In today’ acronym-filled world, it is easy to blow past alphabet strings and not fully understand their meaning. Be fully armed to defend yourself in conversations with vendors, bosses, and co-workers; learn these terms. It is not that hard and ignorance can hurt you.
ERP – Enterprise Resource Planning. ERP is a broad term for an accounting system that runs most of your business in one integrated piece of software. ERP extends accounting software beyond the four walls of the accounting department. In a simple business, QuickBooks qualifies as ERP. A classic description of ERP would be for a manufacturing company that tracks quotes in a CRM module, advances approved quotes to invoices and communicates with inventory to forecast production, sends out purchase orders for stock, builds the products, fulfills the order and ships out the order. In this case, the entire business (Enterprise) uses one system from Quote to Shipping.
MRP – Manufacturing Resource Planning – is a subset of ERP but only includes the manufacturing features, so Inventory, Bill of Materials, Work Orders, and Production would all be part of the MRP subset of the system. While financials, CRM, AP, and AR would not be included in this acronym.
CRM – Is another subset of the ERP system that relates to sales management, marketing, and customer service. You can own a CRM system that is not part of your accounting system but the goal is to have one integrated system, one source of the truth, one ERP system. Many businesses will buy a CRM system and a financial system from different software companies and then spend 10’s if not 100’s of thousands of dollars to integrate them. In my experience, those companies that selected one integrated system have higher success rates and lower operating costs.
PSA– Professional Services Automation – This is another subset of ERP for project-focused businesses. A PSA business collects time, expenses, and purchases against a project for costing, management and billing to a customer. In a professional services company the CRM system tracks project proposals that create a project and budget when approved, release the project for consultants to enter time & expenses, and bills that time to the customer on a regular cycle. Project Managers can see utilization, estimate to complete, burn rate, approve change orders and manage resources. All the project information rolls up to AP, AR and the GL for financial reports. Again, it encompasses the enterprise in one software solution.
E-Commerce – Electronic Commerce, shopping cart or a website like Amazon for your products and services. E-Commerce is an unpaid sales person and marketing resource that works 24/7/365 for your business. E-Commerce is a way for customers to research and price your products without talking to a salesperson, which is what 70% of customers want. A good E-Commerce site will have more than just a product list. It will have features, specs, warranty info, pictures, videos, customer references, documentation, reviews and expert analysis. The E-Commerce system makes it easy for customers to buy from you when they want when they have time, which is probably not 8 to 5.
PCI Compliant – Is a secure credit card certification. Since credit card use is increasingly popular, fraud is going up, and compliance is tougher. You should demand PCI compliance built into your ERP system. If your business takes credit cards, and you should, you have to be PCI Compliant under penalty of law. In essence, none of your employees handles credit card information, only a token or the last four digits are visible. The credit card processing is outsourced and your business never sees or stores the complete credit card information.
Web Services– is a secure way for computer programs to exchange information over the internet. Web Services are an essential feature for modern ERP systems. Web Services are the automatic data exchange tools for credit card authorization to make credit card processing PCI compliant. Web Services shop shipping rates between UPS, USPS, FedEx and other carriers. Web Services are used for currency rates, local tax rates, and to get signatures from customers on contracts with a digital signature. New web services are coming out every day and are critical to making your ERP system efficient and competitive.
SaaS – Software as a Service – is renting software, not owning it. In the past, a business would buy a CRM system for $20,000 for eight people and pay 20% annually for the updates. The business would also pay for servers and internal IT to support the software, plus pay consultants to upgrade the software every two or three years. Today, many businesses elect to rent the software for $75 per person per month. The SaaS license comes with the servers, installation, upgrades and related IT support, the customer only needs an internet connection to get to the software. The key hidden cost is internal IT. Most businesses have swamped IT departments and their importance to business growth is increasing. If the SaaS model prevents the business from adding headcount to internal IT or allows IT to focus on key company goals, SaaS is often a bargain.
SQL – stands for structured query language and it is a database. It is the electronic filing cabinet that stores all your financial and customer information. There are many software publishers that produce a SQL database, including Oracle, Microsoft, My SQL, Sybase, and MongoDB but Oracle is most popular with Fortune 1000 companies and Microsoft SQL or MS SQL is most prevalent with the rest of the market. Oracle requires a person or persons to manage it, called a DBA (Database Administrator). The DBA monitors, the size, speed, indexes, and backups. The DBA tunes and optimizes the database for best performance. Oracle is behind some of the biggest databases in the world and it comes with an overhead that most businesses cannot afford. MS SQL is self-managing. Once installed it will expand, re-index and back itself up as instructed. It is an install it and forget it database. It is economical and the standard for most of the business world.
SLA – Service Level Agreement – This agreement is especially important for SaaS but on-premise software too because it defines what the publisher will do when the software breaks. What is the uptime guarantee? It should be in the 99.x range. What if we have a bug? How quickly will it be fixed? When will upgrades happen and how long will they take? Do I have a choice of when my software is upgraded? If the publisher fails to meet the SLA, how will I be compensated?
Knowing these terms will allow you ask better questions like; when a vendor says their system runs on SQL, you can ask which SQL? When a vendor says the license is SaaS, you can ask what is included? Upgrades? Sandbox? SQL license? Backups? How many users? How many transactions? How much storage? How am I compensated if you fail to meet the SLA? When the vendor drops terms like ERP, MRP, and CRM, you can ask what business functions are included and what is extra. Knowledge is power and knowing these terms will prepare you to defend yourself, in the tech world full of prickly acronyms.
If you would like to discuss more of the strategy behind these terms, drop me an e-mail at [email protected]