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Enterprise resource planning

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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 ERPapplications 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  • To replace out-of-date ERP software (49%)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 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.

Recommended Reading: The Difference Between CRM and ERP

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 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.

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.