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.
Read MoreThe ERP(Enterprise Resource Planning) software concept first appeared in the 1960s’ under the form of MRP (Material Requirements Planning), which focused on manufacturing, purchasing and delivery and was mostly used for organization and scheduling. The next stage of MRP (MRP II) brought new functionalities during the 1970s, including accounting, human resources and financials. At that time, the demand for the software grew as it became more inclusive in terms on industries, but its actual usage was limited given the expensive price (MRP software was used by approximately 700 companies in 1975). The modern ERP software was developed during the 1990s when all core business organizations, but also government and non-profit organizations, turned their attention to ERP solutions.
The online ERP concept was first coined by the Gartner Group, which described ERP II as being an internet-enabled software that went outside the business environment by integrating the supply chain management, CRM and business intelligence. Up to the 2010s, mobile solutions and more online ERP functionalities were added, while the industry underwent a severe consolidation in terms of ERP software companies.
Nowadays, the ERP software integrates all the aspects of a business into a centralized system, being used by organizations of all sizes for managing their day-to-day business operations. ERP solutions are used to process and manage the data and information collected from the entire business process, while offering a simplified and real-time view of all the relevant activities.
The ERP software has been regarded as the nervous system of a business as it ties together all functionalities, such as product planning, inventory, manufacturing, sales, HR and accounting, marketing, etc. The following are included among the most important benefits of the ERP software:
- A centralized and improved business insight – real-time information available in a wide range of reports;
- Efficiency and productivity gains across the organization, including lower operations costs generated by streamlined business processes and an increased collaboration between users of all levels and functions;
- Better financial decision making and control, which leads to a lower financial risk;
- Increased automation that leads to limited human errors;
- Enhanced customer experience and collaboration;
- High user adoption rates.
There are numerous ERP solutions available currently, ranging from ERP for small business to ERP catering to the most complex and internationally exposed organizations. The modern ERP software is suitable for any company size and across any industry. Most of the ERP software companies propose on-premise, hybrid and/or cloud ERP solutions that are easily customizable, while other providers have decided to focus on specific industries, such as manufacturing, real estate, hospitality, services, etc. The cloud ERP option led the Enterprise Resource Planning software into a new era.
While keeping all the centralized data in the cloud, organizations eliminate the need for additional software or hardware and for hiring new IT personnel. This optimization generates reductions in both operational and capital expenses. Additionally, cloud ERP solutions have also opened the door for small businesses to the complex modules that were used before only by large companies.
