Enterprise Resource Planning (ERP) is the same as Enterprise Resource Management, or ERM.
An ERP is a critical piece of business software that collects information from various departments in a common database, enabling leaders to monitor the pulse of a company using a single vision of reality.
ERP systems unify critical business functions like finance, manufacturing, inventory and order management, customer communication, sales and marketing, project management and human resources. One major feature is detailed analytics and reporting on each department. There are several deployment models for ERP software, including on-premises, cloud and hybrid. While cloud ERP has become extremely popular in recent years, the best approach for any given company depends on its needs.
While ERP is a category of business software, ERP systems comprise various modules, each addressing a specific business requirement:
- Product-based companies typically have modules for accounting, inventory and order management, customer relationship management (CRM) and, if they produce or assemble products, manufacturing.
- Services businesses may turn to modules for accounting, project management, professional services automation and CRM.
ERP software manages all the assets and resources of a company, such as:
- General Ledger (GL)
- Financials
- Accounts Payable (AP)
- Accounts Receivable (AR)
- Inventory Management
- Order Management
- Manufacturing
- Inventory
- Human Resources (HR)
At its core, ERP is an application that automates business processes and provides insights and internal controls, drawing on a central database that collects inputs from departments including accounting, manufacturing, supply chain management, sales, marketing and human resources (HR).
Every business must complete work that requires numerous stakeholders with various responsibilities. But that’s a struggle when the information needed to execute processes and make key decisions is spread across disconnected systems. Whether data is held in basic business management software or spreadsheets, employees have a hard time finding what they need and may lack access to it entirely. For example, the accounting and FP&A teams could each have different spreadsheets with different figures for expense tracking.
These disparate data sources make it very challenging to keep everyone on the same page and hinders collaboration and efficiency, especially as an organization grows. Staff waste time hunting for documents and potentially duplicating work because there is no one place to look for up-to-date information on all aspects of the business relevant to them. This also makes it difficult to see the full cause and effect of developments affecting your business.
An ERP system solves this problem by compiling information in a central database to grant managers and employees cross-departmental visibility. It also eliminates the problems that come with conflicting sources of data and empowers them to analyze various scenarios, discover process improvements and generate major efficiency gains. That translates to cost savings and better productivity as people spend less time digging for needed data.
ERP software that’s tailored to meet the needs of an individual business pays major dividends, making these systems a critical tool for companies across industries and of all sizes. Many of the world’s best-known and most successful firms have leaned on ERP for the last quarter century. Now, this software can be configured and priced to meet the needs of all-size businesses.
Put simply, an ERP system helps unify people, core business processes and technology across an organization.