ERP 101

By Kevin Stewart
Updated: August 18, 2011

Enterprise Resource Planning (ERP) software helps organizations manage and control their key operations. A development of the manufacturing resource planning (MRP) discipline, ERP is used in many different types of organizations, from manufacturing to non-profit companies. ERP systems make it possible to use a single system to manage and control major aspects of a business, including:

• customer relationship management
• human resources
• manufacturing
• finance and accounting
• project management

The goal of ERP is to consolidate all of these information systems into a coordinated and centralized system that uses a single database. This promotes better data accuracy and data currency. Instead of having several separate systems maintaining critical data, this data is accessed, stored, and updated in one place.

ERP systems are usually modular, which allows each organization to choose the modules needed for its particular business. For example, a service company may not need the manufacturing module, while most businesses will use the finance and accounting module. Using a modular approach, an organization can also adopt ERP in a series of phases, which can make implementation more manageable.

Implementing ERP systems can be a challenge for established businesses, because of the difficulty in consolidating disparate systems and processes within an organization. In order to successfully implement ERP in an established organization, you need to have full cooperation of all stakeholders. Careful project planning is critical for this process, and in any case the implementation will take considerable time and effort.

ERP implementation tends to be more straightforward in new organizations that do not have established systems and processes. Whenever possible, starting with ERP as a centralized data management system for critical operations is a much better approach than trying to combine separate information systems into a single system.

Software as a Service (SaaS) or cloud computing is also an important development for ERP. Some of the most advanced capabilities in ERP systems are available as subscription-based products. The same advantages of expanded access to data and low cost of ownership are available with this approach.

ERP makes it possible to manage the operations of almost any business, large or small, based on centralized data access and control. The keys to success in implementing ERP are having well-defined requirements, identifying the modules that are needed to meet those requirements, and obtaining the support and involvement of every function in your organization to make your ERP system an integral part of the ongoing operation of your business.

Featured Research
  • The New 2016 ERP Comparison Guide

    Selecting an ERP solution is no easy undertaking. You have to select and configure a system that fits your exact business needs. The right system can make operations more streamlined, efficient, and agile. But choosing the right vendor can be difficult. more

  • ERP Cost Guide

    ERP is the most complex—and costly—business software product available today. Many businesses struggle to implement an ERP system without breaking the bank. Read this guide to learn more about what you can expect in terms of cost—and how to save money during the implementation process. more

  • Build a Business Stronghold to Protect Your Data, Inventory, and Profits

    The retail landscape is changing, particularly in the area of security and loss prevention. With mega-breaches at Target (40 million stolen debit and credit cards), Home Depot (56 million unique cards), and eBay (145 million people affected), security has become a topic that cannot be ignored. more

  • Five Mistakes Retailers Make When Selecting a New Software Solution

    With the immense changes the retail industry has undergone and continues to face today, there are mistakes that you as a wholesaler simply can’t afford to make. Certainly, one of these—perhaps the greatest of all in our technology-driven age—is choosing the wrong retail business management software for your business. more

  • Has Your Business Outgrown Your Business Management Software?

    Does your current software give your retail business the visibility and flexibility you need to be responsive and competitive? Or has your business outgrown your business management system? more