Posted by admin at February 2, 2015 in ERP Software
ERP versus Accounting? Many Small and Medium Size (SME) businesses are unfamiliar with the difference between an Enterprise Resource Planning (ERP) and an Accounting Software. While there is some crossover with ERP functionality, the two are slightly different.
ERP software is a resource management system, tracking tangible and intangible assets, materials, human resources, and financial resources. Financial resources may jump out at you, but note that ERP software covers a range of functionality not generally offered by accounting software, often factoring in intangibles like human work hours, product life-cycles, performance units, and customer relations.
Accounting package handles only individual business functions of accounts whereas Enterprise Resource Planning (ERP) package handles the entire range of business functions of an organization. Simply put, accounting software, as it is traditionally known, is a subset of any ERP bundle.
Thus, Enterprise Resource Planning for SME is a fully integrated business management system covering functional areas of an enterprise. It organizes and integrates operation processes and information flows to make optimum use of resources such as men, material, money and machine.
ERP is a tightly integrated closed loop business solution package. In the case of a manufacturer, an ERP system enhances the company's ability to accurately schedule production, fully utilize capacity, reduce inventory, and meet promised shipping dates.
Accounting software as we traditionally know it is becoming less relevant over time. This is why accounting software and ERP software have come to mean similar things in today’s market. More complex software solutions are replacing its function. Industry attitudes have moved on from this dated concept of accounting software, so it’s possible that ERP software may completely co-opt its meaning as well as its functional place in the market.
Given that the two are unlikely to exist simultaneously in the market now or in the future, referring to ERP as accounting software is unlikely to cause confusion.