To many people, the terms “ERP” (Enterprise
Resource Planning) and “Accounting Software” are interchangeable. This
misconception, however, ends up being a detriment to companies when purchasing
decisions are based on the comparison of apples to oranges, i.e. two distinctly
different products.
So what is the difference between ERP and
accounting software? In short, accounting programs are merely a subset of the
core ERP software capabilities and represent a fraction of the functionality
provided by comprehensive ERP. This truth, however, is just the tip of the
iceberg.
Accounting software
Predictably, accounting software deals with the financial aspect of operations by recording business transactions: AR/AP, journal entries, and general ledger utilized to produce basic financial reports like income statements and balance sheets. Due to this specified but limited focus, the accounting software market has experienced some instability with providers resorting to buyouts or ceasing operations altogether. Why?
Predictably, accounting software deals with the financial aspect of operations by recording business transactions: AR/AP, journal entries, and general ledger utilized to produce basic financial reports like income statements and balance sheets. Due to this specified but limited focus, the accounting software market has experienced some instability with providers resorting to buyouts or ceasing operations altogether. Why?
Accounting software provides a good snapshot
of a company’s financial health today but lacks the ability to anticipate
tomorrow. Without data-driven forecasting, companies base business decisions
primarily on SWAG (Scientific Wild Assumption Guessing) to predict supply and
demand for products and services causing many to fall short of their
profitability goals.
ERP software
Accounting functionality comprises just one subset of the overall solution. ERP’s main objective is to facilitate the day-to-day management of business operations by incorporating data from multiple aspects of the business into a seamless and comprehensive information system. ERP encompasses: Order Entry, Financials, CRM, Reporting, Purchasing, Inventory Control, Warehouse Management (automation/scanning), Serial/Lot Control, QC Tracking, Label Generation, Kitting/Assembly, Secondary Processing, and more along with supplementary functionality of E-commerce, API, EDI, and Mobile Apps.
Accounting functionality comprises just one subset of the overall solution. ERP’s main objective is to facilitate the day-to-day management of business operations by incorporating data from multiple aspects of the business into a seamless and comprehensive information system. ERP encompasses: Order Entry, Financials, CRM, Reporting, Purchasing, Inventory Control, Warehouse Management (automation/scanning), Serial/Lot Control, QC Tracking, Label Generation, Kitting/Assembly, Secondary Processing, and more along with supplementary functionality of E-commerce, API, EDI, and Mobile Apps.
By accurately processing and analyzing data
through these company-wide functions, ERP software delivers forecasting
integral to improving the timing of sales and inventory, detecting process
deficiencies, and identifying strategic enhancements for growing productivity
and competitive advantage.
What’s Best for You?
Because businesses demand a more complete
software solution, ERP continues to consume the accounting software market.
Understanding the differences in software functionality is critical to your
company’s near and long-term success. If you’re currently investigating
software options for your enterprise, Distribution One can help. Our
experienced team will listen to your needs, answer your
questions, and explain the benefits of our comprehensive ERP software
functionality.
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