Enterprise Resource Planning (ERP) is business management software (integrated application) that a company can use to store and manage data from every stage of business, including:
- Product Planning, Cost and Development
- Sales and Marketing
- Inventory Management
- Shipping and Payment
ERP provides an integrated real-time view of core business processes,
using common databases maintained by a database management system. ERP
systems track business resources—cash, raw materials, production
capacity—and the status of business commitments: orders, purchase
orders, and payroll. The applications that make up the system share data
across the various departments (manufacturing, purchasing, sales,
accounting, etc.) that entered the data. ERP facilitates information
flow between all business functions, and manages connections to outside
Organizations consider the ERP system a vital organizational tool
because it integrates varied organizational systems and facilitates
error-free transactions and production. However, ERP system development
is different from traditional systems development. ERP systems run on a variety of computer hardware and network configuration, typically using a database as an information repository.
ERP (Enterprise Resource Planning) systems typically include the following characteristics:
- An integrated system that operates in (or near) real time without relying on periodic updates.
- A common database that supports all applications.
- A consistent look and feel across modules.
- Installation of the system without elaborate application/data
integration by the Information Technology (IT) department, provided the
implementation is not done in small steps.
The fundamental advantage of ERP is that integrating myriad businesses
processes saves time and expense. Management can make decisions faster
and with fewer errors. Data becomes visible across the organization.
Tasks that benefit from this integration include:
- Sales forecasting, which allows inventory optimization.
- Chronological history of every transaction through relevant data compilation in every area of operation.
- Order tracking, from acceptance through fulfillment.
- Revenue tracking, from invoice through cash receipt.
- Matching purchase orders (what was ordered), inventory receipts (what arrived) and costing (what vendor invoiced).
ERP systems centralize business data, which:
- Eliminates the need to synchronize changes between multiple
systems—consolidation of finance, marketing, sales, human resource, and
- Brings legitimacy and transparency to each bit of statistical data.
- Facilitates standard product naming/coding.
- Provides a comprehensive enterprise view (no "islands of information"),
making real–time information available to management anywhere, any time
to make proper decisions.
- Protects sensitive data by consolidating multiple security systems into a single structure.
- ERP can greatly improve quality and efficiency of the business. By
keeping a company's internal business process running smoothly, ERP can
lead to better outputs that benefit the company, such as customer
service and manufacturing.
- ERP supports upper level management, providing critical decision making
information. This decision support lets upper management make managerial
choices that enhance the business.
- ERP creates a more agile company that better adapts to change. ERP makes
a company more flexible and less rigidly structured so organization
components operate more cohesively, enhancing the business—internally
- ERP can improve data security. A common control system, such as the kind
offered by ERP systems, allows organizations the ability to more easily
ensure key company data is not compromised.
- ERP provides increased opportunities for collaboration. Data takes many
forms in the modern enterprise. Documents, files, forms, audio and
video, emails. Often, each data medium has its own mechanism for
allowing collaboration. ERP provides a collaborative platform that lets
employees spend more time collaborating on content rather than mastering
the learning curve of communicating in various formats across