role of ERP
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Role of ERP in Project Management

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ERP (Enterprise resource planning) system refers to business software that is designed to perform various business tasks such as managing and collecting crucial business data, data analysis, data reporting, handling customer relationships, accounting, etc. This system also enables integration and automation in business functions to enhance efficiency and grow the business. Project management can be described as the application of different processes, methods, knowledge, and skills to attain the objectives of a particular project within your budget limit.

Project management is essential and a top priority for many companies. ERP has been in business organizations for a long time now. It has assisted in various business processes and has faced upgradation in the system to bring revolution in the business operations. However, the full potential of ERP is still not clear among many organizations. One area where ERP solutions are proven valuable is in project management. Project management is about controlling all the variables till your goals or objectives are achieved. The ERP system is helpful to make it possible. 

Smart project management is a way for companies to improve efficiency, utilize resources effectively, and grow their customer base. There are many critical issues that businesses face in the process and it is essential to overcome them. These issues include:

  • Errors in budgeting: If your budget is faulty, it presents a higher risk of losing track of your cash flow. It is essential to keep track of cash flow in and out of the company; in different phases of a project lifecycle. Companies also want to establish a proper structure of transacting payments. 
  • Inappropriate application of your labor: To utilize your resources to their full potential, companies must allocate their labor appropriately. As a business, you have to get a better understanding of your budget and available talent, you should also decide who should be working on which projects and until when. 
  • Misunderstanding your workflow: Communication issues are likely to happen if you fail to understand your workflow correctly. And to maintain an appropriate workflow, business organizations should work out particular roles and goals of each key player of the company and fit them to their part in the standard workflow. This process can help you find where you were coming short and how your operations should be. Communication gaps can also be determined by understanding your workflow.
  • Failure in reporting: Reporting is a vital process. Without reporting tools, enterprises can not get visibility in the project. With the help of reports, you can see how your completed project looks and can get insights while it is still in the process. You can correct the mistakes after analyzing the report to avoid further damage.

Here’s how the ERP system helps you to overcome these problems and assists you throughout the whole process of project management: 

1. Track Costs of the Project

Cost management is an essential part of project management. Companies decide the budget for a particular project in advance to manage cash flow and increase efficiency at as much less cost as possible. This strategy helps them to utilize resources at their full potential and also to invest in other projects. One of the biggest risks of project management, besides missing deadlines- includes going over your decided project budget. ERP systems allow the project to get assigned with a specific production job number and the costs related to the project can get assigned at one place, which is the job number.

This system records and monitors labor hours, purchase costs, subcontractor costs, and the cost of materials collected from inventory. These costs are charged to the project, providing companies with real-time access to the project’s status. Project managers use ERP software to define budgets, track funds, divide billable and non-billable projects, and merge all expenses using the data available.  Many ERP systems offer various advanced tools, but every ERP can use tools like jobs costs creatively by adapting it with tools in their possession.

This represents the flexibility of ERP. In this way, ERP helps businesses track costs or funds at every step of the project to prevent spending more money than the decided budget. 

2. Assist in Project Planning

Project planning is the center of the project life cycle. It is a procedure addressing how to complete a project in a particular time frame and ensures project success. Moving forward with a perfect plan can help you to increase customer satisfaction and their trust in your organization. Project planning is a vital process that assists you in reducing the risks and failures in the project that are likely to occur in the future. ERP solutions can help in project planning from the start to the end. It can update tasks with their specific details when you plan for the project.

The Task management process consists of everything from separating tasks or duties and defining them. ERP system also allows planning in advance to ensure that the deadlines are met, aligning tasks sequentially, and recording tasks accordingly. And all of these processes are integrated into one database for convenient use. 

3. Business Intelligence

Business intelligence refers to a process, technologies that help convert raw data into meaningful information that can increase the profitability of a business. It is a set of softwares and services that assists in data transformation. BI tools conduct data analysis and create reports, summaries, dashboards, etc. ERP consists of various business intelligence tools that can prove to be a valuable asset in project management. BI toolset within ERP provides different ways to report on projects and to set up project milestones. These milestones are goals that can be achieved by specific dates as per the guidelines. With the help of project identification codes, you can extract costs and benefits from ERP then you can group the costs and benefits within the milestone by using sorting and filters. The next step is to produce a detailed analysis of the project or make a summary of the project status by producing a single dashboard; it enables visibility for immediate management review.

4. Track Performance

Performance tracking is a crucial part of project management, and the ERP system also accommodates this process. Enterprises might face various risks and challenges during the process of project management. With the help of this function of ERP, companies can identify the issues in advance to work upon them by resolving and improving in the needed areas. The process of tracking also includes recording project details like milestones and resources, mapping and comparing results, and analyzing project risks and resolving them.

It is crucial to note that all transactions and recorded data are related to people. ERP is an essential tool that provides real-time information, which helps companies to take appropriate actions in a matter of urgency.

5. A Common Source of Data

A successful business recognizes that they all must speak the same language to bring effectiveness in communication. State project benefits in this terms related to ERP. Business organizations should connect their project team members with the project using codes or other parameters contained within ERP. You can establish any project budget in ERP and, with the help of an accounting system, you can produce budget vs. actual project reports.

6. Engineer to Order

Many manufacturers produce special or unique products and services regularly. They are likely to use project management tools considerably. These projects also involve subcontractors and other outside resources. ERP supplier management tools will help in this situation to coordinate with these resources to help ensure that all of the work gets the company desired results and customer satisfaction. ERP gets the job done, whether there’s a single project or a complex multiple-project program. 

7. Focusing on People

Companies typically use ERP systems to record or monitor all the transactions and create data based on sales of products and services. When we focus on a project management perspective, we expect ERP to provide a more people-based view. People here refer to the agents who perform sales and transactions and are at the heart of a project. ERP software helps to provide real-time information regarding the project and, it also helps in allocating resources that have the potential to serve the best to the project. ERP assists in various needed actions throughout the project life cycle. 

Project management is essential in business, whether it is for occasional or daily use. ERP has impacted various project management areas till now. ERP consists of tools and resources that have helped businesses to manage their projects. In the future, ERP will be revolutionizing project management for organizations by making it a convenient process.

Author Bio:

Deepali Daiya likes to read and write on technologies that form the bedrock of the modern-day and age like ERP, CRM, Web Apps, machine learning, data science, AI, and robotics.  Deepali works for Sage Software Solutions Pvt. Ltd., a leading provider of ERP and CRM solutions to small and mid-sized businesses in India..

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