What is ERP Software?

What is ERP software?

Enterprise Resource Planning (ERP) software is a type of software that helps businesses manage their day-to-day operations like finance, accounting, procurement, manufacturing and human resources.

The ERP system basically integrates all these different functions into one centralized platform to streamline business processes, improve efficiency, and increase productivity.

An ERP automates many of the manual processes involved in running a business like generating invoices, tracking inventory, and managing customer relationships, which in turn frees up valuable time and resources that can be allocated to more important things like sales and customer service.

An enterprise resource planning system typically includes various modules, each of which is designed to automate a specific group of business processes.

The most common ERP modules include:

1. Finance and Accounting

2. Inventory Management

3. Sales and Marketing

4. Human Resources

5. Manufacturing

6. Supply Chain Management

How Does ERP Software Work?

ERP software works by integrating all of a business’s core processes and data into a single, centralized system. This integration ensures that everyone in the organization has access to the same information and can work more efficiently. 

For example, a salesperson can check inventory levels in real-time and make informed decisions about which products to promote to customers.

Enterprise resource planning software typically relies on a centralized database that stores all of the data for the entire organization. This database is accessible by all authorized users, regardless of their location or department, which helps ensure data accuracy, reduce errors, and increase efficiency.

When looking for ERP software, businesses typically have two options: purchase a license from a software vendor, or use open source software that doesn’t require a license, both of which can then be installed on their own servers or in the cloud. 

Depending on the chosen software, both options provide a level of ongoing support, updates, and maintenance to ensure the system is running smoothly.

How ERP software works

Benefits of ERP Software

ERP software provides businesses with a wide range of benefits, including:

1. Increased efficiency: enterprise resource planning software streamlines business processes and eliminates many of the manual tasks that are prone to error, such as data entry and inventory management.

2. Better decision making: ERP provides real time visibility into critical business data, allowing businesses to make informed decisions based on accurate information.

3. Improved collaboration: ERP software enables all departments to work together more efficiently, which leads to better collaboration and improved business outcomes.

4. Reduced costs: By automating many of the manual processes involved in running a business, an ERP system can reduce labor costs and improve efficiency, leading to cost savings over time.

5. Better customer service: ERP software provides real time access to customer data, which allows businesses to provide better customer service and improve customer satisfaction.

6. Scalability: Some ERP softwares are highly scalable and can grow with the business, which is ideal for businesses that want tech that can grow and evolve with the rest of the enterprise.

When it comes to selecting an ERP system, there’s two primary options: open source and proprietary ERP systems. Both options have their advantages, and the choice ultimately comes down to the specific needs and goals of each business.

Open Source ERP Software

Open source ERP software is a type of software that’s developed by a community of developers who work collaboratively to create and improve the software. The source code is freely available for developers and enterprises to use and modify as they need, and there are typically no licensing fees or restrictions. 

Open source ERP software is designed to be highly configurable and customizable because this allows businesses to tailor the system to their specific needs. This flexibility is essential because every business has unique processes and requirements that must be addressed.

Some of the benefits of an open source ERP include:

1. Customization: Because the source code is freely available, businesses can customize the software to meet their specific needs rather than run into customization barriers due to license restrictions.

2. Access to innovation: Since open source software allows for a wide range of customizations, companies that choose to go the open source route have an increased access to innovation for their software needs.

3. Flexibility: Open source ERP software is often more flexible than proprietary software, which can make it easier to integrate with other software systems.

4. Community support: Open source ERP software is often supported by a large community of developers who provide community support, bug fixes, and education for the software on an ongoing basis.

5. Cost: Open source ERP software doesn’t come with license fees, which can be a significant advantage for small businesses with limited budgets, as well as large enterprises that want scalable technology and to save money on their tech infrastructure.

6. Transparency: Because the source code and community are open, there’s greater transparency and accountability around things like bug fix protocols.

Proprietary ERP Software

Proprietary ERP software is software that’s owned and licensed by a specific vendor. The source code is not available for modification or distribution, and businesses typically pay licensing fees and support costs to use the software.

The main benefits of proprietary ERP software are:

1. Vendor support: Proprietary ERP software is typically supported by the vendor, which means businesses have access to the vendor’s technical support and documentation offerings.

2. One-stop-shop: Proprietary ERP software is often designed to be a single solution you can just plug in and go, which can be an advantage for businesses with limited IT resources and needs.

3. Less specialized: Because proprietary software lacks the high level of customizability that comes with open source, it’s great for businesses that know they don’t need that degree of customization.

Both open-source and proprietary ERP software have their advantages and disadvantages, and the choice ultimately comes down to the specific needs and goals of the business. 

Open source enterprise resource planning software can be a good choice for businesses that want to save money on their tech infrastructure and need a highly customizable and scalable solution. 

Proprietary ERP software may be a good choice for businesses that don’t require a higher degree of customization and want a simple, one-and-done solution they can just “plug in”. 

Ultimately, the decision should be based on a careful evaluation of the features, costs, and benefits of each option.

Apache OFBiz ERP

Apache OFBiz is an open-source ERP software that’s designed to provide a wide range of business management solutions. It has a comprehensive suite of applications that includes features such as accounting, inventory management, manufacturing, order management, and customer relationship management (CRM). 

OFBiz is maintained by the Apache Software Foundation and is distributed under the Apache License, which means that it’s free to use, modify, and distribute. It’s also the backbone of everything we do here at HotWax Systems.

Five main modules of Apache OFBiz ERP software

Features of Apache OFBiz ERP Software

1. Inventory Management: OFBiz allows businesses to manage their inventory levels, track stock movements, and set reorder points to ensure that they always have enough stock on hand.

2. Manufacturing: OFBiz includes a comprehensive manufacturing module that allows businesses to manage their manufacturing processes, including planning, scheduling, and tracking production.

3. Order Management: OFBiz provides an order management system that enables businesses to manage their orders from creation to fulfillment, including tracking shipments and managing returns.

4. Customer Relationship Management (CRM): OFBiz includes a PARTY model that allows businesses to mange individuals, groups, and organizations, tracking relevant customer data throughout. 

5. Accounting: OFBiz provides a complete transactional accounting mechanism that integrates with third party accounting systems. 

6. E-commerce: OFBiz includes an e-commerce module that enables businesses to set up and manage their online stores, including shopping carts, payment processing, and order fulfillment.

Advantages of Apache OFBiz ERP Software

1. Open source: OFBiz is an open source software solution, which means that it’s free of licensing fees and can be modified as needed to fit the needs of each business that uses it. This can be a significant advantage for small businesses with limited budgets, as well as large enterprises that want to reduce their tech costs.

2. Customization: OFBiz is highly customizable, which means that businesses can tailor the software to meet their specific needs, and that these customizations can change over time with the business. 

3. Comprehensive: OFBiz includes a wide range of applications that cover most aspects of business management. This means that businesses can use a single software solution for all their business management needs, which can simplify their operations significantly.

4. Community Support: OFBiz is supported by a large community of developers who provide support, bug fixes, and new features. This can be a significant advantage for businesses that require ongoing support and development, as well as those looking to hire more tech talent.

5. Scalable: OFBiz is highly scalable, which means that it can be used by businesses of all sizes, from small startups to large enterprises.

Apache OFBiz is a comprehensive and customizable open source ERP software solution that includes a wide range of applications that cover most aspects of business management, making it a good choice for businesses that want a single software solution for all their business management needs. 

This is ERP

Enterprise resource planning software is a powerful tool that helps businesses manage their day-to-day operations more efficiently. 

It streamlines business processes, improves collaboration, and provides real-time access to critical data in order to help businesses make informed decisions and improve their bottom line. 

There are two main types of ERP softwares to choose from: open source or proprietary, and which one is right for your business will depend on a list of factors like budget, reason(s) for adopting an ERP, and how much customization your system might need.

Regardless of which type of enterprise resource planning software you choose, if you’re looking to improve your business processes and increase efficiency, an ERP system may be the solution you need.

Infographic about the purpose of enterprise resource planning software

DATE: Mar 15, 2023
AUTHOR: HotWax Systems
Enterprise ERP, Open Source Software, OFBiz