Enterprise resource planning (ERP) is business process management software that allows an organization to use a system of integrated applications to manage the business and automate many back office functions related to technology, services and human resources.
ERP software typically integrates all facets of an operation — including product planning, development, manufacturing, sales and marketing — in a single database, application and user interface.
ERP is an Enterprise Application
ERP software is considered to be a type of enterprise application, that is software designed to be used by larger businesses and often requires dedicated teams to customize and analyze the data and to handle upgrades and deployment. In contrast, Small business ERP applications are lightweight business management software solutions, often customized for a specific business industry or vertical.
Today most organizations implement ERP systems to replace legacy software or to incorporate ERP applications because no system currently exists. In fact, a 2016 study by Panorama Consulting Solutions, LLC., indicates that organizations implement ERP for the following reasons:
To replace out-of-date ERP software (49%)
To replace homegrown systems (16%)
To replace accounting software (15%)
To replace other non-ERP systems / had no system (20%)
ERP – Enterprise Resource Planning
ERP Software Modules Explained
ERP software typically consists of multiple enterprise software modules that are individually purchased, based on what best meets the specific needs and technical capabilities of the organization. Each ERP module is focused on one area of business processes, such as product development or marketing.
Some of the most common ERP modules include those for product planning, material purchasing, inventory control, distribution, accounting, marketing, finance and HR. A business will typically use a combination of different modules to manage back-office activities and tasks including the following:
Distribution process management
Supply chain management
Services knowledge base
Improve accuracy of financial data
Facilitate better project planning
Automate the employee life-cycle
Standardize critical business procedures
Reduce redundant tasks
Assess business needs
Accounting and financial applications
Lower purchasing costs
Manage human resources and payroll
As the ERP methodology has become more popular, software applications have emerged to help business managers implement ERP in to other business activities and may incorporate modules for CRM and business intelligence, presenting it as a single unified package.