What is ERP?

What is ERP? ERP is an acronym for Enterprise Resource Planning, which is a process used by companies to manage and integrate important parts of their business. If you're looking for the literal definition of ERP,  it is the integrated management of main business processes, often in real-time and mediated by software and technology. 

But how can ERP help you? That's what everyone wants to know. If you were to google ERP, some of the first searches that would pop up would be "ERP benefits", "best ERP",  and "how does ERP work".

There are numerous websites available touting the benefits of different ERP products from Sage to NetSuite and the sheer amount of information can be overwhelming. Ultimately, these differences underscore the flexibility that can make ERP such a robust business tool.

At its most basic level, ERP creates a more efficient, better-automated and integrated organization through streamlined technology solutions. In turn, ERP software is used by businesses across various industries to collect, store, manage and communicate data across all functions of the organization. 

Main Characteristics of ERP

There are three main characteristics of ERP systems: 

1. Central Database
2. Real-Time Reporting
3. Comprehensive

The central feature of all ERP systems is a shared database that supports multiple functions used by different business units. This means that employees in different divisions—for example, accounting and sales—can rely on the same information for their specific needs.

Real-Time Reporting

Once data is entered into the ERP software, it updates throughout the system, offering some degree of synchronized reporting and automation. Instead of forcing employees to maintain separate databases and spreadsheets that have to be manually merged to generate reports, it provides up-to-date information in real time for all the users.

For instance, with sales orders automatically flowing into the financial system without any manual re-keying, the order management department can process orders more quickly and accurately, and the finance department can close the books faster. Other common ERP features include a portal or dashboard to enable employees to quickly understand how the business is performing with key metrics.

Comprehensive

Enterprise Resource Planning (ERP) is comprehensive, meaning most of your daily functions and processes should be operational within the ERP software. It has expanded to encompass business intelligence (BI) while also handling "front office" functions such as salesforce automation, marketing automation and eCommerce.

With these product advancements and the success stories coming out of these systems, companies in a broad range of industries—from nonprofit to wholesale distribution to manufacturing to eCommerce—use ERP solutions.

At its core, ERP helps employees do their jobs more efficiently by breaking down barriers between business units.

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