What is an ERP system and why they are important

An old professor I had once said something incredibly profound that I had never considered despite my background in IT. He said that “Computerization adds transparency” in a business.

His example was that when using physical books for accounting, which is often the case for many simple shops even today, humans can introduce inconsistencies in the data, which is a fancy way of saying that they can mess with the actual finances in an organization. With computerization, i.e. just using a computer to do the accounts, inventory and other book-keeping tasks, the calculations made cannot really be controlled by people and everyone can see them (as they need to).

The impact of IT in any organization is very significant regardless of the size or nature of the organization. In this article we’re going to look at a simple example of an IT Institute that uses a simple Online Information System to maintain important class material.

An Illustration

Our situation is simple. A class has many subjects each taught by a few professors. One or two students maintain an online system, that is accessible to view by everyone but only they can upload to and it can contain all sorts of resources like books, software, code, etc. It also contains important information like notices, timetables, and important announcements

Now this looks nothing like a system that you would find in a business but it will serve the purpose of illustrating the impact that any IT system can have in an organization.

Access to Information

Information is vital to the functioning of an organization, even to a classroom. Having the system online with an easily accessible URL (or perhaps as an application installed on everyone’s phone or computer) makes sure that anyone can look up the information right then and there. This is especially useful if it is a front-desk position and you have an impatient customer sitting right in front of you.

In our example, this would expand to information being available to any student 24×7 whether or not they are in college at the time. This means that if someone wants to look up what an assignment was, they can do so from the comfort of their own bed at any time.

A common knowledge base

When an ERP system or any computer system is implemented in an organization, it centralizes the data. Meaning that all the data lives in one central location.

This means that any data coming into the system will be collected together from multiple sources across an organization. In our example, this knowledge could be class notes, articles, books and other study material that all the students in a class would need.

Having a central repository of all knowledge means that if a student needs to look up some information in any book or any notes, they all have it in a central location and they don’t have to ask each other for it, saving them a lot of time.

Saving Work

ERP systems store day-to-day information that is constantly updated. For projects, this means that everyone has a record of exactly what work is done and what needs to be done.

In our example, this would be class notes that could be uploaded every week. Everyone would know exactly where the lectures are in the syllabus hence keeping track for anybody who might’ve missed a few.

Also in our example, the knowledge base of books, notes and other resources would be constantly built up so that when the exams come, every student is well-equipped with whatever they need so that they can study without worrying about missing something from the syllabus.

Looking to the future

One of the key benefits of ERP systems for any organization is that because the information is collated, organized and readily available, managers at all levels can make important decisions for the future.

For example, both teachers and students in our example can be aware of what is done in class and what they need to do in the time remaining till the exam. Students can also look back at some mistakes that may have been made in the past and eliminating inefficiencies.

Due to the fact that the information is available constantly, short-term and long-term decisions can be made, and people can see where they went wrong and perhaps how to improve things.

ERP is a nebulous term and it can mean different things for different people, however it is important to understand that knowledge is power and that’s where ERP matters.

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