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An enterprise resource planning (ERP) system is a large-scale software package companies use to collect, store and disseminate information. Each package contains multiple ERP modules that focus on collecting, storing and disseminating specific information. For example, modules will include production, human resources, marketing, and finance, as well as a variety of others based on the company using the ERP package. Using separate ERP modules is both economical and easier to control within the organization’s operating environment.
Using a large-scale software package typically requires a significant investment by the organization. Equipment needs can include individual personal computers, servers to store electronic information, scanners for inventory management, routers and wires or cables to connect the equipment. Ancillary products include software licenses, Internet connection and security software to protect the information stored in the individual ERP modules. In addition to these investments, companies must pay for the continual upgrades to both software and hardware. Only using modules that are absolutely necessary can reduce the size of direct investment for the ERP package.
The integration of individual ERP modules can also reduce the investment in a company’s employees. With new software and hardware comes the challenge of training employees on how to use the system. This training is both expensive and time consuming, as employees are is typically different in their technical backgrounds and how they learn. Having to spend too much time on employee training can reduce the company’s opportunity to make money through their normal operations. When using individual ERP modules, the company will reduce training time and only have a need to educate employees on specific responsibilities that pertain to their jobs.
When implementing an ERP package, companies must often reorganize the way they conduct normal business operations. Purchasing individual modules allows for the maximization of job tasks through targeted integration. Companies can also implement these modules on a time-delayed basis, meaning that they will delay the addition of some modules in favor of others. This helps smaller companies pay for only the modules they need immediately. As the small business grows and establishes its place in the business environment, the ERP package can grow with it. For example, the small business may have little need for the human resource module. It can delay the implementation of it in favor of the accounting module. Only using a few modules also limits the number of user licenses, which is a common way that ERP vendors charge fees for technical support or other ancillary services.
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