ERP is an integrated system which includes Financial, HRM, Inventory, and material management, SCM, CRM and HRM. The purpose is to automate every single business process of the company to make it fast and accurate. It is built on centralized database and the modules are integrated which prevents data redundancy. The system is consolidated system which follows uniform standards and it stays same across countries, geographical boundaries and system environment.
Some of the features are that it should be integrated and operative on real time data, all the data should be integrated at one place and users should be able to access information from the system at anytime.
Initial Developments: The initial forms of ERPs were basically accounting software which was used to ease the process of everyday monetary transaction and these systems were in use in 1980s. Later the demand for automating the process of manufacturing increased and with the rise in demand for a better system led to the development of enterprise wide systems and now the next generation systems are web based systems which allows the employee and the external resources of the organization such as business partners, suppliers and customers to get real time data anytime from anywhere.
Advantage of ERP Over Accounting: Accounting is a part of ERP and it is the backbone of the complete system. It provides a clear idea about the financial situation of the company and everyday financial transactions can be tracked through the module but the module itself is not complete to provide all the features. In an ERP one can get details of everyday transaction from the gate entry to employee attendance and stocks record but in financial module one cannot track the stock records and future requirements of stocks which are found in inventory module. The reports of inventory module can provide how to optimize the flow of good to warehouse to meet the demand of the customers, packaging and production.
If a company has a production unit - it may require updated information about the stocks and future stocks to fulfill the demands and an accounting module may not be able to provide it. With the improvement in technology the features such as e-business, e-Telecom, online CRM and many other cross functional features are provided by ERP.
1. Accounting software and ERP are completely different of species.
2. Accounting software enables organizations to manage the financial transaction and enterprise software enables management of each and every department of the organization with ease.
3. Accounting software enables synchronizing the accounting details and bills and enterprise software enables one to synchronize data from every department at one place and prevents errors caused by transfer of data from one place to other. It prevents data redundancy as the data is centrally managed and it is updated at one place from every department.
4. The cost of implementation of finances module may be less because it has limited functionalities whereas an ERP may be expensive and it can take more than 24 months for implementation in a large or midsized organization.