ERP: An Art of Sustainability
ERP is defined as a business management system that automates entire business activities in the form of software applications. These applications were developed in the past few decades in response to many businesses that were trying to improve performance while reducing costs. These businesses were trying to develop strategies in order to stay competitive in the growing business market.
At the same time, another initial approach was developed. Environmentalists were started to talk about global warming, acid rain, ozone depletion, overpopulation, biodiversity loss, deforestation and many other catastrophic events that our planet is facing. As a result, the field of sustainability took hold. Sustainability is a multidisciplinary field that strives to maintain better harmony between man and nature and the efficient use of the world’s natural resources to improve human existence on Earth.
Enterprises that strive to introduce innovation and efficient methods of production look at ways to integrate sustainability into their business culture. In the past few years, it has been seen that companies that took into account their social responsibility to society and to future generations in the three components of sustainability: social, environmental, and economic, are actually doing better financially.
This relationship between business and sustainability originated in the 1980s when nations had to find ways to expand their economies without destroying the environment or sacrificing the well-being of future generations. Sustainability has since become a buzz word for an array of social and environmental causes.
The goal of the ERP system in relation to sustainability is to introduce management methods in order to maintain or grow a company’s profit margin while not creating negative environmental or social impacts and strive to improve the lives of those with whom it interacts. In different words, it explains how businesses operate in a way that minimizes impact on living creatures but rather restores and enriches the environment. ERP software has developed a unified approach to address a wide array of three sustainability components.
ERP systems contribute to the financial well-being of a company in terms of generating more revenue while reducing operational costs through one centralized software suite that better controls and manages the entire operation. It increases company value by managing its profit margin, cash flow, and financial operations. ERP increases ROI without degrading natural capital by means of using real-time electronic financial reports. Therefore, companies that use ERP are willing to pay better salaries to their employees and create a better social environment. Moreover, it stores transactions electronically (such as orders and invoices) thereby reducing the chance for errors which translates into revenue.
ERP saves human resources. Work that used to be done by a number of employees now can be done with a fewer number of people and in a shorter period of time which improves efficiency. It protects workers’ and customers’ rights by providing a solid framework of electronic data retrieval, e.g., contracts and technical support. It also encourages employees in the organization to work together and share knowledge as part of their experience in working on one system. Teamwork also streamlines the process of solving problems when different entities in the organization are influenced by the data of their colleagues.
ERP helps to protect the nonrenewable natural resources by using less paper= trees, fewer office equipment = oil, less electricity= coal along with many other natural resources. The great benefit of using ERP is to eliminate the need to synchronize changes between multiple systems by consolidating between the financial, sales, operations, customer service and human resources in the company. The ERP system saves time transferring information, capital, and human resources by transmitting information on a real-time basis providing a more positive work environment for better management decisions. New ERP systems are replacing the old school techniques whereby every document had to maintain a copy for backup by consolidating multiple security systems into a single structure.
ERP can capitalize on sustainability by promoting efficient resource utilization, help minimize environmental impact, enable an effective financial system, and promote social responsibility through accountability.
W.P. Carey School of Business, ASU
SAP Business One is a sustainable software that seeks to maintain strong connections with customers, promote innovation, and achieve the highest business results. Click here to learn more.