What is an ERP system? Planning of financial resources of the enterprise

More and more enterprises of different sizes around the world are striving to incorporate into their work a powerful management tool, known as the ERP system. Its use is designed to establish effective control and planning of all strategically important business processes for the organization, to optimize the functioning of the main production and auxiliary facilities.

The concept of ERP and ERP-system

Business strategy ERP (EntERPrise Resource Planning) is the integration of all organizational units and processes: production facilities, financial, personnel and client profile departments and many others. Such an association is primarily aimed at optimizing the distribution of various resources within the enterprise.

If earlier it was purely a marketing concept, today the ERP-system is most often understood as a class of specialized software. In the broadest sense, it is a methodology for planning and managing all the resources of an enterprise. Historically, the ERP strategy was formed on the basis of its predecessors:

• MRP - planning of material needs.
• MRP II - planning of production resources.

Unlike them, ERP-system can be used for very large enterprises, often geographically distributed. In this case, it is a question of planning corporate resources, as it pays attention not only to production, but also to comprehensive financial planning. An essential feature of the ERP-system is also the possibility of its application to absolutely any enterprises, regardless of the specifics of the work, including those not engaged in production activities. Considering it as a software product, it should be noted equipment with a more powerful set of technical tools facilitating or replacing the decision-making process.

Purpose of ERP-system in the enterprise

In order to decide on fundamental changes in the activities of its company related to the introduction of an information management system and the implementation of a new business strategy, management must clearly understand the whole need for this step, which should be expressed in the following key points:

• Unwillingness to accept the current state of affairs;
• The existence of the need to use modern technologies to strengthen the position of the business entity in the market in a competitive environment;
• Expecting significant benefits from implementation.

First of all, the application of the ERP-system is intended to facilitate the successful implementation of a similar business strategy, the implementation of which should ensure effective planning of the enterprise resources and management. To do this, it is necessary to optimize the work of its units, namely, to achieve maximum consistency between them and reduce administrative costs. This can be achieved at the expense of the advantages provided by the information system. It:

• Increase the transparency of business processes.
• Solving problems with ordering and finding the right information.
• Improving the reliability and relevance of data.
• Increase the speed of workflow between departments.
• Organization of a common information space between the head office and remote branches.
• Reducing the time of filling out the documentation and getting rid of possible errors.
• Increase the speed of decision-making at all levels.

ERP-system provides an increase in the competitiveness of the facility not only through the introduction of more efficient business processes into its work. Its use should also lead to a reduction in the overall costs of the enterprise. Advanced planning, modeling and analysis tools help to optimize the resources of production activities, the financial sector, as well as the work of warehouse, transport and other units.

Main features of work

In different companies, even dealing with the same business, all business processes can take place absolutely differently. The standardized scheme of work that the enterprise information management system offers can be significantly different from the one used here before. For this reason, treating it only as a software product is fundamentally wrong, since its implementation requires large internal changes from the company in the form of reorganizing existing business processes.

The conceptual features of these systems are directly related to their essence. Recall that the ERP-methodology involves the consolidation of all vital parts of the enterprise for the organization of effective management of its resources. Such integration is realized within the information system through the availability of a single, publicly accessible database. Information comes to the repository only once, and can subsequently be repeatedly processed and used by various internal and external consumers. Compared with real life, in this case, there is a reduction in the time and effort of enterprise employees to make decisions. It should also be noted that ERP-system is not an automated control system for technological processes, but integrated information, based on their abstract model, information to which is introduced by living people.

The structure of the database, as well as the work of the software package as a whole, should be arranged in such a way as to reflect the activities of all divisions without exception. Such an approach makes it possible to monitor the total set of resources and business processes of an enterprise practically in real time, and therefore, to implement their operational and strategic management.

One of the main tasks of ERP-systems is to optimize the planning process and control the implementation of the plan. Built-in intelligent algorithms greatly simplify the solution for its users. For example, the planning and management of a manufacturing enterprise has many specific features associated with the heterogeneity of its constituent parts. So, in one plant there can exist shops that work both continuously and discretely. From this point of view, the implemented ERP-class system should be universal and contain a wide range of specialized modules.

Since today's enterprises are often geographically distributed, it is very important that branches remote from the main office are provided with full access to the general information store of data. This is realized by the most advanced network technologies involved in the development of ERP-systems, which also provide for differentiation of users' access rights to the information stored in them.

Functionality of ERP-class systems

Speaking about the functions, we must not forget that any product of the ERP-class is an enterprise management system as a whole. The range of its capabilities in the first place will depend on the scale and features of the object, for the needs of which it is used. Consider the classical set of functions:

Production

• Maintenance of design and technological specifications of the products or services to be performed in order to determine the number of required materials and labor costs.
• Drawing up production plans.
• Planning and management of the technical capacities of the enterprise in different approaches: from individual units to shop and production associations.

Finance

• Operative accounting, financial, managerial, tax accounting and controlling.
• Management of the assets of the enterprise, including fixed assets, securities, bank accounts and so on.
• Comprehensive planning of the financial resources of the enterprise and control of its results.

Logistics

• Formation of planned indicators of required volumes of materials, raw materials, parts, components in accordance with production plans.
• Supply and sales management: accounting of contractors, maintenance of the register of contracts, management of supply chains, implementation of warehouse planning and accounting.

Staff

• Managing the recruitment process.
• Operational staffing and time attendance, maintaining the staffing table, calculating salaries.
• Labor force planning.

Marketing and advertising

• Keeping sales plans.
• Management of pricing on various types of the market with the purpose of formation of the adequate general strategy of the enterprise, a transparent policy of calculation of cost of the goods: the account of discounts and special conditions of sales.
• Planning and control of ongoing advertising and marketing activities.

Projects. Reporting

• Providing a wide choice of standardized accounting, financial and management reporting forms, as well as a flexible mechanism for creating custom ones.
• Drawing up of the general strategy: phased planning of the necessary for the successful implementation of time, material, financial and human resources.
• Monitoring of the main indicators of the project.

Which enterprises can use ERP-systems

At first glance it may seem that the systems of this class are intended exclusively for large-scale industries, since it is for them that the high complexity of the structure of resource flows and processes of various types is more typical. However, there are situations where an enterprise of a small size may not be sufficient to use the MRP or MRP II classes. Today, the market can buy software products that have different capabilities. Depending on the scale of the enterprise, on which they can be effectively used, they allocate heavy, medium and light solutions.

As for non-production organizations, ERP class systems are applicable to them as well. For such enterprises there will be enough and not too wide functionality. At the moment, there are small integrated or local types of systems that can meet the needs of trading companies or organizations working in the service sector. It should also be noted that many developers offer their customers and industry products.

On the methods of classification

The most obvious sign by which all ERP systems can be classified is the scale of the organization where they can be applied. From this point of view, depending on the number of jobs, it is customary to allocate solutions for:

• Large corporations (over 10 thousand people).
• Average corporations (from 1 thousand to 10 thousand people).
• The average enterprises (from 100 to 1 thousand people).
• Small enterprises (less than 100 people).

An important feature of the systematization of such information products is functionality. Depending on the volume of tasks performed, there is the following generally accepted division into:

• Large integrated.
• Medium integrated.
• Financial and management.
• Local.

The local version is usually a unified boxed information product with a narrow focus, which has a relatively small total value. Most often, it covers one or more blocks in the area of the organization's finances or its accounting activities. Such systems are suitable for small manufacturing or trading firms.

The financial and management system of enterprise management can be used mainly in non-production organizations, mainly trading or working in the sphere of rendering services. In addition to financial and accounting, there are also involved logistics management modules .

Integrated information systems depending on the scale of the target can be medium or large. They cover all business processes of corporate structures, namely interaction with suppliers and consumers, production of the final product, material and financial flows, relations with personnel, supply, storage and marketing, project implementation and many others.

The modern market of ERP-systems

All software products presented today in the domestic market can be divided into two main categories: Russian and imported. Differences between them are not only in the place of creation, but also in functionality.

Powerful Western developments serve as standards for what is commonly called ERP class systems. The best examples of such are the products of SAP, Oracle, PeopleSof, SAGE, Baan, Microsoft Business Solution. All of them can be used on target objects of any level, including very large ones. However, their use by Russian companies can often be difficult due to the possible occurrence of the following problems:

• Unavailability of enterprises to seriously reorganize existing business processes. The scale of such changes is difficult to exaggerate. Business processes of foreign enterprise management systems are fundamentally different from those used in our country.
• Insufficient number of specialists capable of implementing the project of introduction of an import ERP-system in Russia with a proper level of quality.
• High cost of using such solutions.

Despite the general lag behind the Western counterparts, modern Russian developments are gradually increasing their functionality. They are fully adapted to the work of domestic enterprises. And they can be successfully implemented, if in a particular case it does not require a wide coverage of business processes, but it is enough just to establish accounting for certain areas of activity using the ERP-system. Examples of advanced domestic developments are the products of companies 1C and "Galaxy".

Looking to the Future - ERP II

The concept of ERP II, which appeared a while ago, was the result of the improvement of the ERP methodology. Enterprise resource planning and management remain here among the main tasks. However, the rapid development of the Internet, which initiated the birth of a new methodology, left its imprint, making traditional business partly electronic. ERP II is a combination of a classical enterprise management system with specific solutions for network commerce.

Now it became extremely important to interact with your counterparties over the network. For this, there are two important areas: supply chain management and customer relations. Intrafirm information ceases to be just that, leaves the external environment and becomes the basis of cooperation with other business entities. A new concept in this case is formulated as the management of resources and external relations of the enterprise. In addition to the ideological reorientation, ERP II systems received their own technological features.

Solution of the choice of the system

The choice of software of this level is a very responsible process. An incorrect decision on this issue, especially for large-scale projects, can entail considerable time and money costs in the absence of the expected result.

Effective implementation of a large-scale system, which, for example, should ensure the effective management of a production enterprise, will necessarily require reengineering of business processes from it. It is important not to allow a situation in which, upon completion of the program implementation procedure, it would collect unused data or not solve the necessary tasks. For this reason, it is better to invite a team of experts, proven in this business, to cooperate with the project .

There is some list of criteria on the basis of which the project team, in agreement with the administration of the target company, can make an optimal, cost-effective decision on the choice of the software product:

• Correspondence of technical and functional capabilities of the system to the main objectives of the enterprise.
• The total cost of ownership should fit into the budget allocated for these purposes. In addition to the cost of purchasing the system, this includes operational and other types of indirect costs.
• The implemented information system of the ERP-class must comply with all generally accepted technical requirements, and therefore be scalable, reliable, resistant to possible failures, and have antivirus and anti-hacker protection.
• The supplier shall be guaranteed the subsequent maintenance and support of the installed software.

The process of implementing ERP class systems

The introduction of ERP-systems at enterprises accompanies the implementation of the same strategies on them. This procedure, depending on the scale of the target, usually lasts from several weeks to several years. Implement the organization can do it on its own or use the help of specialized companies. It is possible to single out the main stages of this process:

1. Primary organization. Here it is necessary to determine the strategic goals, objectives and indicate the expected effect of implementation for a particular organization. Based on these data it will be possible to draw up a technical plan for the project.
2. Project development. At this stage, the analysis of the organization's current activities takes place: strategies for its promotion, business processes. On the basis of its results, a model of the system is built, and the relevant plan is added to the work plan.
3. Execution of the project. As the rules of business processes are dictated by the implemented ERP-system, here they are transformed according to the unified requirements. If necessary, the development of reporting forms and algorithms for data transfer from previously used accounting programs. If the failure of the system functions for the object is detected at the previous stages, it is modified. In conclusion, users are trained and pre-tested.
4. Start-up. In the process of use, it identifies and eliminates possible errors and malfunctions.

ERP class management system today is not just a copy of expensive software installed on all computers in the organization, but also the main driving force of the long-term business strategy. The choice should be based on the existing needs and capabilities of the target. The success of the whole business depends on the correctness of the decision taken and the implementation of the steps for the subsequent implementation.