ERP or Enterprise Resource Planning, as the name suggests is a software package designed and developed to plan all the resources of an enterprise effectively. These resources can be Financial Resources, Human Resources, material resources and others. A ERP package software addresses the enterprise needs of an organization by tightly integrating the various functions of an organization using a process view of the organization. The activities supported by ERP systems include all core functions of an enterprise, including financial management, human resources management, and operations. Major reasons organization going for / advantages of an ERP product are –
- Integration of interrelated information.
- Integration of end to end business processes.
- Standardize and speed up organizational processes.
- Reducing complexity.
- Centralized information source
Interestingly, above are also the points why organizations are reluctant in installing the ERP system in there facilities as because of these reasons results in decrease of departmental myopia and also the habit of putting work on others shoulders.
We will try to understand all the above points by an example. Visualize an industry process of manufacturing, storing (Inventory) and selling of an item. Now we start from back, a sales person enters a sales order in the system for item X with quantity Q then the inventory in charge should come to know that Q is committed to sales for item X. Further consider that there is minimum stock which is to be maintained for item X and if processing of this sales order decreases the inventory below the minimum stock quantity then the production in charge should be intimated to start production of item X. in turn purchase department should be intimated to purchase the required raw material. Below is a diagram depicting this flow –
Coming back to above points, ERP automates, integrates this information flow and the business process as well. It also standardizes and reduces the process complexity. Above all, all this information is stored at centralized place and is secured by user privileges.
A quick point on testing ERP software, apart form the normal functionality a tester has to test the business process and the integration of the information among the interrelated modules.