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 integrates all facets of an operation — including product planning, development, manufacturing, sales and marketing — in a single database, application and user interface.
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.
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, configure, prices, improve accuracy of financial data, facilitate better project planning, automate 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.
The basic goal of using an enterprise resource planning system is to provide one central repository for all information that is shared by all the various ERP facets to improve the flow of data across the organization.
The ERP field can be slow to change, but the last couple of years have unleashed forces which are fundamentally shifting the entire area. The following new and continuing trends affect enterprise ERP software:
Executives and employees want real-time access to information, regardless of where they are. It is expected that businesses will embrace mobile ERP for the reports, dashboards and to conduct key business processes.
The cloud has been advancing steadily into the enterprise for some time, but many ERP users have been reluctant to place data cloud. Those reservations have gradually been evaporating, however, as the advantages of the cloud become apparent.
There has been much hype around social media and how important —or not — it is to add to ERP systems. Certainly, vendors have been quick to seize the initiative, adding social media packages to their ERP systems with much fanfare. But some wonder if there is really much gain to be had by integrating social media with ERP.
Enterprises once attempted to build an all-encompassing ERP system to take care of every aspect of organizational systems. But some expensive failures have gradually brought about a change in strategy – adopting two tiers of ERP.