Let's learn more about ERP with EDUTO in this article! 

1. What is ERP system?

ERP stands for Enterprise Resource Planning , which means Enterprise Resource Planning System. The ERP system integrates subsystems (modules) such as: Finance, Production, Logistics, Human Resources, etc. on the same application, helping all departments in the enterprise to work together on the same system. 

Instead of employees having to work on separate and independent software such as Accounting Software, Human Resource Management Software, Payroll Software, Customer Care and Management Software, etc., the ERP system in a business integrates all parts of a business into a comprehensive information system.

ERP is an integrated system, meaning it connects all the different departments and functions of a business. Data is entered into the system once and then shared with all relevant departments. This helps to reduce data redundancy and duplication, improve operational processes and increase operational efficiency.

An example of ERP linking departments: The warehouse department, thanks to ERP, can control the quantity of goods and raw materials left. The production department uses the report on the quantity of raw materials in the warehouse to plan production. The sales department creates orders and customer information on the system. The customer service department relies on this information to be able to call customers.

See more: AI Application Trends in ERP System: Smart Business Management System

2. Main components of ERP

Enterprise resource planning system ERP includes many different subsystems , each subsystem has its own tasks and functions.

Each subsystem connects to the core ERP system, ensuring accurate data for seamless sharing across departments, forming a unified whole. Common components include:

Financial Management

This subsystem helps businesses manage their general ledgers and automate important financial tasks. The main tasks include tracking accounts payable (AP), accounts receivable (AR), closing the books at the end of the period, preparing financial statements, complying with revenue recognition standards, minimizing financial risks, etc.

Human Resource Management

This subsystem helps businesses easily manage the process of timekeeping and calculating salaries , allowances, etc. of employees. In addition, the system allows tracking the time of social insurance, health insurance, unemployment insurance, etc. of employees.

Supply Chain Management

The Supply Chain Management module focuses on automating purchasing, including requests for quotations, contract creation, and approvals. This helps businesses reduce under- and over-purchasing and improve supplier negotiations.

Sales Management

The sales management subsystem tracks customer information and purchase history. There are many ERP functions in this part such as: order management, contracts, payments, sales performance management and sales force support.

Production Management

The production management subsystem includes functions for material planning (MRP), production planning, production execution, quality management, etc. The system helps businesses simplify complex production processes and ensure production meets market demand.

Service Management

This section provides features to meet maintenance and repair requests, spare parts, field service management, service contract management, etc. and service revenue sources. The system allows statistics on failure causes to help technicians solve problems quickly.

Research and Development Management

This subsystem provides tools for product design and development, product lifecycle management (PLM), product compliance management, etc. From there, businesses can promote new product innovation quickly and cost-effectively.

Enterprise Asset Management

This subsystem includes predictive maintenance, operations planning, asset planning, environmental, health and safety (EHS) management, etc. As a result, businesses will minimize unexpected downtime of machines and keep them operating at peak efficiency.

3. Features of ERP management system

ERP systems have distinct characteristics compared to other business management solutions, including:

• Unified management platform: ERP management system is a unified platform, all processes and data from production to business, customer care, etc. are strung together in an orderly and seamless manner.
• Automated management: ERP systems automate the process of managing operations including: planning, inventory tracking, financial management, etc., helping to save time and reduce errors.
• Management with clear rules: ERP helps businesses build clear rules and plans for business activities, including product plans, sales, etc.
• Modular design: System functions are deployed separately according to business needs.
• Departmental connectivity: ERP connects departments within a business, making it easy to share information and interact between departments.
• Flexibility: ERP offers the ability to customize business processes according to the specific needs of the business
• High security: ERP often integrates strong security features to protect important business information.
• User-friendly Interface: ERP systems are designed with user-friendly and easy-to-use interfaces. This makes it easy for employees to access and use the system effectively.

Read more: Enterprise Management System: Concept, Role and Optimization Steps

4. Form of implementing ERP enterprise resource planning system

There are many different forms of ERP implementation, each form is suitable for the needs and capabilities of each business. EDUTO will introduce to readers 3 popular forms for you to consider choosing the appropriate implementation form:

Cloud ERP

ERP is managed on a cloud computing platform. Businesses use the system via the internet, without having to install software or invest in infrastructure. This is the most widely deployed form of ERP application in businesses because of its low cost,…

On-Premise ERP

On-Premise ERP is a traditional model, installed and operated on the enterprise's server. This ERP solution is suitable for large enterprises that need to use a complex ERP system and need to strictly control the data system.

Hybrid ERP

Hybrid ERP combines On-Premises ERP and Cloud ERP. This system allows businesses to use some ERP modules on the cloud platform and some other modules are installed and operated on-premises. Businesses that need flexibility in how to deploy a management system should apply Hybrid ERP.

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5. The role of ERP for businesses

Enterprise resource planning (ERP) systems play an important role in helping businesses improve operational efficiency, increase productivity and profits. Here are some of the roles of ERP for businesses:

• Information Integration and Management: ERP has the ability to eliminate data duplication, increase information accuracy and consistency, and make it easy for businesses to access and use data for different purposes.
• Enterprise resource management: ERP provides an overview of a business's resources, including human resources, finance, materials, and manufacturing.
• Process Automation: ERP functionality automates many manual processes within a business, saving time, reducing errors, and increasing productivity. For example, the system can automate processes such as bill payments, order processing, inventory management , etc.
• Support for fast and accurate decision making: ERP programs provide business leaders with detailed information about business operations, helping them make decisions faster and more effectively.
• Increased control: ERP helps businesses better control business operations, minimize risks and increase profits.
• Enhanced collaboration: ERP improves communication and coordination between departments, helping the business machine run more smoothly.
• Increased Competitiveness: Successful ERP implementation can help businesses gain an edge in an increasingly competitive marketplace.
• Increased adaptability to change: ERP helps businesses easily adapt to changes in the business environment.
• Improved Customer Service: ERP system functionality helps businesses provide better customer service by providing detailed information about customers and their needs.

6. Total cost of ERP implementation

The cost of ERP software depends on many factors: ERP business management software provider, implementation unit in Vietnam (if using foreign ERP), selected subsystems, implementation form (on prem/on cloud).

In general, ERP deployed on the cloud will cost less than ERP on premises because businesses do not need to invest in hardware and do not need to hire IT experts to operate internally. The implementation unit will be responsible for handling maintenance and charging customers an annual or monthly fee, usually based on the number of users.

When calculating the return on investment (ROI) and total cost of ownership (TCO) of implementing new ERP software , the initial and ongoing human resource costs are just as important as the costs of selecting and implementing the software. For example, maintenance, facilities, downtime, recovery, security, privacy, and IT professional costs are all important considerations.

As mentioned, cloud deployment will significantly reduce both capital and operating costs, helping businesses improve both ROI and TCO.

7. Which businesses should use ERP business management systems?

Although ERP business management software brings many benefits to businesses. However, there will be specific industry groups that are likely to benefit more from investing in ERP implementation. Below is a summary of some types of businesses that should use ERP management systems by EDUTO:

• Manufacturing enterprises: ERP enterprise management system helps manufacturing enterprises effectively manage production processes , warehouses, raw materials, labor, etc.
• Retail businesses: ERP business management software helps retail businesses effectively manage sales activities, inventory management, customer management, etc.
• Service trading enterprises: ERP management software helps service enterprises effectively manage service provision activities, customer management, project management, etc.
• Businesses that want to optimize processes: Any business that wants to optimize processes, improve work efficiency, and reduce waste should consider implementing an ERP system.
• Businesses that are expanding: Businesses that are in the growth and expansion stage should also use ERP systems for better management and preparation for future expansion.
• Multinational enterprises: ERP helps multinational enterprises effectively manage business operations globally.

Businesses need to carefully consider additional factors such as size, industry, financial capacity, etc. before deciding to implement an ERP business management system. Successful ERP implementation can bring many benefits to businesses, but can also pose some risks if not done properly.

See more: The impact of artificial intelligence on business growth strategies

8. How can a business own a good ERP management software?

To own a good ERPs enterprise integration management system, businesses need to do the following:

• Initial investment costs, maintenance costs and support costs need to be considered.
• Provide a complete, consistent database system
• Visually present key information using dashboards, KPIs,…
• Use the same intuitive interface across department management tools
• Seamlessly integrate business production processes and work operations processes
• Automate repetitive tasks
• It is important to ensure that the ERP system has appropriate data security measures in place.
• Need to choose a reputable supplier with good support capabilities
• Choose the ERP implementation form that suits the current situation of the business

9. EDUTO accompanies businesses in effectively implementing ERP

EDUTO is one of the leading ERP solution providers in Vietnam, a senior partner of the world's leading ERP system providers such as SAP , Oracle , etc. With more than 600 ERP experts with more than 3 years of experience, EDUTO has successfully deployed ERP for more than 30 businesses in many different fields. EDUTO's ERP enterprise integration management system has some outstanding features such as:

• Suitable for the needs of Vietnamese enterprises: EDUTO's ERP solution is designed and developed based on the actual needs of Vietnamese enterprises.
• Flexibility and scalability: EDUTO ERP solutions can be easily customized and expanded to meet the growing needs of the business.
• Integrate satellite solutions from the Made by FIS product suite: help accelerate ERP project lifecycles by phase and function, enabling smarter workflows and a cleaner Digital Core environment.
• Professional implementation and support services : EDUTO has a team of experienced experts in implementing and supporting ERP solutions for businesses.

EDUTO understands the problem of business management in each field, ensuring ERP implementation suitable for the specific needs of each enterprise. 

Enterprise resource planning system ERP plays an important role in helping businesses improve operational efficiency, enhance competitiveness and sustainable development . EDUTO hopes that with the above information, readers have obtained basic information about the ERP system. Enterprises with ERP needs, please leave information on the website to receive detailed consultation and demo from EDUTO experts.