First, the term ERP was introduced by The Gartner Group in the 90s to substitute a set of other abbreviations like MRP (material requirements planning) and one more MRP (manufacturing resource planning). ERP systems were developed not only for manufacturing purposes but also for finance, accounting, HR, and other objectives. Even non-profit organizations and governments use this type of software to meet their needs. ERP software development has become a focus direction for a lot of software engineering companies all over the world.
What Is Actually an ERP?
According to Oracle, ERP stands for enterprise resource planning. Companies have relied on it since the 90s to streamline processes and improve inner visibility around finance, project management, and manufacturing. However, the cost of ownership began to climb significantly, and on-premise ERP couldn’t keep up with modern security demands or trends. ERP evolved to embrace the Internet with new features and functionalities. The cloud, for example, offers a more affordable alternative to ERP because it eliminates the need for software and hardware. ERP cloud enables organizations of all sizes across all industries to make significant cost savings, prove business insight, enhance collaboration, and increase efficiency.
Usually, ERP systems consist of multiple modules. According to Wikipedia, here are some of the most important components of ERPs and their objectives:
- Sales - Implement functions of order placement, order scheduling, shipping, and invoicing.
- Procurement - Maximize cost savings with support for the end-to-end procurement and logistics processes.
- Production - Helps in planning and optimizing the manufacturing capacity and material resources. It is evolved from MRP.
- Distribution - Control warehouse processes and manage movements in the warehouse and respond faster to challenges and changes in supply and demand.
- Accounting - Automate any financial operations while ensuring regulatory compliance and gaining real-time insight into overall performance.
- Human resource - Maintain a complete employee database and to optimally utilize of all employees.
- Corporate performance and governance - Aims to streamline and gain greater control of the corporate services.
- Customer services - Capture and maintain customer relationships, facilitate the use of customer experiences and evaluate knowledge management.
- Enterprise asset management - Efficiently and sustainably manage the entire asset lifecycle, improve asset usage and cut costs with powerful analytics.
- Business intelligence - Analyze data and convert into information.
- E-commerce - Focus on internal strategies.
Typically, ERP systems have the following features:
- The capability of integration with other systems.
- Real-time performance.
- A common database.
- Deployment options.
The latter feature means that the solution may be deployed as an on-premise system, a hosted cloud, or a SaaS application depending on what fits your business needs better.
Usually, ERPs incorporate best practices which explain how a vendor offers to execute business processes in the most effective way. The best practices implementation allows reducing risks and complying with most customers requirements.
Standing Out from Competitors: Custom ERP Software Implementation
The scope of the system impacts the operation processes inside the company. To implement the changes, organizations traditionally use the following services: customization, consulting, maintenance or support. How much a company implements a new system depends on how large a company is, how many modules it implements, how many changes it expects to see. If there are many modules, the system can be introduced to users in stages. Large systems can be implemented from 14 months to years whereas small applications can be implemented within a month or a few. If you need to customize the software, it will take much longer to implement it properly.
Preparing to implement
If you are going to implement new software you should note that this will lead to the changes in existing processes. Your starting point is to identify what you actually need. The challenges you will meet on this way may include the lack of motivation or training among the employees, the difficulties with the system itself, or the peculiarities in your business processes. Thus, it is important to deeply analyze everything related to your workflow and infrastructure. An in-depth business analysis helps find the opportunities to modernize the processes and eliminate the risks by doing the following things:
1) analyzing the correlation between existing processes and the company's strategy;
2) identifying the effectiveness of every process;
3) identifying existing automation solutions.
Configuring and customizing
If you want to stand out from your competitors, your business processes must differ from theirs. Therefore, you should customize every new software you implement. Enterprise resource systems are often customized by the final users. It means that some technical part of the software is rewritten according to users requirements and needs. However, it’s better to customize the software before it is implemented, i.e. during the development process.
Types of Systems and ERP Examples
2-tier ERP systems allow organizations to run 2 analogous software systems simultaneously. Simply put, the system is divided into 2 levels: a corporate and a subsidiary. 2-tier systems are used mainly by large enterprises who are in need to optimize the work of their divisions or regional offices. In this case, regions have their own business models, workflows, and are able to address the local challenges. A lot of companies choose this type of systems because of the following factors: globalization in the manufacturing industry, cheaper implementation costs at subsidiary levels, the need for data to pass 2 systems, etc.
ERP for small companies is developed to meet the needs of S&M businesses. This kind of software is also called a lightweight ERP. Usually, these systems include such modules as sales, accounting, manufacturing, project management. An example of small ERP is PeopleSoft.
Open source systems are known for their code that is publicly available. This type of software is a good fit for those customers who search for off-the-shelf solutions to be implemented immediately. An example of an open source system is Odoo.
Vertical systems focus on a particular niche, such as construction, grocery distribution or e-commerce. An example of a vertical system is Epicor Retail.
Cloud ERP solutions offer opportunities for customization and integration to meet different industry requirements. An example of a cloud system is Oracle.
How to Develop ERP Software Using PHP?
It’s up to a business owner or a vendor what programming language to choose while developing ERPs. However, the most frequent question I met over the Internet was “How to develop ERP software using PHP”. I delved into discovering why so many people ask this question or what the peculiarities of ERPs development are. And here is what I found.
The first site I consulted was Quora, surely, because it provides a lot of answers from different people including experts on different topics. There, users asked if it was a good idea to develop ERP in PHP as well as what advantages and disadvantages of that way were.
Shurn Heng, a PHP developer, shared his view of pros and cons of building ERP with PHP. Here are some of those:
- It’s easy to hire a PHP developer. This programming language is considered to be one of the most popular languages for web development that’s why it’s quite easy to find a right candidate.
- The availability of different frameworks. PHP language is good for building your ERP system as it has a lot of frameworks available.
- Off-the-shelf PHP solutions. If you run some of S&M businesses, a ready PHP solution will work best for you. However, if your company is large, you’d better think of a bespoke software.
- It’s difficult to find a skilled PHP developer. Despite the fact that there are a lot of PHP specialists, it’s sometimes hard to find a true expert in PHP. Besides, if you want to develop an ERP system, you will need to find a person who is experienced in enterprise solutions development.
- Financial data security risks. When you are doing any form of numeric variables in PHP, you should be aware of the type. According to Shurn Heng, you can potentially strip out 99 cents if you convert from float to integer.
- PHP is not good for processing Big Data. This language is stateless that’s why there are some problems with Big Data processing.
To sum it up, it’s quite a normal idea to build your ERP systems with PHP. But you should remember about these three things: 1. find expert developers; 2. think of the financial security risks; 3. identify the features you would like to see in your system. However, there are a lot of other programming languages, technologies, and frameworks that you may use to build a new system. If you have any doubts as to what technology to choose, consult professionals.
Step-by-Step ERP Software Development Process
Traditional ERP system life cycle consists of the following stages:
- Defining the scope. During this stage, all the stakeholders define which features the future ERP system must have. Along with identifying the main features, a team develops a long-term vision for the new system and a short-term implementation plan. This stage also includes the analysis of the requirements.
- Development. This stage includes the following operations: the license purchase, the identification, and execution of tasks, implementation of changes in the business process, data migration if needed, configuration.
- Implementation. On this stage, the focus is on installing and releasing the system to the end users and monitoring the release process. Feedback received from system user needs to be funneled to the post-implementation team for ongoing system support.
- Operation. Once all the ERP modules are released, new users are trained to use those modules properly.
Note, that often system failures occur when the change management is not taken into account on the initial stages of the project. A vision for the change management should be introduced from the first stage and then revised, monitored, and implemented on a constant base.
Step-by-Step ERP Implementation
The highly competitive environment in the marketplace requires companies to optimize their resources better, enhance the effectiveness of the processes, and keep their customers satisfied with the goods or services they offer. That is the reason for so many organizations implement ERP systems. Selecting a system that meets your needs and requirements enables companies to have a simpler implementation procedure. If you have straightforward requirements for the system, you can easily find an off-the-shelf solution available on the market. Remember, it’s time-consuming to develop a custom software. However, it is worth it. You get a set of specific business features that fit completely your objectives. In both cases, you should bear in mind that a well-developed implementation plan could become your key to success.
Here is a plan you may use as the basis for crafting your own implementation project.
ERP Implementation Strategy
Here is an example strategy to implement your new system. You may use this example plan to craft your own strategy.
Phase 1 - Planning
Planning must include a chain of the following phases:
- Build a team
- Define existing business processes and data flow
- Set your project goals
- Craft a project strategy and plan
Team: Assign a project team with employees from different departments like sales, customer service, procurement, senior management, etc. Everybody must be committed to the final success and responsible for a particular task.
Define existing processes: Let your team analyze which processes need to be enhanced. Collect the key documents such as tickets, bills, invoices, etc. and start brainstorming new ideas such as: Are existing processes up to date? Are there the processes that should be automated?
Set project goals: Define your goals before implementing the ERP system. You need to define what features to implement first. Examples of challenges of the project may include the following issues: Does the system reduce backlogs? Can the system enhance on-time deliveries? Will you be able to increase effectiveness?
Make a plan: You should develop a project plan which includes previously defined goals, timelines, training procedures, as well as individual team responsibilities. The end result of the project plan should be a “to do” list for every team member.
Phase 2 - Procedure planning
Procedure planning must include a chain of the following phases:
- Review of software requirements and features
- The identification of manual processes
- The development of standard operating processes
Review of software requirements: Allocate three to five days to review the software requirements with your project team. Identify the gaps that must be bridged and determine what features must be modified before training end users.
Define manual processes: Think what manual processes could be automated with the help of ERP system.
Develop standard operating processes: These processes should be documented. This task, is important to successful ERP implementation. Here are some examples of standard operations: 1. How do you handle global price changes? 2. What are the processes for lead generation? 3. How do you handle the paperwork on drop shipments?
Phase 3 - Data gathering
This stage includes the following phases:
- Data conversion
- New data collection
- Review of data
- Clean-up data.
Data conversion: It is presumed that 100% of the information can’t be converted as the system may contain legacy information. First off, analyze the data and decide which information should be converted.
New data collection: Analyze the new data that should be collected. Determine the sources
of the new data. Note that mostly all ERPs have an ability to upload data from spreadsheets to the database.
Data review and clean-up: After the collection, the data must be reviewed and cleaned up to make the system’s information accurate and concise.
Phase 4 - Testing and training
- Database pretesting
- Tests verification
- Final tests
Database pretesting: The team must be sure that everything works properly and accurately that’s why the system should be pre-tested. The other things that should be checked are interfaces, integration issues, etc.
Tests verification: Check if the tests test mirror the SOPs outlined in the second step, and determine whether modifications need to made.
Training: It’s good when the trainers are trained first. Build a team who will provide training for your employees. Provide training documentation. Refresher training should also be provided as needed on an ongoing basis.
Final tests: Once training is done, the team must perform final tests on the data and processes.
Phase 5 - Going live
When you are going live, you should assess if your objectives are met. When the system is up and running, perform a post-implementation audit. Check if the product does what it was intended to do. Besides, it’s important from time to time to review the system in order to increase the ROI.
How Can Diceus, an ERP Development Company, Help You?
Our team is experienced in developing a custom-designed enterprise-grade solution for different industries and implementing off-the-shelf ERP solutions as well. If you made up your mind to develop a new system for your business or choose one from the existing products, feel free to contact us and get a free consultation from our experts. We will provide you with a step-by-step implementation plan or a comprehensive SRS documentation.