accounting software and the business may want to seek out accounting data in one software package, such as ERP. Having all its data centrally located is key for small and big businesses to gain insights and having a multitude of modules available through an ERP software can help you as your business changes.

The benefits of ERP are wide-ranging, with the most prominent being increased productivity, reduced operational cost, flexibility and integrated information. The business intelligence ERP deployment offers is much more substantial than traditional accounting software offerings.

The need for accurate, real-time data is essential to almost every business, no matter the industry. Here are some businesses that rely on ERP solutions.

Utilities:  A utility company is constantly reviewing its capital assets. Therefore, organizing such assets  without ERP  can be challenging. The ERP software can also help utility companies forecast demand for future services and replace aging assets.

Service companies:  Companies such as accounting, tax, engineering and other professional service firms require ERP software that is powerful and delivers real-time data when needed. Professional service businesses can’t afford to experience delays. ERP software helps them stay on schedule and reduce cost and resource utilization.

Wholesalers:  For most wholesaler and importer businesses, reducing distribution costs and increasing inventory are two key elements of success. The best way to keep a business in order and running efficiently is through ERP software with modules customized to its needs. With it, wholesalers can get a handle on inventory management, purchasing and general logistics for their business.

Retailers:  A lot of purchasing is done online thanks to e-commerce and other sales channels, which have changed the retail landscape substantially in recent years. Retail businesses are dependent on integrated data as they need ERP software to provide self-service options to customers. The ERP solutions can assist with purchase orders and warehouse management. Retailers can also benefit from ERP to boost their customer return rate and improve webite conversions.

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1   MRP, JIT, OPT, FMS?  (link resides outside ibm.com), Harvard Business Review, September 1985

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Streamline your business’ tech stack with enterprise resource planning

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Enterprise resource planning is the process of merging company software and applications into a single, centralized platform. By consolidating your tech stack, you can reduce process inefficiencies and bring all your organization’s work together in one place. Coordinate, collaborate, and communicate—without switching tools. 

All that app switching adds up. Companies with large tech stacks see more business inefficiencies and lowered productivity. That’s where enterprise resource planning comes in. 

What is enterprise resource planning?

Enterprise resource planning (ERP) is the process of integrating all company software and business-related applications into a single platform. For example, ERP implementation might involve merging an organization’s customer relationship management software, financial management technologies, HR tools, and other business-critical software systems into a centralized location. This allows teams to access the company’s tools in one place, cutting down on timely manual tasks while increasing visibility and cross-team collaboration. 

Here’s what ERP doesn’t do: it doesn’t replace your business systems. Each department can still use their preferred tools—but instead of existing in a silo, the tools now exist in a single location. This makes it easier for teams to communicate across departments and see what work is getting done around them.

Not all enterprise resource planning systems are equipped to meet business needs. One ERP solution is to merge your tools into a comprehensive work management platform like Asana, which can integrate with key business tools and systems like Slack, Zoom, Dropbox, Microsoft Teams, Google Workplace, Salesforce, Jira, and more.

How does enterprise resource planning work?

Have you ever stopped to count how many systems your organization uses? The number might be higher than you expect. Think about the last time you needed to solve a problem with a tool—did you consider using your existing systems, or just tack on new tech to solve the problem? Often, companies adopt technology without evaluating the tools already in place, or thinking about how they work together. The result is a large, siloed—and costly—tech stack.

And there’s no way around it—the more tools you have, the larger the cost to productivity. Our research found that consistent app switching—caused by too many tools that don’t work together—leads to disconnected information, duplicative processes, and less efficiency. Plus, app switching is causing employees to work longer hours , potentially leading to higher employee attrition and productivity loss.

Enterprise resource planning combats this by consolidating all existing business applications and tools into one centralized platform. When everything is in one place, anyone in your organization can work from this single, united system—no matter what team they’re on. The result is streamlined business processes, reduced inefficiencies, and easier communication. Plus, ERP helps your employees better understand how their work connects to the organization’s high-level goals—which increases employee engagement and leads to high-impact work. 

Enterprise resource planning example

Let’s say your engineering team manages their workflow in an engineering-specific tool, like Jira. While the tool is perfect for their needs, your business team isn’t in Jira, which makes communication between the teams manual and difficult to track. ERP solves this problem by centralizing communication into a single platform. 

Since ERP doesn’t replace existing tools, that means your engineering team can keep using Jira—and now, your business team can effectively connect and communicate with them through the centralized platform. For example, Asana integrates with over 260 tools —including Jira—letting you merge business-critica tools, simplify your tech stack, and streamline cross-functional workflows. 

What are the benefits of enterprise resource planning? 

App switching isn’t just a time-suck—it’s a productivity killer. Our research found that 25% of workers who use more than 16 apps said they miss messages and actions ( compared to 8% using 1–5 apps and 15% using 6–15). Plus, 23% of these workers said their attention span was reduced because of app-switching.

That’s where enterprise resource planning can help. By consolidating the number of tools your organization uses, you can reduce redundant work, minimize app switching, and simplify collaboration. Other benefits of ERP include:

Streamlined business processes. By consolidating all your business tools into a centralized platform, you can standardize and automate core business processes. That gives your team more time to focus on achieving high-impact work—in fact, enterprise companies stand to gain 264 hours per year by improving business processes. 

Connect employee work to organizational goals. Often, employees feel disconnected from topline goals and can’t conceptualize how their work connects to larger, organizational goals. By tracking goals where work gets done , ERP helps employees see their work in context, so they can effectively prioritize work that ladders up to important goals. 

Real-time visibility into projects and workflows. With ERP, your entire organization works from a centralized platform, which gives employees greater visibility into what other teams and colleagues are working on and why that work matters.

Consolidated reporting and data collection. When all your work happens in the same place, you can easily pull data from any project or team. Instead of manually piecemealing information together from multiple sources—like spreadsheets and emails—you can use reporting tools and dashboards that let you access data in real time. 

Reduced operational costs. Consolidating the number of tools in your tech stack doesn’t just make work more manageable—it also saves the business money. ERP helps you audit your tools and eliminate outdated or redundant tech, cutting down on operational costs. Plus, since ERP translates to streamlined business processes and increased employee productivity, you can minimize inefficiencies that ultimately cost the company time and money. 

Improved cross-team collaboration. One of the most challenging aspects of communicating across multiple teams is coordinating across different tools. ERP solves this by providing a single collaboration hub for all communication—no matter what team you’re on. 

Improved security. Data security is top-of-mind for business leaders, and for good reason. Cyberattacks can have devastating consequences for businesses, including financial repercussions and loss of customer trust. By eliminating subpar, unvetted tools and taking advantage of a secure work management platform , you can keep data secure and meet compliance requirements. 

Increased productivity and team-wide focus. By streamlining business processes and automating recurring tasks, ERP reduces manual work and allows teams to focus on producing high-impact work. Plus, consolidating your tech stack has a positive impact on engagement—our research found that 17% of people at enterprise companies say that fewer apps would improve their focus.

Enhanced team visibility. ERP consolidates where work is done, giving teams greater visibility into what’s happening around them and keeping everyone on the same page about organizational goals and project progress.  

Who is enterprise resource planning for? 

Any company that uses multiple tools across departments can take advantage of enterprise resource planning. While ERP is undeniably useful for larger companies with larger tech stacks, small businesses and startups that use diversified tools across departments can also benefit from merging them into a single source of truth. 

Signs that your company should look into ERP include:

Your company is growing or has outgrown old processes or tools. 

You have a large tech stack spread across different departments such as finance, human resources, supply chain management, IT, marketing, and project management. 

Your organization’s current systems don’t integrate with each other. 

Your employees don’t understand how their work supports organizational goals. 

You’ve seen an increase in process inconsistencies or incorrect reporting data.

Your business is experiencing a loss of productivity as a result of overtooling and app switching. 

You rely on outdated or subpar systems for communication and collaboration, such as spreadsheets and docs. 

You or your team spend an oversized amount of time on admin or manual tasks that could be automated.

Fewer silos means fewer inefficiencies 

No matter how big or small your company is, the more tech you use the more room there is for redundant processes and business inefficiencies. Enterprise resource planning streamlines your business operations by merging all your tools and applications into a single, centralized location.

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Oracle Analytics for Cloud ERP complements the embedded analytics in Oracle Cloud ERP to provide prepackaged use cases, predictive analysis, and KPIs based on variance analysis and historical trends.

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2022 Magic Quadrant for Cloud ERP

Find out why Oracle was named a Leader in the 2023 Magic Quadrant ™ for Cloud ERP for Service-Centric Enterprises, placing highest in “Ability to Execute” and furthest right in “Completeness of Vision.” *

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Find out why Oracle was named a Leader in the 2023 Magic Quadrant ™ for Cloud ERP for Product-Centric Enterprises—for the fifth time. **

Complete cloud ERP with built-in artificial intelligence

Predict, detect, and act on new situations.

No one likes big deltas between forecasts and actuals. Most models though are too limited, relying on sample datasets or just gut feel. Oracle Cloud ERP introduces machine-learning to predictive planning and forecasting so you can utilize broader datasets, reveal hidden bias, uncover significant deviations, and speed your overall response time.

Automate and eliminate your manual business processes

Spend less time compiling data and more time understanding what it tells you. Whether preparing your narrative for the street or assessing potential M&A activity, Oracle Cloud ERP gives your team more time for strategic work by automating the most time-consuming, mundane business processes. With AI, up to 96% of transactions can be automated.

Simplify and speed everyday work

Oracle’s AI-powered digital assistant simplifies and speeds common tasks, allowing you to ask simple questions like “what’s the status of my open purchase requisitions?” and “what reconciliations are due today?” Personalized tasks like invoices or over-budget notifications are delivered to you proactively, so approvals move faster too.

Launch new business models, faster

Staying ahead of customer trends and emerging competitors gets harder every day. With Oracle cloud ERP, it's easier to identify and launch new business models—and monitor results in real time so you can constantly refine your approach. Paired with machine learning insights like customer churn, you'll predict and avoid problems before they can do harm.

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Learn why almost 10,000 leading corporations worldwide trust Oracle to run their mission-critical business functions.

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** Gartner® Magic Quadrant™ for Cloud ERP for Product-Centric Enterprises, 2023 Published: 3 October 2023.

Analysts: Greg Leiter, Robert Anderson, Dixie John, Tomas Kiensat, David Penny

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What Is Enterprise Resource Planning (ERP)?

Enterprise resource planning (ERP) is software developed to manage and optimize business operations and processes. Learn all about ERP, its benefits, and whether it’s right for your business.

[Featured Image]:  A male, wearing a yellow jacket, is sitting at his desk, working on his laptop and his desktop.

Enterprise resource planning (ERP) is software that helps businesses manage day-to-day operations, such as inventory management or accounting. ERP can be beneficial for your organization because it acts as a centralized, common database that cross-functional teams can access for their specific needs.

While big companies have long used ERP to manage their processes, more and more small businesses are also adopting ERP to boost efficiency and sustainable growth. In this article, you'll learn more about what ERP is exactly, its benefits, how it work, and what industries use it today.

What is ERP?

Enterprise resource planning (ERP) is software, tools, and technology used to manage daily business operations and automate processes, such as accounting, supply chain, manufacturing, managing projects, and more. ERP systems have different modules that perform these functions.

ERP streamlines and integrates all of a company’s data into one database system that acts as the single source of truth, so data can be saved and accessed in one place. These software systems automate tedious and time-consuming manual processes to save companies time and money.

For a more in-depth look at enterprise resource planning, watch this video:

Origins of ERP

As early as the 1960s, businesses started using computers for their accounting and finance solutions [ 1 ]. When the manufacturing industry started booming in the 1980s, new software was invented to integrate all of these processes in one place. In the 1990s, ERP was introduced, combining accounting, finance, sales, manufacturing, inventory, human resources, and project management.

Cloud ERP software emerged in the early 2000s, and today, machine learning and other supplemental technologies are helping companies run even more efficiently to measure up against the competition.

ERP system examples 

Popular examples of ERP include Systems Analysis and Program Development (more commonly known as SAP), Oracle ERP, and Microsoft Dynamics 365.

Businesses use these systems to centralize data and leverage the data analytics inherent within them to equip their teams with actionable insights. For example, a business might use an ERP system like Microsoft Dynamics 365 for customer relationship management by centralizing customer lead data for both the sales and marketing departments. Using the implemented ERP, consequently, the team will be able to close sales faster, employ targeted digital marketing efforts, and reduce costly inefficiencies. 

Benefits of ERP

Overall, enterprise resource planning helps organizations save time and money. Here are some main advantages of ERP:

Save time and money: ERP software tools help businesses plan, forecast, and operate faster, so that they can expand and gain profitability.

Automate processes: Automating an organization’s processes gets rid of redundant and inefficient workflows, which improves productivity and creates space for growth and innovation.

Centralized system: With management systems (modules) for all departments in one place, teams can easily access real-time data across the organization. Reporting is streamlined and accessible by all.

Secure, accurate data: Not only is data secure on the database system, and much more accurate than if it was input manually, but it's also available in real-time. Data, such as procurement or sales, can be tracked and monitored. Reports can be generated immediately, which is useful for planning, forecasting, budgeting, and communicating insights to shareholders and teams.

Cloud-based accessibility: Most ERP systems are now cloud-based, or at least have the option of being accessible on a cloud, so that teams can access them anytime, anywhere.

Collaboration and knowledge sharing: ERP helps integrate all teams, which enables collaboration and sharing of knowledge across the organization. Companies can grant organization-wide access, and this visibility contributes to workplace cohesion and harmony.

How does an enterprise resource planning system work?

If companies need to use seven different systems to automate their workflow and production, then employees need to learn (and toggle between) multiple software tools just to get a simple task done. 

ERP provides a central database system that streamlines all that data and planning in one place. Modules might include:

Supply chain management

Inventory management

Project management

Human resources

Warehouse management

Finance and accounting

Risk management

Sales orders and planning

Business intelligence

Data analytics

Research and development

Types of ERP

There are three types of ERP available for businesses to use: on-site systems, cloud-based systems, and hybrid systems. Each type of ERP has its own advantages and disadvantages and is best suited to different use cases. At a glance, here’s what you need to know about each one:

On-site ERP

The most traditional kinds of ERP are those that are housed on-site at a business’ physical data center. For an ERP housed at a business’s premises, the business must maintain and implement the system itself, rather than relying on online solutions. ERP of this kind are some of the earliest systems, which rose to prominence in the 1990s when the internet was just beginning to develop.

Cloud-based ERP

Today, many ERP systems are housed online in “the cloud” rather than directly within a business’ physical data center. The benefits of cloud-based ERPs are that they can centralize all of a business’ relevant data online and make it available to employees around the world. Systems are also routinely updated by service providers and are often equipped with artificial intelligence and advanced analytics capabilities, such as predictive modeling. 

Hybrid ERP 

Hybrid ERPs pair on-site ERP systems with cloud-based ones. Businesses that have invested significantly in their on-site system or house sensitive data on-site may pair such systems with those in the cloud to maintain the benefits of updated cloud systems without having to sacrifice what they already have in place.

Types of industries

ERP software can benefit most industries because a majority of organizations require the use of systems to help manage their operations. The following are examples of industries that have many moving parts and especially benefit from ERP:

Manufacturing 

Health care

E-commerce businesses

Construction

Transport and logistics

Food and beverage

Hospitality

Telecommunications

Media and entertainment

Non-profit organizations

Careers that use ERP

There are several career paths that utilize ERP software as a part of their role. Here’s a look at four of them.

Data architect: A data architect is often in charge of implementing data and information architecture in an ERP. These individuals are adept at systems engineering and architecture and applying these to data strategy operations. A cloud architect is similar but uses cloud-based ERP systems.

Business analyst: A business analyst is responsible for solving internal problems, so they will implement strategies to improve business operations, including the use of ERP systems and tools. If a company is already using ERP, an ERP operations analyst may be hired to advise staff on developing new workflows to optimize operational capacity. 

Database administrator: A database administrator focused on ERP will help a particular team with technical support and maintenance for their ERP system. This role might focus on the ERP system as a whole, or a specific module supporting the procurement team, for example. Using SQL , the database administrator might optimize procedures, objects, and functions within the system.

Project manager: A project manager (or technical project manager ) that focuses on ERP helps teams or organizations manage the implementation or enhancement of using ERP systems. They understand deeply the various applications of ERP software and help coach employees toward their goals by boosting productivity and organization. 

Learn ERP with Coursera

Are you ready to dive into enterprise resource planning? Get to know tools and software that can help you land a fulfilling career in cloud-based operations and strategy.

The highly-rated Information​ ​Systems Specialization from the University of Minnesota offers the opportunity to learn the frameworks needed to implement and integrate ERP into business strategy. You’ll be able to evaluate whether ERP is needed and how to develop the appropriate IT infrastructure that will allow the ERP (and business) to thrive.

Article sources

SAP. “ What is ERP? , https://www.sap.com/insights/what-is-erp.html.” Accessed January 5, 2023.

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Only 20 percent of companies manage to capture more than half the projected benefits from ERP systems.

By taking a business-driven approach to ERP investments, and placing them in the context of the client's global operating model, we can ensure that business needs and the ERP program are aligned, creating annual benefits of $100 million in some cases.

We focus on a few large structural and process improvement levers such as finance shared services, straight-through order processing, and harmonized customer and purchasing data, where the trade-off between customization and standardization must be evaluated.

Our diagnostics for different business functions help predict the value at stake (at an automotive manufacturer the ERP value diagnostic helped increase the annual rate of return for the business case by 15 percent), and a proven project setup and execution methodology makes sure you realize the value. This is especially important as all too often it is in the later stages of implementation and rollout that organizations fall short of maximizing potential.

By helping build capabilities with a proven change-management program, we help realize the full benefits of such a large-scale IT program over time.

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ERP tutorials

Enterprise Resource Planning (ERP) is a software solution whose primary goal is to help companies streamline operations and increase productivity. Using the right ERP tool, software development organizations can automate their core business processes, such as accounting and finance, human resources, customer relationship management, and more. That being said, implementing and maintaining an ERP solution is an involved process and teams should take a thoughtful approach when implementing enterprise resource planning tools to ensure a successful outcome.

Read: Best Critical Path Analysis Tools

Strategies for Implementing Enterprise Resource Planning

In this tutorial we highlight 10 tips and strategies for incorporating Enterprise Resource Planning into your business, including:

  • Identify and document your business needs
  • Choose the right ERP software and tools
  • Meet with stakeholders
  • Create a project plan
  • Train your team on the new ERP solution
  • Test the ERP tools
  • Monitor the ERP software
  • Customize the system
  • Consider cloud-based ERP solutions and other alternatives
  • Evaluate and optimize the ERP software and tools

Identify and Document Business Needs

Prior to choosing ERP software or tools, project managers should analyze the needs of their company, its business processes, and identify any areas that need improvement or that could benefit from Enterprise resource planning. With this information in hand, it will be much easier to choose the right ERP solution for your business.

To do this, take a long hard look at you current business processes. Review the overall business operations, look for areas of inefficiency, and identify any pain points that may cause roadblocks or that need to be addressed.

Once you have completed your assessment, it is time to evaluate potential ERP software and tools. Seek out ERP systems that match your business goals and project objectives. Make sure the ERP options have features and integrations that meet the needs of your business.

Budget is always a key factor as well when deciding on Enterprise resource planning software. ERP tools, in general, vary greatly in price, and choosing a system within your budget is essential. Note, however, that the most cost-effective option is not always the right option, and project managers should weigh heavily the value of cost over features and needs. Keep in mind, too, that the ERP software can actually reduce costs in your business and help improve productivity and efficiency, which equate to further cost savings.

Choose the Right ERP Tools and Software

There are plenty of ERP tools on the market and choosing the one that fits your business requirements can be complicated. To make the issue even more difficult, you may find that your organization needs multiple ERP software and tools, adding to research time and investment. To help minimize the risk of choosing the wrong ERP software, create a checklist of the items you business needs based off of the business process audit we suggested you conduct in our first tip. Then, check user reviews for individual ERP tools, look at their features, and ensure they line up to your needs.

In general, you will want to consider factors including:

  • Business size/number of employees
  • Business processes
  • Specific needs (for instance, do you need a customer relationship management feature?)
  • Scalability of the software to ensure it matches your future growth plans

We have a great article that highlights some of the Best ERP Software and Tools to help you narrow down your options.

Vault ERP Tool

Meet with Stakeholders

Implementing ERP software can be challenging and it will likely involve many stakeholders, each of whom have different backgrounds, ideas, and technical knowledge. Because of this, project managers will want to carefully choose key employees to include in the decision, and determine which vendors, customers, and partners to evaluate when implementing your ERP processes and workflows.

The benefit of involving stakeholders is that you can make certain everyone is on the same page and mitigate misunderstandings. You can also use this opportunity to set expectations, gather feedback, and review suggestions, all of which will be useful when it comes to customizing the ERP software to match your business needs.

Create a Project Plan

Incorporating ERP software requires careful planning and execution. As such, project managers should create a project plan that outlines the steps involved, timelines, resources required, and specific milestones.

A good project plan will include a contingency plan to handle unexpected issues or roadblocks that may arise during implementation as well. With a well thought out project plan, project managers can ensure that the ERP implementation process goes smooth and stays on track.

Train Employees and Stakeholders

Enterprise resource planning software and tools are only as good as the people using them. Implementing ERP solutions often involves fundamental changes to pre-existing business processes and workflows, which will likely cause some short-term turmoil. Because of this, training employees and stakeholders on the new ERP software is key to ensuring a smooth transition.

In an ideal world, employees and stakeholders will receive training that covers every aspect of the ERP tool, including its features, functionality, how to use it, and who to contact should issues arise. Plan on providing continuous training and support so that employees are better able to adapt to the new system. In addition, be sure to include a process for the onboarding of new employees so that they understand the processes and workflows as well.

Read: Tips for Managing Stakeholders

Test the ERP Tools

Before setting your ERP solution into the wild, be sure to test it thoroughly and make sure it meets your business needs, is free of errors, and functions correctly.

ERP testing should cover all aspects of the software, including its modules, interfaces, and third-party integrations. Conduct user experience testing as well to ensure it meets the needs of your employees and key stakeholders. The last thing you want is to unleash a clunky tool to your team after investing money and time choosing an option.

Other tests to consider include:

  • Unit Testing: Unit Testing is where you test individual modules or components (or units) to ensure they work as expected.
  • Integration Testing: Integration testing is used to evaluate the actual integration of the ERP software with other systems, tools, third-party integrations, and applications you rely on to ensure they work together seamlessly.
  • User Acceptance Testing (UAT): UAT is a process where you allow real users to use the ERP system to make sure it meets their needs, has all of the features they require to do their job, and is easy to use.
  • Performance Testing: Performance testing involves monitoring the applications performance under different scenarios to ensure it can handle anticipated workloads. Using an application performance monitoring (APM) tool can be used to get a better insight into ho the software functions.
  • Security Testing: Lastly, security testing looks at the security features (such as role-based access and user authentication) to see if they are robust enough and are able to protect your business and customer data from unauthorized use or access.

Monitor Performance

Once your ERP platform is live, it is essential to monitor its performance and make sure it is functioning as anticipated and that it is meeting the needs of your company. Create performance metrics and report on them regularly so you can identify issues or bottlenecks in performance. As with any software, routine maintenance and upgrades are a best practice to keep your system running smoothly and take advantage of the latest features, as well as keep security up-to-date.

Customization

Part of the benefit of good ERP software is the fact that it can be customized to meet your company’s unique needs. Be certain to create custom reporting, forms, workflows, and functionality that match your business processes.

Customizing an ERP tool is achieved through the addition or modification of features, third-party integrations and functionalities. A caveat, however: make sure the customizations and add-ons you incorporate do not negatively affect the overall performance or stability of the system.

Typically an ERP vendor will work with you or your development team to customize the software based on your criteria. This customization may require configuring the system settings, purchasing new equipment or equipment upgrades, or coding custom modules or integrations – all of which comes at a further investment.

Consider Alternative ERP Tools

As the world continues to embrace remote work – and remote software development especially – cloud-based ERP solutions are becoming more popular. Cloud-based ERP software has many benefits to consider as these remote teams become more common, including scalability, flexibility, and accessibility.

Cloud-based ERP tools allow teams to access business data and applications from anywhere, at any time, using most popular architecture options (Windows, Mac, Linux. Tablets, Mobile devices) so long as it has an Internet connection. Project managers can also scale system resources up or down as business needs change, making it more cost-effective than traditional on-premise solutions.

Evaluate and Optimize

Implementing Enterprise resource planning is an on-going process. Because of this, project managers need to periodically evaluate and optimize their ERP software and tools.

Regular audits of the ERP software should be conducted to identify areas that can be improved. Tweaking system settings, optimizing workflows, and upgrading system modules or add-ins are all art of this auditing and optimization process.

Evaluating and optimizing your ERP system on a scheduled basis helps ensure that it continues to meet your needs and performs optimally.

Final Thoughts on Enterprise Resource Planning Tips

Implementing a new ERP solution can be a complex and challenging process; however, following the tips in this project management tutorial can help project managers ensure a successful outcome. Identifying your unique business needs, choosing the right ERP software and tools, getting feedback from stakeholders, creating a project plan, training stakeholders, testing the system, monitoring its performance, adding customizations and optimizations, and never ruling out ERP alternatives are some of the essential ERP tips that can help you make the most out of your new ERP software.

Finally, never forget that implementing ERP is not a one-time process; it requires ongoing effort to ensure that the system continues to deliver the desired results. Project managers should work with their ERP vendor to optimize any ERP software and keep it up-to-date with the latest features, updates, and integrations. Using the right ERP tools and Enterprise resource planning approach, you can streamline business processes and workflows, increase productivity, and drive down costs within your organization.

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ERP Project Manager Job Description

An ERP (Enterprise Resource Planning) Project Manager is responsible for overseeing the implementation of an ERP system in an organization. The ERP Project Manager must work closely with stakeholders, including the executive team, department managers, IT personnel, and end-users, to ensure the ERP system meets the organization's requirements and objectives. The ERP Project Manager is responsible for the successful implementation of the ERP system within budget, on schedule, and to the satisfaction of stakeholders.

Key Responsibilities:

What are the roles and responsibilities of an erp project manager.

Project Planning and Management: The ERP Project Manager is responsible for creating and maintaining a comprehensive project plan that outlines the project's scope, schedule, budget, and resources required. They must also establish a project team, define roles and responsibilities, and create a communication plan that includes regular status updates and stakeholder engagement. The ERP Project Manager should monitor progress, identify risks, and develop mitigation strategies to keep the project on track.

Stakeholder Management: The ERP Project Manager must work closely with stakeholders, including the executive team, department managers, IT personnel, and end-users, to ensure the ERP system meets the organization's requirements and objectives. They must develop and maintain relationships with stakeholders, communicate project updates, and manage expectations to ensure stakeholder satisfaction.

Budget Management: The ERP Project Manager must establish a project budget, track costs, and report on budget variances. They must work with stakeholders to identify cost-saving opportunities and develop contingency plans to manage project costs effectively.

Risk Management: The ERP Project Manager must identify project risks and develop contingency plans to mitigate these risks. They should be proactive in identifying risks and work with stakeholders to develop a risk management plan that includes risk assessment, risk response, and risk monitoring.

Resource Management: The ERP Project Manager must manage project resources, including project team members, vendors, and contractors. They must ensure that the project team is appropriately staffed, trained, and motivated to achieve project objectives. They must also manage vendor and contractor relationships to ensure that deliverables are met within budget and on schedule.

Quality Management: The ERP Project Manager must ensure that project tasks are completed on time and to the required quality standards. They must establish quality control processes, conduct regular quality audits, and work with stakeholders to develop corrective actions when necessary.

Change Management: The ERP Project Manager must develop a change management plan that includes stakeholder engagement, communication, and training to ensure that end-users are prepared for the new system's implementation. They must also manage changes to the project scope, schedule, and budget, and ensure that stakeholders are informed of these changes.

Qualifications:

What qualifications and education do you need to have as an erp project manager .

• Bachelor's degree in Business Administration, Computer Science, or related field. • 5+ years of experience in project management, including experience managing ERP implementations. • PMP certification or equivalent project management certification preferred. • Strong leadership and communication skills. • Ability to manage multiple projects and prioritize tasks effectively. • Knowledge of ERP systems and implementation methodologies. • Knowledge of project management tools and software. • Experience managing cross-functional teams. • Strong analytical and problem-solving skills. • Strong attention to detail. • Ability to work independently and in a team environment. • Ability to work under pressure and manage tight deadlines.

Working Conditions:

The ERP Project Manager will work in an office environment, although remote work may be an option in some cases. The ERP Project Manager may be required to work outside of normal business hours to accommodate project deadlines and stakeholder availability. The ERP Project Manager must be willing to travel occasionally to meet with stakeholders, attend training sessions, or manage project resources.

How much do ERP project managers earn? How much should you pay an ERP project manager? What is the salary of an ERP PM?

The salary for an ERP Project Manager will vary depending on experience and location, but typically ranges from $90,000 to $140,000 per year. In addition to salary, ERP Project Managers may be eligiblefor bonuses and other benefits such as health insurance, retirement plans, and paid time off. The salary may also be higher for ERP Project Managers with advanced certifications, extensive experience, or working in high-cost-of-living areas.

Career Path:

What is the career path of an erp project manager how can an erp project manager advance.

An ERP Project Manager can advance their career by taking on larger and more complex projects, managing multiple projects simultaneously, or moving into a senior management role within the organization such as CIO. They can also specialize in specific ERP systems or industries to become an expert in their field, whether in SAP , Oracle , Microsoft or other popular ERP systems. Alternatively, they may choose to become a consultant or work for a vendor that provides ERP system implementation services.

Concept photo of a cheerful afro american woman standing under rain with money on gray background

Which ERP Project Manager is right for your organization?

It's important that when selecting an ERP project manager, that you make the right choice. 

We believe that this comes down to selecting based on key qualities and attributes, such as:

1. Technology Specialization

Every ERP system tends to have it's own unique implementation methodology, quirks and best practices for implementation. Each ERP also has a unique ecosystem of consultants, implementation partners and more. 

It certainly improves your odds of success by choosing an ERP project manager that specializes in the ERP system you're choosing to implement, such as SAP, Microsoft, Infor, Workday or Oracle.

2. Industry Specialization

An ERP system for a manufacturing company is radically different to an ERP which suits a services organization or a pharmaceutical company. Your industry will determine the type of ERP requirements your business has, some of the complexities associated with implementing an ERP system within your business and more. 

It's a great idea therefore to choose an ERP project manager with specialization within your specific industry vertical.

3. Cultural Fit

An ERP project manager is going to be the interface between your organization and external ERP consultancies and service providers. Your ERP PM will guide your teams through one of the most stressful and risky processes a business can go through.

For the success of your ERP project, you must hire an ERP project manager who is a good cultural fit with the rest of your organization and most importantly your ERP project team itself.

Why hire an ERP Project Manager?

A company would hire an ERP (Enterprise Resource Planning) project manager for several reasons, including:

Implementing an ERP system: ERP systems are complex and involve several departments and processes within an organization. A project manager with experience in implementing ERP systems can help ensure the project is completed on time, within budget, and with minimal disruption to the organization.

Streamlining business processes: An ERP system is designed to integrate all the core business processes into a single system, including finance, human resources, sales, and supply chain management. An ERP project manager can help streamline these processes by identifying areas for improvement and implementing best practices.

Maximizing the ROI: ERP systems are a significant investment for any organization, and a project manager can help maximize the ROI by ensuring the system is implemented correctly, on time, and within budget. They can also help identify areas for cost savings and increased efficiency.

Managing change: Implementing an ERP system involves significant change management, including training employees, communicating changes, and addressing resistance. An ERP project manager can help manage this change by developing a comprehensive change management plan and ensuring employees are adequately trained and supported throughout the implementation process.

Ensuring compliance: ERP systems often involve compliance with industry-specific regulations, such as Sarbanes-Oxley, HIPAA, or GDPR. An ERP project manager can help ensure the system is compliant with these regulations and implement the necessary controls and processes to maintain compliance.

Overall, an ERP project manager is essential to the successful implementation and management of an ERP system within an organization. They bring expertise, experience, and leadership skills that can help ensure the project is completed successfully, on time, and within budget, while maximizing the ROI and minimizing disruption to the organization.

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Enterprise Resource Planning: Definition, Benefits, and Challenges

Enterprise Resource Planning: Definition, Benefits, and Challenges

Struggling with managing your business operations efficiently? You’re not alone – about 25% of organizations implement Enterprise Resource Planning (ERP) to increase their efficiency.

This article will guide you through the myriad facets of ERP, its benefits, vulnerabilities, applications, ERP meaning, and much more. It will also show you how to define ERP and highlight the various uses of ERP. 

What is an ERP?

How do you define ERP software? An ERP, or enterprise resource planning, is a software or system businesses use to plan and manage their daily activities, such as supply chain management, manufacturing, and financials.

ERP Function

Enterprise Resource Planning (ERP) operates as the digital backbone of any business, seamlessly integrating multiple processes and systems into one efficient platform. Its core function revolves around optimizing business operations by consolidating critical functions such as finance, manufacturing, inventory management, sales, and customer communication into a unified system.

The ERP software successfully automates these complex processes with unparalleled accuracy, significantly reducing the chances of errors while enhancing productivity levels. Beyond just automation, an effective ERP solution analyzes and interprets data from various integrated services to ensure sound decision-making based on real-time insights.

It’s like having a customizable dashboard that offers a holistic view of all key areas in your enterprise for improved overall performance.

ERP Industry Role Models

Leading the way in the successful implementation and utilization of ERP systems, industry role models are pivotal in demonstrating the business-transforming potential of this technology.

Companies such as manufacturing giant Siemens , retail leader Walmart, and financial powerhouse Citigroup are just a few companies that have reaped substantial benefits from their well-executed, ERP integration strategies. They understand how to define an ERP system.

They showcase efficient management information about products, customers, suppliers, and employees, which is a hallmark of successful, enterprise resource planning systems.

These companies didn’t succeed overnight; carefully selecting suitable ERP software was essential to align with each organization’s specific needs and goals. SAP’s global reputation as an effective ERP system stems from its adoption by these leading businesses that utilized it to enhance productivity and streamline operations.

Their stories highlight how investing time in understanding your unique business functions can lead to identifying the right ERP solution capable of driving significant growth and improved efficiency across all departments.

ERP History and Evolution

The journey of Enterprise Resource Planning (ERP) systems as pivotal business tools started in the 1960s, with early models focused on inventory management and control in the manufacturing sector.

Systems known as Material Requirements Planning (MRP) first entered the scene, laying down foundational elements for what was to become ERP. By the late 1970s and into the 1980s, these systems had evolved into Manufacturing Resources Planning (MRP II), which included additional processes like shop floor and distribution management.

In a significant shift during the 1990s, tech consulting firm Gartner coined the term ‘ERP.’ This marked an expansion beyond just resource planning or manufacturing concerns; it paved the way for novel software designed to integrate all core business processes – from accounting to customer relationship management.

For domestic and global businesses alike, ERP systems became vital backbones of operation. Today’s cloud-based ERPs take this integration even further by offering real-time data analytics, enabling decision-making based on current trends rather than historical data.

As we contemplate its trajectory over decades, it is clear that ERP history is woven tightly with market forces and technological advancement – constantly adapting to serve evolving business needs better.

Benefits of ERP

erp

ERP systems improve productivity through accuracy, providing reporting advantages and creating efficiency and collaboration within an organization.

Systems Improve Productivity Through Accuracy

ERP systems are instrumental in improving productivity within organizations by enhancing accuracy. By automating time-consuming tasks and eliminating duplicate information, these systems streamline processes and ensure that data is consistently accurate.

This eliminates the need for manual data entry and reduces the risk of errors, leading to increased efficiency throughout the organization. With ERP software, employees can access real-time data, making informed decisions quickly and effectively.

The availability of accurate information also facilitates better coordination between different business areas, ensuring smooth operations and maximizing productivity across all departments.

ERP Software Provides Reporting Advantages

ERP software provides businesses with numerous reporting advantages. With real-time information and advanced reporting tools, companies can gain valuable insights into their operations.

These reports comprehensively view key performance indicators (KPIs) , business analytics, and other critical data points. By having access to accurate, up-to-date information, decision-makers can make informed choices that drive growth and efficiency.

Additionally, ERP systems provide a single source of truth with one integrated database for all business processes. This centralized approach streamlines data collection and eliminates the need for manual data entry or multiple spreadsheets, ensuring accuracy and consistency in reporting.

ERP Solutions Create Efficiency and Collaboration

ERP solutions are designed to streamline business processes and foster collaboration within organizations. By implementing an ERP system, businesses can achieve greater efficiency in their operations.

The software integrates different departments and functions onto a centralized platform, eliminating the need for manual data entry and redundant tasks. This automation reduces errors, saves time, and allows employees to focus on more value-added activities.

Additionally, ERP solutions facilitate collaboration by providing real-time access to information across teams and locations. This ensures everyone is working with accurate and up-to-date data, promoting effective communication and teamwork.

Enterprise Resource Planning Vulnerability

Today, with the increasing reliance on technology and interconnected systems, enterprise resource planning (ERP) systems have become more vulnerable to cyberattacks. These vulnerabilities arise from the fact that ERP systems are often connected to the Internet, providing potential entry points for hackers.

Businesses must be aware of these vulnerabilities and take measures to protect their ERP systems.

One common challenge is applying patches without customization. Customers find it difficult to update their ERP software due to extensive customizations, which can leave them exposed to known vulnerabilities.

Additionally, weak password policies and lockout mechanisms are among the common weaknesses found in ERP systems, making unauthorized access easier for attackers.

Organizations need vulnerability management processes to handle these disruptions and ensure data security in ERP systems. This involves regularly testing the system’s security measures and identifying any weak spots or vulnerabilities that may exist.

By implementing best practices for ERP security, such as strong password policies and regular updates of both software and hardware components, businesses can close gaps and better protect against potential attacks.

In conclusion, securing ERP systems is of utmost importance in today’s digital landscape. These vital platforms require robust protection against cyber threats to safeguard both sensitive data and overall business operations.

The Significance of ERP in Modern Industry

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What is the ERP business meaning? Well, ERP plays a significant role in modern industry, enabling centralized data management and integration, streamlined business processes and workflows, improved decision-making and strategic planning, enhanced collaboration, and communication, as well as scalability and flexibility in adapting to industry changes.

Centralized data management and integration

Centralized data management is a critical component of enterprise resource planning (ERP) systems in today’s industry. With ERP, organizations can gather and store data from various departments and functions in one centralized database.

This enables seamless information flow and visibility across the entire enterprise, improving efficiency and decision-making. By integrating people, processes, and technologies within a single platform, ERP ensures that accurate and up-to-date data is readily available to support key business operations.

With centralized data management and integration at its core, ERP empowers businesses to streamline their operations and achieve cross-departmental visibility like never before.

Streamlined business processes and workflows

Streamlined business processes and workflows are essential for the success of any organization. With ERP software, companies can integrate various departments and functions into a unified system, eliminating redundancy and improving efficiency.

As an enterprise resource planner, ERP enables smoother operations and faster decision-making by automating manual tasks and providing real-time data visibility. This streamlining saves time and reduces errors, helping businesses achieve higher productivity levels.

With better collaboration across teams and improved communication channels, organizations can ensure that their workflows are optimized and aligned with their overall objectives. Companies can streamline their business processes by implementing ERP systems to drive growth and profitability.

Improved decision-making and strategic planning

One of the key benefits of implementing an ERP system is the improvement it brings to decision-making and strategic planning within an organization. With real-time access to accurate and updated data from various departments, managers can make informed decisions based on facts rather than assumptions.

This allows them to analyze trends, identify patterns, and forecast future outcomes more effectively. By having a comprehensive overview of their business operations, leaders can develop robust strategies that align with organizational goals and stay ahead of the competition.

ERP enables proactive decision-making by providing managers with timely information at their fingertips, empowering them to take decisive actions when needed. With better analytics capabilities offered by ERP systems, businesses can leverage data-driven insights for more successful strategic planning project management and execution.

Enhanced collaboration and communication

Enhanced collaboration and communication are key benefits of implementing an ERP system within an organization. By utilizing a centralized database and integrating various departments, ERP enables teams to share information easily and work together more seamlessly.

This promotes effective collaboration across departments, breaking down communication barriers often hindering productivity. With real-time data accessible to all stakeholders, decision-making becomes faster and more informed.

This fosters better teamwork and coordination among employees, allowing them to respond quickly to changing business needs. ERP systems also provide tools for efficient communication channels within the organization, facilitating effective collaboration even in large or geographically dispersed teams.

Scalability and flexibility in adapting to industry changes

Modern businesses must be prepared to adapt to the ever-changing landscape of their industry. One key aspect that sets enterprise resource planning (ERP) systems apart is their scalability and flexibility in adapting to these changes.

ERP software has a modular structure, allowing for easy adjustments and additions. Your ERP system can seamlessly accommodate these changes as your business grows, expands into new markets, or introduces new products and services.

With scalable ERP systems, you can streamline processes, automate tasks, and centralize operations while ensuring efficiency and integration across all departments. This flexibility empowers your organization to stay agile and responsive in an increasingly competitive business environment.

ERP Software Systems and Their Application

ERP software systems are widely applicable in various industries, including building commerce, finance, human resources, manufacturing, and supply chain management.

ERP and Building Commerce

ERP software system plays a crucial role in building and enhancing commerce for businesses. ERP software systems streamline operations and create efficiency by integrating various business processes, such as finance, supply chain management, and customer relationship management.

With its ability to centralize data management and integration, ERP ensures that information is readily available across departments, enabling better collaboration and communication.

This results in improved decision-making and strategic planning. ERP offers scalability and flexibility in adapting to industry changes, allowing businesses to stay competitive in the ever-evolving marketplace.

Financial Benefits of Using ERP Applications

Implementing ERP applications can bring significant financial benefits to organizations. One of the key advantages is improved cost management and reduced operational expenses. By streamlining business processes, eliminating redundant tasks, and automating manual activities, ERP software systems help reduce labor, paperwork, and error costs.

Additionally, these applications provide better control over financial operations, allowing for improved planning and forecasting. With real-time access to accurate financial data, decision-makers can make more informed choices regarding resource allocation and budgeting.

Furthermore, by increasing efficiency and productivity throughout the organization, ERP applications contribute to increased profitability and a higher return on investment. Overall, utilizing ERP software systems can lead to better financial transparency, cost management optimization, and enhanced risk mitigation.

Establishing ERP to Harness Human Resource Potential

ERP systems are not just limited to managing sales, inventory, and finance; they also play a crucial role in harnessing the potential of human resources. Businesses can effectively plan and manage their workforce by integrating HR activities into an ERP solution.

This includes retaining employment history, recording skills, tracking illness, and even automated performance tracking. With dedicated HR modules within ERP systems, companies can streamline processes and improve resource planning and utilization.

The efficient management of human resources is essential for any successful organization, and ERP software provides the tools necessary to achieve this goal.

In addition to managing employee data, ERP applications also enable businesses to support continuous improvement teams through social functionality. This means employees can collaborate more effectively toward achieving common goals while using the ERP system to communicate and share ideas.

ERP and Manufacturing

ERP systems play a crucial role in manufacturing by streamlining operations and optimizing efficiency. By integrating various aspects of the manufacturing process, such as inventory management, production planning, and quality control, ERP software helps businesses improve productivity and reduce costs.

With real-time data accessibility and automation capabilities, manufacturers can make informed decisions to optimize their supply chain, minimize wastage, and meet customer demands efficiently.

Furthermore, ERP systems enable seamless collaboration between different departments within a manufacturing organization, enhancing communication and fostering innovation. By harnessing the power of ERP technology in manufacturing processes, companies can achieve greater operational visibility and control to stay competitive in today’s dynamic market.

Supply Chain Models Using ERP

Effective supply chain management is crucial for businesses to streamline their operations and achieve optimal efficiency. By implementing supply chain models using ERP software systems, companies can seamlessly manage and integrate essential parts of their businesses, leading to better coordination and collaboration across the entire supply chain.

ERP software helps organizations track the movement of goods, connect various sources, optimize inventory levels, reduce lead times, and improve forecasting accuracy. With real-time data and analytics provided by ERP systems, businesses can make informed decisions to respond quickly to changes in demand, supply, and market conditions.

Implementing ERP in supply chain management has numerous benefits – improved operational efficiency, reduced costs, enhanced customer satisfaction, and overall business performance.

The Challenges of Implementing ERP

Implementing an Enterprise Resource Planning (ERP) system can be a complex endeavor with several challenges that organizations face. One of the main challenges is determining which processes should be integrated into the ERP system.

With so many different departments and functions within a company, it can be difficult to identify which areas will benefit most from using the ERP software.

Resistance to change is another common challenge encountered during ERP implementation. Employees may resist adopting new systems and processes due to fear or uncertainty about how their roles will be affected.

Overcoming this resistance requires effective communication and training programs to ensure everyone understands the new system’s benefits and how it will improve their work.

Flexibility is also a key consideration in implementing ERP systems. Organizations need to ensure that the chosen business management software can adapt and evolve as their business grows or changes over time.

Lack of flexibility in an ERP system can limit its effectiveness and hinder future scalability.

Additionally, the cost is often a significant challenge for organizations implementing ERPs. There are expenses associated with purchasing and customizing the software and costs related to training employees, data migration, and ongoing maintenance.

Addressing these challenges requires careful planning, strong leadership commitment, thorough employee training, and selecting an experienced vendor who understands your organization’s specific needs.

By addressing these challenges head-on, businesses can successfully implement an ERP system that streamlines operations, enhances productivity, improves decision-making capabilities, and ultimately drives growth.

Finding an ERP Business Partner and ERP Solutions Expert: Key Tips

  • Look for a partner with experience in implementing ERP systems, as they will have the knowledge and expertise to guide you through the process.
  • Consider the specific industry expertise of the business partner, as different industries may have unique requirements and challenges when it comes to ERP implementation.
  • Check for certifications and qualifications of the ERP solutions expert, such as being a certified consultant for a specific ERP software.
  • Seek recommendations and referrals from other businesses in your industry that have successfully implemented ERP systems.
  • Evaluate the level of support and training the business partner offers, as ongoing support is crucial for a smooth transition and effective use of the ERP system.
  • Take into account the scalability and flexibility of the ERP solution the business partner offers, ensuring that it can grow with your business and adapt to future needs.
  • Assess the cost-effectiveness of partnering with a specific provider, considering both upfront implementation costs and long-term maintenance expenses.
  • Prioritize communication skills and responsiveness when selecting an ERP business partner, as effective communication is vital throughout the implementation process.

Curious about Enterprise Resource Planning (ERP)? Discover the 5 components, benefits, and examples of ERP systems. What is the enterprise resource planning meaning? Get all your questions answered in our comprehensive FAQ section. 

What are the 5 components of ERP?

ERP software consists of five key components that work together to help organizations manage their operations effectively. The first component is Human Resources, which helps with employee data management, payroll, benefits, training, and performance evaluations.

The second component is Customer Relationship Management (CRM) , which enables organizations to manage customer data, sales, marketing, and customer service. Business Intelligence (BI) is another crucial component that allows organizations to analyze and visualize data for informed decision-making.

Supply Chain Management helps with procurement, inventory management, and logistics. Lastly, the Inventory Management System component assists in tracking and optimizing stock levels.

What is ERP, and how does it work?

A software system that enables organizations to coordinate and streamline their different business operations in a unified and effective way is called ERP, or an Enterprise Resource Planning system. It integrates essential functions such as finance, purchasing, inventory management, production, and personnel management into one single platform.

By collecting data from different departments and storing it in a common database, ERP gives leaders a holistic view of the organization’s operations. This allows for better coordination between departments and facilitates informed decision-making based on real-time information.

With features like standardizing processes and automating tasks, ERP streamlines workflows and reduces manual workloads. Overall, ERP improves productivity by eliminating redundant tasks and provides a comprehensive solution to meet the complex needs of modern businesses.

What are the 3 common types of ERP?

Three common types of ERP systems exist: on-premise, cloud, and hybrid ERP. Cloud ERP is a system hosted in the cloud, allowing users to access it through the Internet.

This offers flexibility and scalability as organizations can easily scale up or down based on their needs. On-premise ERP refers to a system that is implemented and maintained within the organization’s premises.

This gives organizations full control over their data but requires more resources for maintenance. Lastly, hybrid cloud based ERP also combines elements of both cloud and on-premise solutions, giving organizations the best of both worlds by allowing them to have a mix of cloud-based and on-site solutions depending on their specific requirements.

What is an ERP example?

An example of an ERP system is SAP, which stands for Systems, Applications, and Products in Data Processing. SAP is a widely used ERP software that helps businesses manage various operations, such as accounting, sales, inventory management, and human resources.

With SAP or other similar ERP systems, companies can streamline and integrate their business processes to improve efficiency and decision-making. These systems provide a centralized database where different departments can access real-time information, enabling better visibility into the organization’s overall operations.

Concluding Thoughts on ERP

In conclusion, enterprise resource planning software (ERP) is a powerful tool that can revolutionize the way businesses operate. ERP systems streamline processes and improve overall efficiency by integrating core functions like finance, HR, and supply chain management.

Not only do they offer benefits such as standardization and integration of business functions, but they also provide valuable insights through centralized data management. With ERP software, companies can make more informed decisions, enhance collaboration among teams, and easily adapt to industry changes.

Successful implementation of an ERP system requires careful planning and choosing the right business partner. Organizations need an expert who understands their unique needs and can provide reliable solutions.

Remember that ERP trends show a surge in digital transformation within organizations – embracing this technology can lead to improved productivity and growth.

Overall, ERP is not just a buzzword – it’s an essential tool for modern businesses. It can transform operations by streamlining processes, improving decision-making capabilities, and fostering collaboration across departments when implemented correctly.

So whether you’re a small start-up or a large corporation looking to stay competitive in today’s fast-paced market, consider adopting an ERP solution tailored to your specific needs – it could be the game-changer your business needs for success in the long run.

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Enterprise Resource Planning (ERP) Software for Project Management

How the right Enterprise Resource Planning (ERP) software can take your Project Management solution to the next level.

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Work with a real time view providing full visibility. Be confident of the status of any project against the Key Performance Indicators (KPIs).

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Drive more predictable project outcomes

Empower project managers to understand how a project is really tracking against its planned outcomes.

Drive project control

Improve overall control of resources including people, materials, logistics and supplies to keep projects on-track.

After a deep evaluation of the vendor market, IFS Cloud was found to provide more powerful support for Ortec Group's multi-site, multi-country operations. IFS Cloud will introduce full visibility into key areas such as asset investment budgeting, risk assessment, materials management, maintenance contract management, project execution and quality assurance.

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Ensure projects are delivered in-line with the requirements and goals of wider programs or strategic business objectives.  

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Implementing HCM before ERP

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Introduction

Oracle’s Human Capital Management (HCM) and Enterprise Resource Planning (ERP) applications share enterprise structures and workers  The single source of truth eliminates the effort, risk, and timing differences inherent in custom integrations.

In our experience, customers often implement HCM before ERP. Hence, enterprise structures defined for HCM may impact a subsequent ERP implementation. In most cases, implementers can adapt existing setups and usage to reflect ERP related requirements. However, a few foundational enterprise structures may present challenges once transactions exist for them.

This post will:

  • Highlight dependencies that you should bear in mind when implementing HCM before ERP.
  • Offer best practices that avoid imposing limitations on your subsequent ERP implementation.

Worker Assignment Business Units (aka HCM Business Unit)

Business units are a key shared enterprise structure. They represent operational departments that perform one or more business functions. Examples of Cloud ERP business functions include Payables Invoicing, Customer Payments and Requisitioning. Business units determine the ledger and hence, chart of accounts of their financial transactions. Not all business units are assigned to a ledger because some business functions and hence, business units do not generate financial transactions. For example, a global procurement business unit that manages suppliers but not financial transactions.

Implementers often refer to the business unit on worker assignments as the HCM business unit although, no HCM business function exists. You can select any business unit no matter which business functions are it has. For more details, see the Business Units section of the Cloud ERP Enterprise Structures White Paper on Customer Connect.

The following features use on the worker assignment business unit.

Worker Assignment Business Units in Cloud ERP

The worker assignment business unit is:

  • An optional reference data determinant for jobs, departments, grades and locations. Reference data sets control lists of values. See the  Reference Data Sets section of the Implementing Applications book for more details.
  • One of the available areas of responsibility (AOR) scopes. Areas of responsibility secure access to worker assignments. See the  Secure Person Records by Area of Responsibility of the Securing HCM book for more details.

When entering expense reports through a self-service user interface, the worker assignment business unit determines the following key expense report features:

  • The expense report’s primary ledger and chart of accounts. If you implement Expenses, you must assign the worker assignment business unit to a primary ledger even if you plan to account for Expenses using a legacy financial application.
  • The expenses template.
  • The expense report’s legal entity which it derives from the worker assignment’s legal employer. Expenses does not use the business unit's default legal entity.

Projects (Time & Labor)

When entering Time & Labor transactions through the self-service user interface, the worker assignment business unit determines its ledger and chart of accounts. Hence, if you implement Time & Labor, the worker assignment business unit must have a primary ledger.

Requisitioning

Procurement automatically grants users access to the primary worker assignment business unit to manage requisitions.

  • Self-service users acquire an entitlement to create requisitions in the worker assignment business unit.
  • Managers acquire an entitlement to report on the data in the worker assignment business unit.

In both cases, you can modify the default security assignments to suit your business requirements. See the Overview of Security for Oracle Fusion Cloud Procurement of the Securing ERP book for more details.

Mass Changes

HCM offers the Mass Change feature to update the worker assignment business unit. In other words, you could modify the configuration and assignments at a later date. Nevertheless, a far reaching re-configuration to align them with ERP’s requirements could be onerous and, in effect, imposes some limitations.

Best Practices for Worker Assignment Business Units When Implementing HCM Before ERP

The worker assignment business unit should be country specific

A worker assignment business unit that extends across multiple countries would oblige the Expenses and Time & Labor business units and hence, ledgers to do the same. While ERP supports this configuration, you should carefully consider its implications for usability and local compliance. For more details, see the Legal Entity Specific Secondary Ledgers section of the Cloud ERP Enterprise Structures White Paper on Customer Connect.

Address requirements for global, regional or division level worker assignment business units as follows:

  • Use the HCM Division enterprise structure to address requirements to report on multinational management entities. For example, to represent a global line of business.
  • Configure reference data sets so that country level worker assignment business units share global regional or division jobs, departments, grades or locations.

Avoid highly granular worker assignment business units

Worker assignment business units that represent many detailed local departments or locations may result in additional setup and maintenance tasks. You must:

  • Assign the Expense Management business function to each worker assignment business unit and, using the service provider model, to each Payables Payments business unit.
  • Create and maintain a separate employee expense template for each worker assignment business unit.
  • Assign the Project Accounting business function to each worker assignment business unit.
  • Duplicate the Project Accounting intercompany setup for each worker assignment business unit.
  • For most workers and managers, explicitly grant access to the Requisitioning business unit.

In the following diagram, the green rectangles represent the worker assignment business unit. On the left hand side, two business units represent multi-country divisions. On the right hand side, the business units represent very granular departments or locations. In the center, there is single a business unit per country.

Worker Assignment Business Unit Granularity Examples

The diagram offers only general guidance. For example, you may decide that the benefit of two or three worker assignment business units per country outweigh the additional setup and maintenance effort.

Do not assign a ledger to the worker assignment business unit until necessary

Cloud General Ledger (GL) strictly controls the changes you can make to a chart of accounts once an account combination exists for it. To avoid limiting design choices when you come to implement ERP, create business units for your HCM implementation’s worker assignments with no business functions and with no primary ledger. When the time comes, you can update business units to add business functions and primary ledgers.

Note: you should never change a business unit’s primary ledger if you have created setups (for example Payables Options) or subledger transactions for it.

Payroll - Ledgers, Calendar and Chart of Accounts

When you implement Payroll before Cloud ERP, the recommended approach depends on whether you account for its results in Cloud GL or a legacy financial application.

Account for Payroll in Cloud GL

If you choose to account for Payroll results in Cloud GL, the Payroll implementation must include shared Cloud ERP enterprise structures: ledgers, calendars and chart of accounts. The Payroll accounting will generate journal entries and balances in Cloud GL.

In effect, when you implement Payroll, you configure your financial enterprise structures. Cloud General Ledger (GL) strictly limits the changes you can make to COA’s and ledgers once they have been used. Hence, you should consider enterprise wide requirements for your future COA.

Account for Payroll in a Legacy Financial Application

If you choose to account for Payroll results in a legacy financial application, the ideal HCM configuration should minimize dependencies on Financials enterprise structures.

  • Do not configure ledgers for your payrolls. Ledgers must have a retained earnings account. GL strictly controls the changes you can make to a chart of accounts once an account combination exists for it.
  • Do not configure internal bank accounts for your payroll disbursements. Internal bank accounts must have a legal entity which is itself assigned to a primary ledger.

Following these guidelines will allow you to delay gathering requirements for financial enterprise structures until the financial implementation gets underway.

Payroll - Costing Key Flexfield

If you choose to account for Payroll results in a legacy financial application, you will configure the payroll cost allocation flexfield to allocate costs to the appropriate legacy analytical and financial dimensions.

When you subsequently implement ERP, you will account payroll costs in Cloud GL. To do this, configure Subledger Accounting rules to map the Payroll cost allocation flexfield to the chart of accounts. Subledger Accounting offers powerful account rules and mapping sets to transform your legacy payroll cost allocation segment values and combinations into General Ledger account combinations.

When you implement Cloud ERP, the cost allocation flexfield may not contain sufficient detail to generate General Ledger account combinations; or the mapping between the legacy cost allocation flexfield and the new chart of accounts is complex and hence, difficult to maintain.

To ensure consistency over time, Payroll prohibits modification of cost allocation flexfield segments. However, it does allow new segments to added. You can take advantage of this to:

  • Support the accounting flexfield’s greater level of detail.
  • Simplify the mapping between the cost allocation flexfield and General Ledger chart of accounts. You can do this, for example, by sharing legal entity, natural account, cost center and other value sets between the two flexfields.

Follow these steps to adapt the Payroll cost allocation flexfield to the General Ledger chart of accounts.

  • Add required new segments to the Payroll cost allocation flexfield. See the Payroll Cost Allocation Key Flexfield Structure section of the Administering Global Payroll Costing book.
  • Reconfigure payroll cost allocation rules to use the new segments where appropriate. Ensure that you update the Suspense Account and Default Accounts in the Payroll, Department Costing, and Costing of Payment Sources. Use date effectivity to ensure an orderly transition to the updated rules. See Payroll Setup for Costing Accounts section of the Administering Global Payroll Costing book.
  • Configure Payroll Subledger Accounting rules to map payroll cost allocation segment values to the corresponding accounting flexfield segments and combinations. See Payroll Setup Tasks for Subledger Accounting section of the Administering Global Payroll Costing book.

When You Implement ERP

Consider these potential issues when you subsequently implement Cloud ERP.

Payroll – Locations

In some geographies, Payroll works in conjunction with location and payroll tax content providers. Since HCM and ERP share locations, the ERP implementation will inherit the same locations. Make sure that you take such dependencies into account before finalizing your global location design.

Approval Workflows

ERP workflows significantly increase the number of workers referenced by Business Process Management (BPM) workflows. When you come to implement ERP, the HR department may need to review the procedures they follow when workers change job or leave the company.

Roles and Privileges

HCM, ERP and Enterprise Performance Management (EPM) share some security privileges. Be aware that reorganizing roles and privileges as part of the ERP implementation could potentially impact other pillar’s users.

Expenses with HCM

Some customers implement Expenses alongside HCM and before other Cloud ERP subledgers such as Procurement, Payables and Assets.

Expenses is a financial application that generates accounting. Even if you have chosen to account for Expenses in a legacy financial application, its configuration relies on Cloud ERP enterprise structures. Once again, bear in mind that Cloud General Ledger (GL) strictly controls the changes you can make to a chart of accounts once assigned to a ledger.

By following the above recommendations, you can ensure that your ERP implementation is free from limitations imposed by an earlier HCM implementation.

Neil Ramsay

Senior director, cloud erp development.

Neil has 30 years of experience with Oracle ERP applications dating back to E-Business Suite. Prior to joining Product Strategy, Neil was Senior Director of Application Development in Oracle's Redwood Shores campus. As a member of the ACE ERP team, Neil works with strategic customers on their Cloud transformation journey. Neil is based in Madrid, Spain.

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Enterprise risk management (ERM): An overview

February 20, 2024 · 12 minute read

Establish resilient enterprise risk management (ERM) with strategic planning, comprehensive risk identification, and effective communication, ensuring business sustainability and growth.

This blog is part of this series.

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Not long ago, retailer Bed Bath & Beyond was a Fortune 500 company. In 2023, it filed for Chapter 11 bankruptcy, closing its last store at the end of July. The reasons for its closure are numerous and complex. But it’s clear that it didn’t or couldn’t plan for all the dangers that brought down its once-booming business model.

As events such as the pandemic, the decline of many economies, and rapidly rising interest rates have demonstrated, even solid businesses can be disrupted. Companies of all kinds face numerous risks that could damage their operations, their reputation, their profitability, and even their viability. This makes the implementation of an enterprise risk management (ERM) initiative absolutely crucial. The goal of ERM is to help businesses make informed decisions about risk in order to operate more efficiently and profitably. But to be effective, an ERM initiative needs careful planning and enterprise-wide participation.

What is enterprise risk management?

Enterprise risk management (ERM) is a systematic approach to identifying risks associated with running a business, assessing their likelihood and potential impact, and developing strategies to manage and mitigate them. Most businesses have some kind of risk management program in place. But in “traditional” risk management, the management is typically left in the hands of separate divisions or departments. By contrast, ERM is a holistic approach, requiring communication and coordination between business units to identify and manage risks across the entire organization. Many companies have established an ERM team that includes stakeholders from several key departments.

This is because of the risks that enterprise risk management (ERM) addresses across departmental boundaries. These include strategic risks, which involve activities related to achieving business objectives. They also include financial risks that need to be managed such as debt levels, cash flow shortfalls, or investments that could harm the business’s bottom line. New technologies, notably generative AI technologies such as ChatGPT, could disrupt many companies’ business models and open them up to possible compliance challenges. Insufficient cybersecurity can cause crucial company or customer data to fall into the hands of cybercriminals. There are legal risks that would need to be managed such as lawsuits involving contracts or other business agreements. Then there are the risks associated with compliance–not meeting regulatory requirements such as Sarbanes-Oxley regarding financial reporting, for instance.

Enterprise risk management (ERM) also includes operational risk management (ORM) , which focuses specifically on identifying, assessing, and managing risks related to the organization’s day-to-day operations. These can include risks associated with technology, regulatory compliance, and onboarding vendors . Like ERM, ORM seeks to reduce risks. However, the risks ORM addresses are unintentional risks, such as employees who accidentally open up company data systems to cybercriminals. Besides managing all types of risk, ERM can also help an organization to optimize certain intentional strategic risks —those that could bring in new customers, new product lines, and new ways to reduce expenses and improve performance.

In addition, enterprise risk management (ERM) incorporates the use of key performance indicators , or KRIs, with metrics that track risk assessment performance. It also typically includes the development of a “risk register” that outlines potential risks associated with certain activities or operations.

There are numerous reasons why enterprise risk management (ERM) is essential. Most notably, it allows organizations to be proactive in identifying and monitoring potential internal and external risks rather than simply reacting to them after they occur. It also establishes protocols for mitigating those risks that an enterprise simply can’t avoid.

Another key reason a business should establish an ERM program is to enhance its ability to operate more efficiently and profitably. By raising the profile of the potential dangers a company faces, ERM protocols can help inform strategic decision-making and implementation while also minimizing losses from potentially damaging risks.

By openly and transparently sharing information about risk and mitigation, a company-wide risk management initiative can keep all employees and other stakeholders aware of risks and risk management protocols. This can be beneficial when employees interact with customers about potential risks. That in turn can reassure all stakeholders about a company’s resilience and durability.

Steps to the enterprise risk management process

Crafting a successful enterprise risk management (ERM) initiative requires careful thought and rigorous execution. That thinking informs the following ERM components, which were developed by the Committee of Sponsoring Organizations (COSO), a private-sector group that helps organizations provide guidance on internal control, risk management , and fraud deterrence:

Setting goals

This involves defining the organization’s goals and objectives and aligning them with its tolerance for risk. A business should recognize that long-range strategic plans are fraught with risks that could translate into opportunities–or dangers.

Internal workflows

Internal factors that influence the organization’s risk management include its management structure, governance, and company culture. These factors determine the enterprise’s risk appetite and what kinds of risks it needs to manage. While it is senior management (and, in many organizations, the company’s board of directors) that typically identifies what risks require managing, many organizations also engage employee input.

Identifying risks

This involves identifying risks, defined as events or situations, that could affect the organization’s ability to achieve its objectives. These impacts can be either beneficial or harmful to the company’s future operations. An ERM program should identify high-risk events that could be particularly damaging. An example of such an event might be the current backup at the Panama Canal, which is snarling numerous companies’ supply chains.

Assessing risk

In this step, a company determines how likely the risks it has identified risks are likely to occur. It also prioritizes them based on how significant an impact they might have. The COSA ERM framework suggests that companies assess both the percent change of occurrence and the dollar impact of a potential risk. In addition, COSA advises that an organization assess not only the direct risk (COVID-19 social distancing) but also residual risks (employees resisting returning to the office). There are many types of risk assessments depending on the industry, but overall, risk assessment tools have their benefits .

Responding to risk

The organization then develops and implements strategies for managing the risks it has identified. One strategy is avoidance. An example would be shedding a business line where the potential dangers outweigh any benefits. A second strategy is maintaining that business line while establishing protocols to reduce any potential damage. A third option is acceptance. A company may choose this route if it determines the possibility of a risk event occurring is low and the costs of reducing potential negative impacts are too high.

Controlling activities

Also known as internal controls, these activities involve implementing policies and procedures to mitigate the identified risks and monitoring their effectiveness. Control activities can be classified as preventative (preventing or mitigating a risk event) or detective (recognizing the risk event and responding appropriately).

Monitoring risk activity

This involves continuously monitoring the organization’s risk management processes and controls, and making adjustments as needed. A company may wish to contract with an external consultant to evaluate its risk management practices. Whether the monitoring is conducted externally or internally, it should determine how well the ERM process is working, and whether the company is leaving itself vulnerable to any risk despite the processes and policies in place.

Communicating information

This step ensures that the organization’s risk management processes and results are communicated to stakeholders. Those within the business overseeing its ERM initiative should gather data and design metrics regarding the company’s risks and how they’re being managed. Sharing this information with senior management and affected employees can ensure their involvement in any needed mitigation.

Benefits and challenges to enterprise risk management

What are the benefits of enterprise risk management.

A rigorous, thoughtfully developed enterprise risk management (ERM) program can help avoid financial losses, reputational damage, compliance failures, and legal liability. It also improves business decision-making because it provides more complete information on the risks a company faces. As a result, an ERM program can strengthen corporate governance and oversight and reduce instances of fraud.

Enterprise risk management (ERM) also boosts internal communication and interdepartmental cooperation. The regular risk reports that a firm’s ERM team delivers to upper management include a list or “matrix” of the risks, how these risks are being prepared for or mitigated, and how the risks are being prioritized. This information is crucial for management decision-making and guidance regarding risk response and preparation.

An enterprise risk management (ERM) program can help a company’s operations and profitability in numerous ways. It can uncover areas where a company is vulnerable to theft or embezzlement. It can be useful in discovering markets and product areas to enter or to avoid. ERM also can strengthen a business’s supply chain by identifying areas where that chain might be weak. An example would be the recent semiconductor shortage, which slowed production for many companies. All this can result in better management of strategic risks that could lead to new opportunities (such as acquisitions and new products) or dangers (such as new competitors and disruptive technologies).

What are the challenges of enterprise risk management?

Despite all the advantages of enterprise risk management (ERM), getting a program established is by no means a slam dunk. For most companies, ERM requires culture, process, or system changes that can be costly, time-consuming, and disruptive. ERM can be particularly costly to businesses that have limited resources. As a result, it may be difficult for supporters of an effective ERM program to get buy-in from upper management.

Company leaders may believe that the investments of time, talent, technology, and capital needed to implement an enterprise risk management (ERM) initiative don’t pencil out, and that those costs exceed the potential benefits. They may argue that it’s difficult to project a program’s effectiveness, including a legal project management tool , because it involves assessing the probability and impact of risk events that may or may not occur. Establishing metrics is often one of the most significant challenges an ERM initiative wrestles with. In addition, ERM also could result in organizations becoming reliant on particular digital technology tools, which could be a risk in itself.

If a company does go forward with establishing an enterprise risk management (ERM) program, there are other risks it will need to anticipate. It makes perfect sense that the risks an enterprise will seek to manage will be those that the company has already faced or is currently facing. But the most potentially dangerous risks are those that it hasn’t encountered. The recent pandemic is a particularly notable example. How many companies not only anticipated the pandemic but also had metrics in place to measure its effect on the business’s customers, employees, and other stakeholders? And how could the potential costs of mitigating the risks associated with the coronavirus have been determined?

Best practices for enterprise risk management

Companies need to consider both the benefits and challenges of enterprise risk management as they craft their own enterprise risk management (ERM) program. This can help them determine the best practices they should follow.

The components of enterprise risk management (ERM) discussed earlier reflect many of the best practices of an effective ERM initiative. Clearly, such a program needs to identify, assess, and prioritize all risks an enterprise might face. It needs to develop consistent action plans that eliminate or reduce the most significant risks, as well as processes to continuously monitor risk and risk-related metrics–and then enforce risk management policies.

For this to succeed, a company should also develop a culture that includes open communication about risk and risk management throughout the organization. It should also assign risk management responsibilities to appropriate employees. And it should determine whether there are ways to automate risk management processes.

Final words

In an unpredictable, fast-changing business environment, an enterprise risk management (ERM) initiative is essential. An ERM program includes assessment, prioritizing, and mitigation of any potential risk to a company’s future health and success. And wherever necessary, it solicits the participation and input of all stakeholders—senior management, board of directors, employees, and customers.

The benefits of a well-crafted risk management strategy include thorough regulatory compliance, a clearer sense of how strategic risks can help or hurt a business, and improved decision-making about operations, opportunities, and future planning. It’s not stated too strongly to say that an enterprise risk management program could mean the difference between maintaining a successful business—or going out of business entirely.

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Prioritization Methods and Techniques – Part 2: MoSCoW Method

In my previous article, Prioritization Methods and Techniques - Part 1: Why Prioritize and the Kano Model , I talked about the need to prioritize and the Kano model as a prioritization method. In this second article in the series on prioritization methods and techniques, I will discuss the MoSCoW method.

The MoSCoW method is a highly widespread prioritization method which was popularized by Dynamic Systems Development Method (DSDM). The term MoSCoW has nothing to do with the capital of Russia. It is an acronym derived from the first letter of each of four prioritization categories – Must have, Should have, Could have and Won’t have.[1] The two “O” are added to make the word pronounceable.

Must have: This category contains requirements or features that are absolutely mandatory. Those are fundamental to the system (being a product or a service). If any of them are neglected, the system will certainly not work or will have no value for the customer.

Should have: These features are important, ideally, we should have them for the system to work correctly. If they are not there, a workaround may be possible, but it can be costly or cumbersome. Yet, they are not mandatory and therefore do not have the highest priority. Simply put, they don’t have much impact on delivery success right now, though they must be implemented soon enough (after the “must-haves”).

Could have: These are useful additions (often small-scale improvements) that add tangible value. These are “nice-to-have” requests. In general, they do not take considerable resources, but they are not essential to implement either. Their absence won’t affect almost anything, or at least wouldn’t impact the release negatively.

Won’t have (sometimes also known as “would like to have, but not this time”): These items are not worth the investment (of time, money, energy) and are unlikely to make the cut (at least not in the near future). These requirements are of the lowest importance and can be easily omitted (definitely considered out of scope for the first release) or rescheduled for future releases.

When prioritizing requirements in a project, DSDM recommends no more than 60% effort for “must-haves” requirements and a sensible pool of “could-haves”, usually around 20% effort (see Figure 1 below). Anything that is higher than 60% effort for the “must-haves” poses a risk to the success and predictability of the project, unless the environment and the used technology are well understood, there are minimal external risks/dependencies and the team is experienced and well established. Note that we are talking about a balance based on estimated effort of requirements (i.e. the expected time it takes to implement the prioritized features) and not total number of requirements. When calculating effort for a specific timeframe (e.g. first release), “won’t haves” are excluded, as they are considered out of scope for this timeframe.[2]

MoSCoW technique.png

Figure 1: Balancing priorities using the MoSCoW prioritization technique (recommendation by DSDM[2])

Practical example

Let’s take a simple practical example. How can you categorize the features required to manufacture a child’s bicycle?

Must have: two wheels ; a frame

Should have: brakes for safe stopping; pedals; ability to adjust the saddle to accommodate growth; safety cover for the chain; stabilizers or the ability to fit them when needed (the last two features can also be classified as “could-haves” depending how essential they are for the child/parents)

Could have: bell or horn to alert others in proximity; attractive color of the bike; front suspension; Presta valves for inflating tires

Won’t have: valve caps to cover the tires valve; Bluetooth bike speaker

Even though it may seem strange not to have the pedals and the brakes in the “must have” category, in reality they are not mandatory for a child’s bike. By definition a bike is two-wheeled transportation device, so it must certainly have two wheels and a frame to link the wheels together, but everything else is subject to discussion and negotiation. For example, small kids can learn to ride a bike by simply using their feet, so no pedals and brakes are really needed. This simple example also shows that there is often a disconnect between expectations and requirements. People often have high level of expectations, but high expectations are different from must-have requirements which are mandatory and non-negotiable.

Let’s now look at the advantages and disadvantages of the MoSCoW method.

Pros of MoSCoW

  • Simplicity. The MoSCoW method is one of the simplest prioritization techniques. It does not require searching for detailed data or making complicated calculations. So, it is easy to master and use because it is based on simple principles. Using this prioritization scheme in a product management context promotes mutual understanding between product people (product managers and product owners) and stakeholders. It is also a great method to resolve conflicts and to bring stakeholders to consensus. Prioritizing work using MoSCoW is fast and transparent.
  • Agility for flexible scheduling and implementation. Since this prioritization method has no strict time limits for the implementation, except for the “must-have” category (items there should always go first and be implemented as soon as possible), it allows for flexible implementation timeframes per feature. Therefore, a team can easily adjust feature deliveries or releases on favorable terms based on agreement with customers/stakeholders.

Cons of MoSCoW

The MoSCoW technique is very simple, but such simplicity comes with some pitfalls.

  • The technique lacks a clear consistency of implementation and lacks specific planning per feature. Even though priorities can be easily and quickly set, the MoSCoW method prioritizes the backlog items in four categories (in a similar fashion to the Kano model, covered in my previous article, which also prioritizes features in different categories), so it does not introduce any sequencing of features/backlog items and lacks specific planning. This makes it quite challenging for product people to decide on the exact priority of a feature compared to another one within the same category. At the end of the day, this drawback might put the entire release at risk.
  • MoSCoW classification rules can be subjective and this creates imbalance between the absolutely required (must have or mandatory) and slightly desirable. Often, the blurred lines between categories make it hard to decide in which category a feature should go into, specifically when we talk about “must-have” and “should-have” lists. But it is sometimes also the case between “should-haves” and could-haves”. This happens due to the subjectivity of requirements. Therefore, features or stories allocated to the different categories should be approached with great thought and care and the chosen categorization should be agreed with (or well explained to) all stakeholders.

When to use the MoSCoW method

The MoSCoW method is probably the simplest and most widespread prioritization scheme for new product development, and more specifically for small products. But as we saw above, this technique also has its disadvantages and is not always effective. For instance, if you have a complicated backlog with many time-sensitive releases, consider choosing other prioritization method or complementing MoSCoW with another more accurate or comprehensive technique.

On the other hand, it is quite reasonable to use MoSCoW when prioritizing work for small (and not too complex) products, which does not have many technical limitations. The MoSCoW requirements help product people and teams take a strategic, orderly approach to prioritization. This method is great for avoiding wasted time, arguments and misdirection.

In my next article I will talk about the Eisenhower matrix. Meanwhile, if you want to know more about prioritizing using the MoSCoW method, please feel free to contact me.

About this article or just curious about working at BlinkLane? Contact Martin or take a look at our open vacancy .

References:

[1] Griffiths, M. (2012). PMI-ACP Exam Prep (2nd ed.). RMC Publications Inc.

[2] Agile Business Consoritum (n.d.). Chapter 10: MoSCoW Prioritisation. Retrieved from https://www.agilebusiness.org/page/ProjectFramework_10_MoSCoWPrioritisation

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An Agile Primer: Agile Estimating and the “MoSCoW Process”

by PMHut Team · May 9, 2015

An Agile Primer: Agile Estimating and the “MoSCoW Process” By Chuck Snead

One common criticism of Agile Development methodologies by those used to more predictive methods is that Agile Development does not guarantee that all listed features will be completed by the end of a project. However, this is by design. What Agile Development does promise to do is to focus development on the features most relevant to the end users first, while providing the option to add more if time permits. This is an important distinction.

Because the end point of the predictive planning process for Traditional projects is a relatively inviolate development schedule, product owners and end users have been trained to take an “everything but the kitchen sink” mentality when converging on a solution, since the change control process tends to discourage the addition of more features once a project has been started. Product owners in Traditional projects also tend to have little control over the order in which features are produced, since development order is often determined more by efficiency of development than prioritization based on business value; the reason being that order shouldn’t matter, since everything is going to be delivered anyway.

However, in terms of usability and relevance, the development order does matter, since not all features speculated at the beginning of a project may, actually, be needed by the project, or even be relevant by the time they are deployed. Since expending development effort on activities that may not be needed or relevant at time of delivery is a significant source of waste, then a development pattern needs to exist that allows features to be prioritized based on the immediate need of the end users, starting with want they must have first, and working down from there. Enter the MoSCoW process.

MoSCoW is an acronym for prioritizing feature development along the following guidelines:

  • MUST have features that are required for the project to be called a success.

SHOULD have features that have a high priority, but are not required for success.

COULD have features which would be nice to have, but are not high priority.

An important differentiator in the above process is the term “required for success.” Some features will obviously be required, such as those needed to meet regulatory requirements. Others may be deemed required due to the percentage of end users who desire the feature. But the criteria for determining what is required should be as objective as possible. If a product owner merely “feels” something is required without evidence to back it up, then this is a feature that may more properly be defined as a high priority “should have” instead of a “must have.” The reason this distinction is significant is because it establishes an important milestone for determining the success of a project, Agile or otherwise, by focusing development initially on the absolute minimum set of features needed for delivery of a project, while making allowances for additional features if time and resource needs allow it.

MoSCoW does this iteratively by first utilizing brainstorming sessions to populate the backlog with features and user stories. The product owner and team will then group the stories by their must/should/could/won’t have status. This will lead to other stories being identified and prioritized until the team determines that a sufficient number of stories have been identified to reasonably quantify the project. The following are some helpful criteria for distinguishing must, should, and could:

  • Critical core features required by the solution to function
  • Features required by law, statute, etc.
  • VERY high priority business requirements
  • High priority business requirements
  • Highly desired features not defined as “must have”
  • “Nice-to-have” features not defined as “must have” or “should have”

Once the stories have been grouped, the team will utilize some form of relative estimating, usually utilizing story points, to quantify the relative complexity of the stories on the backlog. Once this is complete, the team will then take 3-4 stories for which they have a high level of confidence and decompose those stories into hour and resource estimates, utilizing “ideal” time. The team will then divide the number of estimated hours by the sum of the story points used for the estimation to calculate an average hours-per-story-point. This average will then be multiplied by the total number of story points on the backlog to estimate the total number of hours needed to produce it. This can then be utilized to determine if the team can realistically produce all of the features identified on the backlog, or where to draw the line for that release of the project.

Depending on where the line is drawn (must haves only, must haves plus some percentage of should haves, must haves plus should haves, etc.) it is common practice to multiply the agreed upon total by a risk factor based on the assumed risk of the project. This provides a buffer to accommodate stories that will be discovered during development. Some typical multiplication factors are:

  • Maintenance/recurring: 1.25
  • Well defined: 1.5
  • Extensive rewrite/new development: 2.0
  • Quick start: 2.0 or greater

Thus if the sum of must haves and should haves for a well-defined upgrade project comes to 150 story points, the total projected story points for the project would be (150 * 1.5) = 225. If the average hours per story point for the project was estimated at 10, then the estimated hours for the project would be (225 * 10) = 2250 hours. This hour estimate would then be used to calculate the projected cost and resource requirements of the project.

Chuck Snead is a Project Management Professional (PMP), PMI Agile Certified Practitioner (PMI-ACP), and Certified Scrum Master (CSM) with over fifteen years of experience managing Waterfall/Traditional and Agile projects, for both the private and public sectors. He also has a Master’s degrees in both Information Technology and Business Administration, and he teaches various IT and project management courses as an adjunct professor. You can read more articles from Chuck on his blog .

PMHut Team

PMHut.com is a website dedicated to providing PM articles, detailed project management software reviews, and the latest news for the most popular web-based collaboration tools.

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The Evolutionary Development Phase

This is one of the six phases in the DSDM ® Process , which can be configured in different ways to create various types of lifecycle for the project.

This phase is where we develop the product iteratively and create increments of it. (See the build incrementally from firm foundations principle.) Following the deliver on time and develop iteratively principles, our development is done in timeboxes which have fixed durations: We repeat our development processes.

The evolutionary development phase uses many techniques/practices such as MoSCoW Prioritization, modeling, and facilitated workshops.

The development that we talk about in this context contains all aspects of development, including testing: We have iterative development , where all development processes are repeated. This is so, because we want the output to be complete and able to generate useful feedback.

Even though the output of the evolutionary development phase is so complete that it can be put into production without much extra work, we don’t do it after each iteration because deployment needs to be aligned with the business aspects outside the project. As a result, there’s a deployment phase for putting the latest increment into production.

Written by Nader K. Rad

This is (and will be) a work in progress: More details will be added in the future, depending on the feedback.

This wiki is developed and managed by an accredited trainer, independent of Agile Business Consortium and APMG. While aligned with their guidelines, it’s not an official resource.

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  2. ENTERPRISE RESOURCE PLANNING SYSTEM

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  3. What Is Enterprise Resource Planning (ERP)?

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  4. Enterprise Resource Planning

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  5. What is Enterprise Project Management? 10 Things You Need To Know

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  6. Enterprise Resource Planning (ERP) Definition

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VIDEO

  1. Odoo Enterprise Resources Planning ERP & Customer Relation Management CRM Arabic

  2. Corporate planning process

  3. #24 Planning || Features of Planning

  4. Business Planning: Stages in Planning and Managing an Enterprise

  5. Enterprise projects

  6. Supercharge Your Projects: Expert Tips for Effective Planning

COMMENTS

  1. Enterprise resource planning

    Enterprise resource planning ( ERP) is the integrated management of main business processes, often in real time and mediated by software and technology.

  2. What Is Enterprise Resource Planning (ERP)?—Microsoft Dynamics 365

    Enterprise resource planning (ERP) is a type of software system that helps organizations automate and manage core business processes for optimal performance. ERP software coordinates the flow of data between a company's business processes, providing a single source of truth and streamlining operations across the enterprise.

  3. What is ERP?

    Enterprise resource planning (ERP) refers to a type of software that organizations use to manage day-to-day business activities such as accounting, procurement, project management, risk management and compliance, and supply chain operations.

  4. The Power of Enterprise Resources Planning |Smartsheet

    Enterprise Resource Planning: ERP tracks your resources, materials, and transactions. It provides all the data about how your company operates in real time. Use ERP systems to operate your business. Enterprise Resource Management: ERM lets you manage access for all your software systems.

  5. Enterprise resource planning for project management

    Enterprise resource planning is the strategic process of integrating all business-related software and technologies into one single system. For instance, it's the process of merging the company's financial software, inventory tracking platform, human resource technologies, marketing tools, and other business systems into one convenient location.

  6. Enterprise Resource Planning (ERP): Meaning, Components, and Examples

    Enterprise resource planning (ERP) is a platform companies use to manage and integrate the essential parts of their businesses. Many ERP software applications are critical to companies because...

  7. What is Enterprise Resource Planning (ERP)?

    Enterprise resource planning, or ERP, is a business management software system designed to manage and streamline an organization's functions, processes and workflows with automation and integration. Sign up for an IBM newsletter How does ERP work?

  8. ERP Implementation: The 9-Step Guide

    9 Steps To a Successful ERP Implementation Common ERP Implementation Mistakes To Avoid How To Measure the Success of ERP Implementation Frequently Asked Questions (FAQs) Show more Enterprise...

  9. Streamline Your Tech Stack with Enterprise Resource Planning ...

    Summary. Enterprise resource planning is the process of merging company software and applications into a single, centralized platform. By consolidating your tech stack, you can reduce process inefficiencies and bring all your organization's work together in one place. Coordinate, collaborate, and communicate—without switching tools.

  10. Enterprise Resource Planning (ERP)

    Oracle Enterprise Resource Planning (ERP) Tomorrow's leaders are those most capable of adapting to change today. Oracle Fusion Cloud ERP is a complete, modern, cloud ERP suite that provides your teams with advanced capabilities, such as AI to automate the manual processes that slow them down, analytics to react to market shifts in real time ...

  11. What Is Enterprise Resource Planning (ERP)?

    Enterprise resource planning (ERP) is software, tools, and technology used to manage daily business operations and automate processes, such as accounting, supply chain, manufacturing, managing projects, and more. ERP systems have different modules that perform these functions.

  12. Enterprise Resource Planning (ERP): Your Complete Guide

    Enterprise resource planning involves a specialized software system that streamlines business operations. ERP software applications work as a single source of truth for an entire organization, making it easy to share essential data points about: Accounts payable and receivable. Financial reporting.

  13. Enterprise Resource Planning

    Enterprise Resource Planning Only 20 percent of companies manage to capture more than half the projected benefits from ERP systems. By taking a business-driven approach to ERP investments, and placing them in the context of the client's global operating model, we can ensure that business needs and the ERP program are aligned, creating annual ...

  14. Tips for Enterprise Resource Planning

    Project managers can also scale system resources up or down as business needs change, making it more cost-effective than traditional on-premise solutions. Evaluate and Optimize. Implementing Enterprise resource planning is an on-going process. Because of this, project managers need to periodically evaluate and optimize their ERP software and tools.

  15. How To Create An Enterprise Project Plan In 7 Easy Steps

    Enterprise projects are typically multiphase, cross-functional, and high-impact initiatives that involve significant investment in people, technology, and resources. One of the primary benefits of enterprise projects is that they allow large organizations to optimize their resources and achieve their strategic goals more efficiently.

  16. What does an ERP Project Manager do? (ERP PM Job ...

    An ERP (Enterprise Resource Planning) Project Manager is responsible for overseeing the implementation of an ERP system in an organization. The ERP Project Manager must work closely with stakeholders, including the executive team, department managers, IT personnel, and end-users, to ensure the ERP system meets the organization's requirements ...

  17. Enterprise Resource Planning

    Enterprise Resource Planning (ERP) software products were first developed to serve the manufacturing industry, and intended to assist organizations control, track, and coordinate activities in multiple locations. More recently, ERP tools have found application in the project management field, and vendors offer packages which enable project managers to deal with plans, schedules, resource ...

  18. Enterprise Resource Planning: Definition, Benefits, and Challenges

    The journey of Enterprise Resource Planning (ERP) systems as pivotal business tools started in the 1960s, with early models focused on inventory management and control in the manufacturing sector. ... businesses can leverage data-driven insights for more successful strategic planning project management and execution. Enhanced collaboration and ...

  19. ERP Solutions for Project Management

    Drive project control. Improve overall control of resources including people, materials, logistics and supplies to keep projects on-track. After a deep evaluation of the vendor market, IFS Cloud was found to provide more powerful support for Ortec Group's multi-site, multi-country operations. IFS Cloud will introduce full visibility into key ...

  20. Implementing HCM before ERP

    Oracle's Human Capital Management (HCM) and Enterprise Resource Planning (ERP) share enterprise structures and workers In our experience, customers often implement HCM before ERP. Hence, enterprise structures defined for HCM may impact a subsequent ERP implementation. In most cases, implementers can adapt existing setups and usage to reflect ERP related requirements.

  21. Enterprise risk management (ERM): An overview

    This makes the implementation of an enterprise risk management (ERM) initiative absolutely crucial. The goal of ERM is to help businesses make informed decisions about risk in order to operate more efficiently and profitably. But to be effective, an ERM initiative needs careful planning and enterprise-wide participation.

  22. Prioritization Methods and Techniques

    In this second article in the series on prioritization methods and techniques, I will discuss the MoSCoW method. The MoSCoW method is a highly widespread prioritization method which was popularized by Dynamic Systems Development Method (DSDM). The term MoSCoW has nothing to do with the capital of Russia. It is an acronym derived from the first ...

  23. PDF Business Planning and Modeling

    A Business Plan summarises the results of the planning process: • the objectives to reach ( subscribers demand, sales) • the description of all activities requested by the project; • the future revenues expected from the project; • the planned expenses (investment and operations); • the accounting statements and the financial indicators

  24. An Agile Primer: Agile Estimating and the "MoSCoW Process"

    Thus if the sum of must haves and should haves for a well-defined upgrade project comes to 150 story points, the total projected story points for the project would be (150 * 1.5) = 225. If the average hours per story point for the project was estimated at 10, then the estimated hours for the project would be (225 * 10) = 2250 hours.

  25. The Evolutionary Development Phase :: AgilePM® wiki

    This is one of the six phases in the DSDM ® Process, which can be configured in different ways to create various types of lifecycle for the project. Pre-Project. Feasibility. Foundations. Evolutionary Development. Deployment. Post-Project. This phase is where we develop the product iteratively and create increments of it.