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ERP is a technology-driven management platform crafted for enterprise leaders and decision-makers to allocate, strategize, while enabling employees to assign and execute diverse commands. Through the refinement of internal business structures, pivotal corporate processes such as finance, accounting, human resources, manufacturing, supply chain, O2O omnichannel marketing, and procurement are amalgamated within a unified management framework. The objective is to institute standardized information and data, cultivate an integrated and systematic operating model, thereby fostering transformative and innovative business processes. This approach facilitates dynamic efficiency monitoring and continual enhancement in management practices.
Enhancing Corporate Efficiency through Data Integration: ERP (Enterprise Resource Planning) seamlessly merges logistics, information flow, capital management, process control, and value-add potentials within an organization. This consolidation of fragmented data, coupled with intelligent connectivity, establishes internal synergy, laying the groundwork for well-informed management decisions and elevated operational efficiency.
Streamlining Operations and Cost Reduction through Automation: Simplify and automate business processes by reviewing, rectifying, and improving workflows, eliminating unnecessary procedures. This empowers companies to achieve greater productivity with fewer resources, ultimately reducing operating costs.
Prompt Market Insights through Rapid Report Generation: The reporting efficiency of ERP systems facilitates swift creation, design, and consolidation of diverse business and financial reports. This empowers employees and management to promptly act on the latest information, staying agile in response to market trends.
Ensuring Precision and Continuity for Data-Driven Enterprises: ERP replaces manual processes, conducting data collection, analysis, intelligent forecasting, and early troubleshooting. Through the integration and consolidation of all enterprise data, it systematically eradicates information silos and blind spots, fostering objective and data-oriented decision-making that benefits the business.
Enhancing Agility through Real-time Online Access: The ERP system interconnects information, delivering real-time updates that empower personnel to stay abreast of the latest developments.
Mitigating Risks: With visibility and control over enterprise information and operations, ERP ensures legal compliance and enables the prediction and prevention of potential risks.
Gartner, a renowned international consulting company, introduced the concept of ERP in 1990 with the aim of assisting enterprises in achieving comprehensive and integrated business operations management. This software system primarily focuses on logistic resources, human resources, financial resources, and data resources allocations.
Leveraging advanced information technology, ERP embodies a systematic approach to management thinking. It adeptly integrates various business functions into a unified management platform, spanning diverse areas such as finance, accounting, human resources, manufacturing, supply chain, O2O omnichannel marketing, and procurement . This consolidation eliminates the need for laborious searches, allowing all facets of business operations to be centrally managed. Data is processed comprehensively, systematically categorized, and easily scrutinized in detail, providing a streamlined and efficient management solution.
Prototype: MRP (Material Requirements Planning)
During the 1960s, industrial manufacturing enterprises pioneered the utilization of MRP (Material Requirements Planning) to oversee material management. Tailored for efficient inventory management, MRP tackled the challenge of securing the necessary materials precisely when needed and in the correct quantities.
The Most Common
MRP 2.0 = MRP II（Manufacturing Resource Planning）
Advancing into the 1970s, closed-loop MRP allowed for feedback from the bottom up, adjusting system planning to assist companies in assessing their ability to implement plans.
In the 1980s, MRP II evolved to consider post-production profitability, integrating financial modules into its framework. This phase revolved around production planning, establishing connections between production, supply, sales, and finance. This integration created a cohesive mechanism, ensuring steady and continuous production processes. As a result, capital consumption and waste could be mitigated, and thus the overall economic efficiency was improved.
ERP (Enterprise Resource Planning)
In the dynamic economic landscape of the 1990s, ERP emerged, broadening the functionalities inherited from its predecessor, MRP II:
Horizontal Expansion: Extending management capabilities from suppliers upstream in the supply chain to downstream customer relationship management.
Vertical Expansion: Progressing beyond low-level data processing (manual > automated) to empower high-level management decision-making.
Industry Expansion: Shifting focus from a manufacturing-centric approach to serving diverse industries.
Cloud ERP (SaaS ERP)
Since the year 2000, on-premises ERP encountered challenges, including elevated expenses for hardware, software, consultancy training, and labor. Issues like security vulnerabilities and compatibility drawbacks with mobile devices catalyzed a transition towards Cloud ERP. Enterprises, aiming for cost efficiency, favored the shift to remotely hosted servers, facilitating the seamless integration of both internal and external resources.
ERP (Enterprise Resource Planning) is composed of individual modules, each equipped with distinct functionalities to offer data and process support for specific job roles. Imagine the ERP system is a toolbox, then these modules are akin to tools, such as screwdrivers, wrenches, hammers, each serving a specific purpose.
Tailoring to their specific needs, enterprises can initially select one or several modules that are of utmost urgency. As the business evolves, additional modules can be seamlessly integrated, and the system can be upgraded to effectively address emerging challenges.
The frequently utilized ERP modules include the following categories:
There are primarily three ways of deploying ERP: On-premises ERP, Cloud ERP, and Hybrid ERP.
On-premises ERP functions and is managed within the confines of the company’s physical office environment, utilizing the company’s internal computers and servers. A technical team is necessary for the on-site installation and implementation of the software. After deployment, the company possesses complete ownership and exercises total control over the entire system. On-premises ERP is commonly procured through a licensing model.
Cloud-based ERP software, also known as Software as a Service (SaaS), allows companies to access and store data on any device with internet connectivity. The software provider offers ongoing support, updates, training, and a certain degree of flexible customization. Cloud ERP generally follows a subscription-based model.
Hybrid ERP integrates on-premises ERP and cloud ERP, with hosting, implementation, and deployment services tailored to the service provider. This hybrid model offers ERP users enhanced flexibility and the benefits of integration that may be lacking in their existing systems.
Generally speaking, cloud ERP comes with a lower cost compared to on-premises ERP. This is attributed to the elimination of hardware purchase requirements and the avoidance of in-house IT expert expenses, leading to a considerably reduced Total Cost of Ownership (TCO). Maintenance tasks are handled by the vendor, and customers usually pay a subscription fee annually or monthly, depending on the number of users.
When assessing the return on investment and overall costs of an ERP implementation project, businesses need to factor in both initial and ongoing labor costs. These elements play a crucial role in software selection and deployment. Specific considerations for cloud ERP and hybrid ERP include software maintenance, facilities, computer capacity, downtime, recovery capabilities, security, privacy, and IT staff costs. Opting for the right ERP solution has the potential to substantially decrease both capital and operational expenses for businesses, improve return on investment, and mitigate overall costs.
Kingdee provides on-premises ERP, cloud ERP, and hybrid ERP models. We are happy to recommend products that match your requirements, and our software specialist consultants can customize more fitting solutions. Please do not hesitate to reach out for further information.
If you have any questions, please call us at (852) 2157 9390. Our consultant will give you the best solutions for Digital Transformation.
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