enterprise resource planning presentation

Transform Your Business with Enterprise Resources Planning

By Kate Eby | June 8, 2017 (updated April 17, 2023)

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The origins of enterprise resource planning (ERP) date back over a century. The ERP process consists of linking or integrating the numerous and disparate functions of an organization, both back- and front-office operations. Rather than relying on an incompatible, cobbled-together group of platforms, software, and spreadsheets that require manual reconciliation, you can use an ERP system. ERP enables various departments like finance, manufacturing, procurement, sales, human resources, and administration to share data in a consolidated, centralized, and reciprocal data system.

This article explains how ERP works, gives you examples of ERP systems, describes the benefits of ERP for your business, and offers guidance on determining if your company is ready for ERP.

What Is ERP in Simple Terms?

Enterprise resource planning (ERP) brings the entirety of your business operations — from sales and marketing to planning and production to inventory and finance — into one seamless experience. By pulling your data into a central system, all the information you need to drive your business is at your fingertips. A smart ERP gives you every data point you need in real time.

What Is an ERP System?

Enterprise resource planning (ERP), called government resource planning (GRP) in the public sector, has traditionally been a large in-house initiative that aims to streamline both business processes and business information. When implemented properly, it is an integrated system that provides data clarity, flexibility, and operational agility.

The foundation of an ERP solution is a shared database that acts as a central repository of information. All relevant stakeholders access this same repository of data. Reports are then culled from this singular, uniform system to provide transparency, efficiency, and consistency.

Enterprise resource planning plays a key role in computer-integrated manufacturing (CIM), which relies on automated systems, software, sensors and computer-controlled machines to manufacture products. ERP has evolved from pure manufacturing systems to integrate with accounting, human resources, purchasing, ordering, and cost accounting.

The roots of ERP go back to 1913, when an engineer named Ford Whitman Harris saw a need for greater efficiency and developed a production scheduling model called economic order quantity (EOQ). This paper-driven precursor to process planning remained the industry standard until 1964, when Joseph Orlicky developed materials requirements planning (MRP) , and toolmaker Black + Decker became the first company to adopt an MRP solution that combined EOQ concepts with a mainframe computer.

Rapid software adoption in the 1980s led to integration capabilities that expanded functionality to include scheduling, bill of materials (BOM) , and purchasing functions tied to corporate financial reporting. Encompassing considerably more manufacturing processes, manufacturing and resource planning (MRP II) replaced MRP as the standard for data management and efficiency planning. When the systems expanded beyond manufacturing processes to include human resources and accounting, they were recast as enterprise resource planning.

What is the Difference Between Enterprise Resource Planning and Enterprise Resource Management?

Enterprise resource planning can be confused with other management systems such as enterprise resource management (ERM), enterprise performance management (EPM), and customer relationship management (CRM). Here are the benefits and features of each.

• Enterprise Resource Planning: ERP tracks your resources, materials, and transactions. It provides all the data about how your company operates in real time. Use ERP systems to operate your business.
• Enterprise Resource Management: ERM lets you manage access for all your software systems. Typically this includes the ability for staff to sign in to multiple software systems with a single username and password, as well as let you control who has access to software systems.
• Enterprise Performance Management: EPM software takes the ERP data and helps you monitor and analyze your organization’s performance. Use EPM for planning, forecasting, evaluating, and decision-making. It helps you strategically manage your organization’s overall performance through modeling and analytics.
• Customer Relationship Management: Most ERP solutions include many CRM tools to help you understand your customers better. For example, you can track contacts and the purchase order history of your customers. CRMs, however, typically provide deeper insights into the sales pipeline and funnel, whether it relates to sales or to services for your customers. Many CRMs also help you organize and track your marketing efforts and time spent on converting leads into sales.

Who Is Using Enterprise Resource Solutions?

In today’s competitive climate, every organization needs the ability to gather, store, and analyze data to make better decisions faster. Enterprise resource planning helps you standardize and simplify your data for greater agility, efficiency, and collaboration.

You can implement an ERP system to streamline operational and administrative processes across every industry vertical, including healthcare, manufacturing, retail, government, and technology. ERP works to integrate disjointed processes into one data system that the entire organization can view and act upon. All users — from executives to CIOs to customer service reps — can access the same real-time, up-to-date, and complete user-appropriate data and information.

Increasingly, companies that need to streamline and integrate operational functionality are turning to the nimble ERP solutions available in the current market. Companies need fast responses to the variances in the modern business climate and market forces to succeed and profit.

The business value of an ERP system can be found in its efficiencies and ability to quickly provide clear analytics. Businesses view data intelligence as a commodity that can be leveraged to enhance market share, competitiveness, and profitability. Having the right knowledge, clear reporting, and cross-function integration provides greater opportunities to identify areas for growth and expansion. ERP systems provide companies with the ability to respond to changing operational paradigms, new partnerships, acquisitions, increased supplier lists, decision-making tools, and mechanisms in order to adapt and move forward quickly.

Lisa Anderson , supply chain expert and business consultant, says, “ERP systems have become essential to compete in today’s Amazon-impacted marketplace, no matter the industry. My best clients are leveraging systems to provide superior service and rapid deliveries to customers, to gain quick access to information for decision making, and to utilize advanced technologies for customer and supplier collaboration and automation in support of profitable growth.”

ERP can provide financial management, follow standard accounting practices, generate reports for business uses, and manage transactions. For manufacturers, ERP can manage your supply chain and inventory, ensuring you have the right materials on hand at the right time to fulfill orders. ERP can also provide customer insights, analyzing who is ordering your products or services, how often they order, and what their special requests or needs might be — creating a database of all your customer interactions.

In addition, developers are always finding new integrations among devices (from desktop to mobile) and among business applications. ERP vendors are constantly looking for the tools and techniques to give businesses an advantage in a data-driven world.

How Does ERP Work?

To accommodate the diverse needs of buyers, vendors offer on-premise, hosted, and cloud-based solutions to meet organizational implementation goals. Most ERP systems are based on a modular platform that vertically integrates elements — from the payroll and staffing requirements of an HR department to procurement and warehousing capacity, sales and marketing, contract lifecycle management (CLM), and administration.

ERP modules are designed for many business processes, such as inventory control and finance, and can be bundled together for your business. The benefit of an ERP solution is that the modules have a consistent look and feel, so everyone from the back office to the front office to the production floor has the same experience. These modules are integrated to ensure you have a shared system of data and workflows, as well as standardized business processes.

One of the numerous goals of an ERP system is to lower operational costs by eliminating redundant systems and tasks, improving workflow, enhancing efficiency, and encouraging cross-functional collaboration and communication. ERP systems also furnish the reports that reveal opportunities for insight, growth, and planning. An ERP system integrates modules into a consistent infrastructure and typically features the following:

• Modules ranging from distribution and supply-chain management to human resources and payroll to project management and finance
• Ability to capture transactional data, using radio frequency identification (RFID) scanners, readers, and tills
• “Clean” data that avoids duplication and offers a standard source for all your business decisions
• Data services that provide interfaces or functionality for your customers, vendors, and staff
• Real-time data and dashboards for key metrics
• Specialized data and analytics that track trends and ROI on your marketing efforts
• Advanced planning and scheduling (APS) systems
• A shared or common database with standardized data
• A consistent look and feel for all modules in the ERP system, reducing training time, and improving staff performance
• A services knowledge base or vendor forum, offering community support among all the customers using a particular ERP system

ERP began as a tool for manufacturing, but has been adopted by industries that provide services as well as finished goods. A strong ERP system combines integration, real-time operational support, and a centralized database. That centralized database will possess modern conveniences such as dashboards, cross-functional operations reporting, and instant views of the organization as an entire, integrated unit. However, a centralized database poses one risk: It can open the company to the threat of losing sensitive information in the event of a security breach.

ERP system solutions, software, and tools fall into several categories, based on their size and the complexity of the businesses they serve:

• Tier I: A single-solution or general ERP. These systems, from the likes of Oracle or SAP, are designed for large organizations that need integration across a global structure, including large federal agencies. These typically adapt to the processes across industries and have the capacity to customize depending on industry requirements. These ERPs handle multiple languages, currencies, alphabets, and accounting regulations.
• Tier II: Industry-specific or vertical ERP. These systems, such as Microsoft Dynamics or Epicor, focus on serving a single industry, such as construction, retail, or grocery. They also serve business units of global companies, as well as state and local governments, but lack some of the global capacity of Tier I solutions.
• Tier III: Midsize ERP. These handle midsize companies that need few global functions.
• Tier IV: Small-business ERP. These systems, such as PeopleSoft, offer one or two business processes, such as accounting, rather than a fully integrated solution. You can add other options as needed, or you can combine vendors to provide the services you need without buying unnecessary modules.

According to  Gary McTall, Co-Founder and Chief Technology Officer at GovSense , “Top-tier ERPs of the future must fulfill these three criteria.” He lists them as the following:

• Have a flexible framework for innovation, such as point-and-click customization, a graphical workflow, or a true-cloud solution.
• Possess effective compliance and controls, such as a rule-driven reporting engine that runs in accordance with multiple accounting standards (GASB, GAAP, IFRS), role and permission controls, and audit trails.
• Offer real-time reporting that includes personalized dashboards and financial analytics.

The Leading Enterprise Resource Planning Vendors

According to most industry sources, including Gartner Research, the leaders in ERP solutions are SAP (which developed the first ERP system in 1972) and Oracle. Today, these companies continue to be the two largest providers of ERP solutions offering in-house and cloud-based technology. Gartner’s Peer Insights also cites Microsoft Dynamics, NetSuite, and Sage among the industry leaders, especially for organizations seeking small and medium-sized cloud-based solutions.

Industry-Specific Enterprise Resource Planning Solutions

The trend for developing industry-specific solutions is growing rapidly. Hundreds of ERP solutions are available; many apply generally to all industry verticals, while others possess industry-specific functionality/modules (healthcare, manufacturing, retail, government, or technology). It’s essential to evaluate your processes and determine whether a generic solution will meet your needs prior to selecting a vendor. A Software Advice analysis using Gartner's research methodology found almost 600 ERP software solutions currently available in the marketplace, offering a vast array of choices to fit any organization’s needs.

Angela Nadeau, CEO of CompuData Inc ., discusses the varying industry needs: “Each industry and business is different, with disparate operational requirements, variations in general accounting requirements, and industry-specific regulations. These needs will drive the transition to an appropriate ERP solution.”

Countless ERP solutions can meet the needs of all types of organizations, even in niche businesses. Here are some examples of how ERP software can meet market needs:

• Construction: Construction is a complex project, with general contractors scheduling and managing subcontractors and all the materials needed to deliver a project on time and on budget. ERP project management allows contractors to track material delivery, schedule subcontractors, and post costs and billing.
• Production: ERP modules can provide product lifecycle management (PLM), helping you guide a product from beginning to end, especially through design, manufacturing, and service. ERP solutions can synchronize your production process and provide quality control.
• Procurement: While many early ERP systems focused on back-office systems, the next generation of modules integrates with supplier-relationship management (SRM), making it easier for you to work with outside vendors and your customers. Just as you would track inventory for your production and manufacturing, ERP systems allow you to track products and supplies across business lines, as well as monitor vendors and get the best value for the volume of materials you buy.
• Distribution and Transportation: Starting with the distribution center, an ERP system can track the location and inventory of any ship, truck, or delivery, using real-time lookup and check-in. The software can also coordinate the timing of trucks that need to meet ships on the dock to receive timely deliveries, cutting the costs of waiting either in unloading or loading, as well as saving employee time in scheduling deliveries and pickups.
• Manufacturing: Real-time ERP solutions manage the process from the time an order is placed until it is shipped. ERP triggers the production schedule, aligns it with other orders in progress, and adjusts if you encounter any delays. ERP modules are key in supply-chain management (SCM), helping you monitor your stock levels and find items in your warehouse.

The Advantages of Enterprise Resource Planning Solutions

Data is the lifeblood of any organization. It helps you track your revenue, your materials, your resources, and your performance. It helps you identify the areas for growth and reduce your costs. Here are the ways your company can benefit from the data insights that ERP offers:

• Lower Your Operational Costs: ERP systems track your manufacturing production, customer service, purchasing, and more. With real-time data, you can see where operating costs are over or under budget, and how delays or bottlenecks can affect your costs. You’ll also have real-time inventory reports, pricing sheets, and customer data.
• Automate Order Processing: Are you still manually creating, entering, tracking, or fulfilling orders? ERP solutions automate the process, offer e-commerce systems so that customers can order and pay online, and validate billing, order tracking, and payment. You will also be able to configure pricing and track revenue from invoice through payment or cash receipt.
• Improve Project Management and Collaboration: By reducing the number of systems your organization uses to develop and manage products, you can work across departments to ensure key benchmarks, deliverables, and budgets are aligned with the project goals. Everyone will have access to the same data to offer and share business insights.
• Integrate Financial Reporting: Marketing, sales, and finance all work within a single system to track revenue and expense. Accounting no longer has to reconcile reports.
• Standardize Procurement: In large organizations, various cost centers and business units frequently buy resources independently of one another. An ERP system will unify your purchasing, resource, and vendor tracking to save time and money.
• Enhance Government Reporting: For public sector organizations, ERP software will help you fulfill compliance requirements such as accounting and auditing, data security, and supply-chain sourcing.
• Strengthen Security: A strong ERP system offers advanced user access and permission settings, keeping your data under virtual lock and key. Your sensitive information is no longer scattered in individual folders or computer hard drives. And everyone has access to the data they need, without opening up the data they don’t.
• Standardize HR Information: ERP software enables you to automate the lifecycle of any employee, from recruiting to onboarding to training and development. ERP software can include payroll management, performance appraisals, and time tracking.
• Empower Employees: When employees no longer have to work with inefficient systems, they can focus on the work, driving revenue and helping you retain focused, fulfilled staff.

You can use ERP to improve your corporate performance and governance in several ways. Data will show you where your business needs to grow or innovate, as well as help you control or reduce costs and risk. You gain business intelligence (BI) to get a truer vision of your company’s health and standing.

Advantages also include better cross-function communication and reporting, improved customer service management, better and more efficient operational management for procurement, inventory, sales tracking, and streamlined operations. Utilizing BI via predictive analytics allows for effective identification and implementation of new initiatives and opportunities for stability and growth.

According to Anderson, “Although ERP systems have many bottom-line advantages, the most compelling reason to pursue an ERP system is to gain a cross-functional — and even cross-organizational — platform to support scalable business growth.“

The Disadvantages and Challenges of Enterprise Resource Planning Solutions

On the other hand, an ERP solution can be a large and expensive initiative. It requires a lot of time, planning, and money to unify all your systems in one ERP solution. Expenses include the capital and software needed for functionality, as well as the consultants, in-house IT personnel, and administrators to manage the system. Many challenges in implementing an effective ERP system stem from hidden costs resulting from insufficient planning.

Once a business deploys ERP, users can utilize the system and maximize its functions, but there is often a lack of corporate policy to protect the integrity of the data in the ERP systems and the ways in which it is used. The key is to first plan proactively, recognize the elements of operational and cultural change, and assign the appropriate assets and human capital to the project. Oversight in these areas is the main reason for costly delays and financial overruns.

Almost as important as integrating systems is to identify any independent businesses that should not be included in the solution. If you include truly independent lines, you can create functionality, add unnecessary processes, and face unnecessary dependencies in your data gathering and reporting to fit the ERP rather finding a system that meets your business needs. Be sure that you buy the right ERP system, or combination of systems, that serve your business and strategy.

No system will align perfectly with your business right out of the box. Your business is unique, and your solution should fit your business. You will need some level of customization to integrate your systems with the ERP modules and may use third-party vendors to fit your particular needs. Be sure you have identified core business processes that require a minimal amount of customization and support. Too much development will cost you time and money in the long run.

Another widely recognized roadblock to ERP success is failing to provide sufficient training and education. As with all organizational or cultural change, supplying the tools to understand, comfort, and familiarize staff with the benefits and logistics of the new process is critical to gaining buy-in. And the time you spend on training takes away resources from the day-to-day operation of your business.

The most cited reasons for unsuccessful ERP implementation are the failures to do the following:

• Adequately identify your needs
• Understand the processes that need to change
• Assign the right team or resources
• Overcome resistance about changing systems
• Resolve disputes among departments about sharing sensitive data
• Install processes to ensure proper governance over the way data is gathered and entered into modules

If you are changing ERP solutions, be aware that the switching costs can boost the vendor's negotiating power, resulting in increased cost for support, maintenance, and upgrades.

McTall says the most common challenge his organization encounters is “difficulty in staying the course after we’ve defined the requirements. At GovSense, we leverage Smartsheet to help our customers organize, manage, and rank their requirements. Having a single source of truth throughout the project helps mitigate the risks.”

Is Your Company Ready for ERP? An Implementation Checklist

According to “ A Framework for Applying CSFs to ERP Software Selection ,” a study conducted by Rekha Gupta and S. Kazim Naqvi, “ERP implementation is believed to be a high-risk investment process, as it requires substantial financial commitments and has an inherent high-failure probability.” Organizations that carefully plan their search, purchase, and implementation of an ERP solution are able to minimize many of the most common risks mentioned above. Utilizing the McKinsey 7s model, a 2011 framework for assessing ERP readiness calls for the following actions when planning an ERP implementation:

• Strategy: Align the goals of the ERP system with the overall business strategy.
• Structure: Identify the decision makers and elements of coordination and alignment.
• Systems: Analyze the needs of IT, usable/important data, and business processes.
• Style/Culture: Make the appropriate changes in alignment or business culture to adopt ERP.
• Staff: Select the right project team and provide support.
• Skills: Provide the training and education to acquire or improve the necessary skill sets.
• Shared Values: Adopt the elements to assure buy-in, including overall business commitment.

Once you decide to proceed with implementing or improving an ERP solution, consider the following actions:

• Assigning an executive sponsor to lead the implementation of the ERP solution and provide oversight and direction, as well as remove any obstacles
• Developing a dedicated team of IT and non-IT professionals to lead the initiative
• Analyzing the current system and areas that need improvement
• Identifying the best deployment option for your business (SaaS/cloud vs. on-premise)
• Investigating industry options, vetting vendors, and obtaining references
• Planning the costs realistically (hardware, software, change management, staffing, and training)
• Creating a training protocol for ongoing education and user buy-in
• Planning for the data transfer (what information to import to the new system and why)
• Preparing a reasonable and actionable time frame before going live

Many of these considerations are dependent on the size of your business, the business units requiring support, and industry vertical. Factors such as general or industry-specific solution, and cloud, SaaS, or on-premise deployment will all be a large part of the decision-making process.

For example, you'll need to think about how you want data from the plant floor to be shared throughout your system. You have several options for data integration:

• Direct integration connects the equipment on the plant floor with other vendors' equipment and products.
• Database integration connects plant floor data to other systems through staging tables in your database.
• Enterprise appliance transaction modules (EATM) communicate with the plant-floor equipment and your ERP system through web services, software interfaces, or a staging table. These are typically an off-the-shelf solution.
• Custom integration solutions can be tailored to your specific business, but can cost more or require more maintenance.

Enterprise Resource Planning Best Practices

Much of your readiness assessment will vary based on your industry vertical. Industry- focused ERP software vendors place best practices procedures and reporting in many of the modules. Part of due diligence is identifying the reporting needed for function areas, such as quality and regulation. Many ERP solutions have financial and compliance reporting functions that are germane to a certain industry. The right system can assist and provide data to support issues of proper data storage and security, financial reporting, and ISO support, as well as the banking considerations of IFRS, Basel II, and Sarbanes-Oxley. Regulations and industry standards are part of the ERP software, which automates your need to monitor and review compliance in your business.

Best Practices for Implementing Your ERP Solution

When you’re ready to implement your ERP solution, one key to success is how well you migrate the data into your new system. Plan for success by identifying which data will need to move, determining and establishing a timeframe for migration (including when you will "freeze" the data and not allow more to be included in systems you will be shutting down), creating templates for migrating key data, establishing the key business accounts for those who will need immediate access to the data, and designating policies and procedures for archiving the data.

The Evolution of Enterprise Resource Planning

Gartner’s “postmodern ERP,” which recognizes that a one-suite solution may not always be in a company’s best interest, effectively articulates the continuing evolution of ERP, building on Forrester’s prediction that SaaS-based ERP adoption would rise 21 percent annually through 2015. In the same year, a survey by the Aberdeen Group found that about 90 percent of companies have implemented ERP.

A departure from a single-vendor approach, postmodern ERP advocates a multitiered plan that can solve many pertinent issues by integrating disparate systems and scaling for growth. This approach is especially useful for companies or divisions with remote teams or that are in the midst of corporate mergers and acquisitions. The key to postmodern ERP is striking the right balance between components, software, hardware, and modules, all while managing the complexity that can come with integrations.

The Future of Enterprise Resource Planning

The traditional ERP implementation was large, complex, and primarily accessible to enterprise-sized organizations. But the size of these legacy systems also meant that businesses struggled to keep them updated.

According to an article by Ron Gill, “ Why Cloud Computing Matters to Finance ,” “About two-thirds of midsized businesses are running old versions of their enterprise resource planning system. In some cases, it’s software that’s three or more versions old. This is the legacy of decades of on-premise (in-house) software deployments, incremental releases that never seemed worth the pain of a major upgrade migration project, and the fear of losing critical customization.” The article outlines the costs and inefficiencies of the continuous repair of large, complex, out-of-date systems.

Traditional ERP systems are installed on a company’s computers and servers, usually for a one-time license fee, with additional costs for upgrades, support, and training. These on-premise, or on-prem, systems, are typically considered a capital expenditure because of the up-front costs.

Cloud-based software works differently. The software is hosted on the ERP vendor’s servers and businesses access the data through a web browser and, increasingly, through mobile apps on phones and tablets. These ERP solutions can be installed quickly since they don’t require expensive hardware purchases, and pricing is based on a monthly or annual subscription, with additional fees for support, training, and updates. Many businesses initially were concerned about data being stored outside their own servers, but improved security and other benefits are speeding the adoption of cloud systems.

According to  Peter Contreras, P&G’s ERP Oil and Gas, Aviation, and Consumer Goods Project Manager , “These multiphased, multiyear, multi-million-dollar projects that were hugely popular in preparation for Y2K are diminishing due to the demand for a more agile approach to technology, including apps that act as more user-friendly components of ERP solutions.”

Projections for cloud-based ERP solutions are between $25-30 billion over the next five years, according to “ State of Enterprise Resource Planning Security in the Cloud,” a 2018 report by Cloud Security Alliance.  

Different types of cloud systems store and provide access to your data and ERP solution.

• Software as a service (SaaS) hosts your software and applications, providing all the maintenance and upgrades, which you access through a subscription
• Infrastructure as a service (IaaS) is more like a cloud-based data center, offering servers, storage, and networking.
• Platform as a service (PaaS) provides virtual environments for developing, testing, and managing applications, without the need for related infrastructure such as servers and databases.

Some providers offer a hybrid, or two-tier, ERP approach. Some applications are on-premise, and some live in the cloud. Companies can maintain their legacy ERP system while giving individual business lines access to nimble cloud solutions, gaining the overall benefits of ERP while distributing their effort across platforms.

As technology continues to evolve, more people have the power of computing in smaller devices. Mobile ERP apps give everyone access to real-time business data (such as sales, manufacturing updates, and customer tracking) in their phone or tablet. Social tools integrate sharing with ERP solutions. The Internet of Things (IoT) makes access to data faster, better, and universal among your company.

ERP providers have adapted their offerings to meet the demands for agility and mobility. As SaaS and subscription-based cloud technologies find greater acceptance, many small and medium-sized companies can take advantage of cost savings by eliminating expensive hardware expenditures, complex licensing, and maintenance.

McTall echoes the demand for cloud ERP solutions: “Cloud ERP enables organizations to manage IT costs, optimize operational efficiency, streamline order management and procurement processes, eliminate manually intensive, spreadsheet-based reporting, and improve employee productivity, while shifting ERP expenses to OpEx rather than CapEx.”

Today’s ERP systems are shedding their reputation for costly, time-consuming, and rigid deployments, while continuing to solve and improve upon key business functions like data integrity and process efficiencies. As the world moves through the era of digital transformation, businesses continue to recognize the need to leverage data to maintain or achieve a competitive advantage. Current ERP systems provide visibility, coordination, integration, and versatility. Future systems will offer the enhanced functionality, flexibility, reporting, and centralized data vital to meet the competitive demands of business.

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• Enterprise Resource Planning (ERP)

What is ERP?

Enterprise resource planning (ERP) is a software system that helps you run your entire business, supporting automation and processes in finance, human resources, manufacturing, supply chain, services, procurement, and more.

• ERP definition in detail

ERP stands for enterprise resource planning, but what does ERP mean? The simplest way to define ERP is to think about all the core business processes needed to run a company: finance, HR, manufacturing, supply chain, services, procurement, and others. At its most basic level, ERP helps to efficiently manage all these processes in an integrated system. It is often referred to as the system of record of the organization.

Yet today’s ERP systems are anything but basic and have little resemblance to the ERP of decades ago. They are now delivered via the cloud and use the latest technologies – such as artificial intelligence (AI) and machine learning – to provide intelligent automation, greater efficiency, and instant insight across the business. Modern cloud ERP software also connects internal operations with business partners and networks around the world, giving companies the collaboration , agility, and speed they need to be competitive today.

Table of Contents

Why is erp important.

• Benefits of ERP

ERP examples in different industries

How do erp systems work, common erp modules.

Types of ERP deployment

ERP integration

The total cost of erp.

• History and the future of ERP

10 things to look for in an ERP system

Erp at any size: what are my options.

Sometimes described as “the central nervous system of an enterprise,” an ERP software system provides the automation, integration, and intelligence that is essential to efficiently run all day-to-day business operations. Most or all of an organization’s data should reside in the ERP system to provide a single source of truth across the business.

Finance requires an ERP to quickly close the books. Sales needs ERP to manage all customer orders. Logistics relies on well-running ERP software to deliver the right products and services to customers on time. Accounts payable needs ERP to pay suppliers correctly and on time. Management needs instant visibility into the company’s performance to make timely decisions. And banks and shareholders require accurate financial records, so they count on reliable data and analysis made possible by the ERP system.

The importance of ERP software to businesses is illustrated by the growing adoption rate. According to G2 , “The global ERP software market is projected to reach US$78.40 billion by 2026, growing at a CAGR of 10.2% from 2019 to 2026.”

Discover why an ERP system is so important.

Six key benefits of ERP

A good ERP system offers many advantages — which can vary depending on how the system is deployed. The benefits of cloud ERP , for example, are different than on premise. That said, there are six major benefits that apply to all modern ERP solutions:

• Higher productivity: Streamline and automate your core business processes to help everyone in your organization do more with fewer resources.
• Deeper insights: Eliminate information silos, gain a single source of truth, and get fast answers to mission-critical business questions.
• Accelerated reporting: Fast-track business and financial reporting and easily share results. Act on insights and improve performance in real time.
• Lower risk: Maximize business visibility and control, ensure compliance with regulatory requirements, and predict and prevent risk.
• Simpler IT: By using integrated ERP applications that share a database, you can simplify IT and give everyone an easier way to work.
• Improved agility: With efficient operations and ready access to real-time data, you can quickly identify and react to new opportunities.

Businesses in every industry – from automotive to wholesale distribution – need accurate, real-time information and effective business processes to compete and thrive. Different industries rely on their ERP software for quite different reasons, however. Here are just a few examples:

• Utilities need to constantly review their capital assets, not only to meet demand for future services but also for the replacement of aging assets. Without ERP, the effort to prioritize these major asset investments would be difficult and error prone. ERP also helps solve another critical utility company issue: forecasting of spare parts. Not having the right parts during an outage can create a significant customer service issue. On the other hand, having too many spare parts means excessive costs and out-of-date stock.
• For wholesalers , importers, direct store delivery, and 3PL/4PL firms, on-time delivery is key. All of these organizations want to reduce distribution costs, increase inventory turns, and shorten order-to-cash time. To achieve these goals, they need integration of inventory management, purchasing, and logistics functionality, as well as automated processes that are customized to their needs.
• Discrete, batch, and continuous process manufacturers all rely on ERP and supply chain systems to meet product quality goals, manage asset utilization, control overtime costs, handle customer returns and more. Manufacturers can also gain end-to-end inventory control by monitoring stock movements, pinpointing top and underperforming products, and managing procurement more efficiently.
• Service companies – including accounting, tax, engineering, IT, legal, and other professional services firms – require powerful, real-time mobile ERP technology to balance service delivery commitments with financial health. Key to professional service success is the ability to stay on schedule while managing project profitability, resource utilization, revenue recognition, recurring revenue objectives, and growth opportunities.
• Retail has undergone a significant transformation now that e-commerce has merged with other sales channels as well as brick-and-mortar operations. The ability to provide self-service options for identifying, configuring, purchasing, and shipping products is dependent on integrated data. A modern ERP also helps retailers reduce cart abandonments, improve Web site conversions, boost average order value, and increase customer lifetime value.

An ERP system – also called an ERP suite – is made up of integrated modules or business applications that talk to each other and share common a database.

Each ERP module typically focuses on one business area, but they work together using the same data to meet the company’s needs. Finance , accounting, human resources , sales, procurement , logistics , and supply chain are popular starting points. Companies can pick and choose the module they want and can add on and scale as needed.

ERP systems also support industry-specific requirements, either as part of the system’s core functionality or through application extensions that seamlessly integrate with the suite.

ERP software can be bought using a cloud subscription model (software-as-a-service) or a licensing model (on premise).

The ERP software system shown here illustrates enterprise resource planning use cases for sourcing and procurement, as well as sales. Typical ERP modules also address finance, manufacturing, and supply chain, among other applications.

Enterprise resource planning systems include a variety of different modules. Each ERP module supports specific business processes – like finance, procurement, or manufacturing – and provides employees in that department with the transactions and insight they need do their jobs. Every module connects to the ERP system, which delivers a single source of truth and accurate, shared data across departments.

Components of an enterprise resource planning system

The most widely used ERP modules include:

• Finance:  The finance and accounting module is the backbone of most ERP systems. In addition to managing the general ledger and automating key financial tasks, it helps businesses track accounts payable (AP) and receivable (AR), close the books efficiently, generate financial reports, comply with revenue recognition standards, mitigate financial risk, and more.
• Human resources management:  Most ERP systems include an HR module that provides core capabilities such as time and attendance and payroll. Add-ons, or even entire human capital management (HCM) suites, can connect to the ERP and deliver more robust HR functionality – everything from workforce analytics to employee experience management.
• Sourcing and procurement:  The sourcing and procurement module helps businesses procure the materials and services they need to manufacture their goods – or the items they want to resell. The module centralizes and automates purchasing, including requests for quotes, contract creation, and approvals. It can minimize underbuying and overbuying, improve supplier negotiations with AI-powered analytics, and even seamlessly connect with buyer networks.
• Sales:  The sales module keeps track of communications with prospects and customers – and helps reps use data-driven insights to increase sales and target leads with the right promotions and upsell opportunities. It includes functionality for the order-to-cash process, including order management, contracts, billing, sales performance management, and sales force support.
• Manufacturing:  The manufacturing module is a key planning and execution component of ERP software. It helps companies simplify complex manufacturing processes and ensure production is in line with demand. This module typically includes functionality for material requirements planning (MRP), production scheduling, manufacturing execution, quality management, and more.
• Logistics and supply chain management:  Another key component of ERP systems, the supply chain module tracks the movement of goods and supplies throughout an organization’s supply chain. The module provides tools for real-time inventory management, warehousing operations, transportation, and logistics – and can help increase supply chain visibility and resilience.
• Service:  In an ERP, the service module helps companies deliver the reliable, personalized service customers have come to expect. The module can include tools for in-house repairs, spare parts, field service management, and service-based revenue streams. It also provides analytics to help service reps and technicians rapidly solve customer issues and improve loyalty.
• R&D and engineering:  Feature-rich ERP systems include an R&D and engineering module . This module provides tools for product design and development, product lifecycle management (PLM), product compliance, and more – so companies can quickly and cost-effectively create new innovations.
• Enterprise asset management: Robust ERP systems can include an EAM module – which helps asset-intensive businesses minimize downtime and keep their machines and equipment running at peak efficiency. This module includes functionality for predictive maintenance, scheduling, asset operations and planning, environment, health and safety (EHS), and more.

Modern ERP systems can be deployed in a number of ways: in a public or private cloud, on premise, or in various hybrid scenarios that combine environments. Here are some of the high-level benefits of each to help you identify the ERP deployment option that makes the most sense for your business.

With cloud ERP , the software is hosted in the cloud and delivered over the Internet as a service that you subscribe to. The software provider generally takes care of regular maintenance, updates, and security on your behalf. Today, cloud ERP is the most popular deployment method for many reasons – including lower upfront costs, greater scalability and agility, easier integration, and much more.

On-Premise ERP

This is the traditional model for deploying software where you control everything. The ERP software is typically installed in your data center at the locations of your choice. The installation and maintenance of the hardware and software is your staff’s responsibility.

Many companies are modernizing and upgrading their on-premise ERP systems to cloud deployments. This requires careful planning of your ERP upgrade as well as a thoughtful process of evaluating ERP software and deployment options .

For companies that want a mixture of both to meet their business requirements, there is the hybrid cloud ERP model. This is where some of your ERP applications and data will be in the cloud and some on premise. Sometimes this is referred to as two-tier ERP .

ERP for finance can help you manage your daily accounting and financial close processes securely, regardless of your deployment approach.

Today’s ERP systems provide an enormous range of business functionality, but they still need to connect to and synchronize with other applications and data sources – such as CRM and HCM software, e-commerce platforms, industry-specific solutions, and even other ERPs. With ERP integration , companies can gain a unified view of information from different systems, increase business process efficiency, improve customer experiences, and facilitate collaboration across teams and business partners.

Modern ERP systems are open and flexible – and can easily integrate with a wide range of software products using connectors or customized adaptors, such as application programming interfaces (APIs). Other methods for ERP integration include ESB (enterprise service bus) and iPaaS (integration platform-as-a-service). iPaaS, which offers a cloud-based approach, is a very popular option for modern businesses. iPaaS platforms can rapidly sync on-premise or cloud-based ERP with SaaS applications from the same vendor or third-parties. They typically require little-to-no coding, they’re flexible and relatively inexpensive, and they offer a whole host of other uses – such as automatic API generation, machine learning data integration, Internet of Things (IoT) network integration, prebuilt content, and more.

The cost of ERP depends on the software vendor, the modules selected, and the deployment method. Generally speaking, cloud-based ERP has lower costs than on-premise ERP because there is no hardware that needs to be purchased – and no expensive in-house IT experts that need to be hired. The vendor handles the maintenance and charges the customer an annual or monthly subscription fee, usually based on the number of users.

When calculating the return on investment (ROI) and total cost of ownership (TCO) of a new ERP implementation, the initial and ongoing workforce costs are just as important as the software selection and deployment costs. With cloud and hybrid options, new factors must be evaluated. For example, software maintenance, facility, computer capacity, downtime, recovery, security, privacy, and IT staff costs are all important considerations. As mentioned, cloud options significantly reduce both capital and operating costs – improving both ROI and TCO.

ERP history: The rapid evolution of ERP

Computerized business applications were born in the accounting and finance world in the 1960’s using mainframe computers. These pioneering applications were faster and more accurate than manual processes – but were expensive, limited in functionality, and still slow. Before long, these applications spawned the development of dedicated, standalone solutions such as sales order processing and manufacturing requirements planning ( MRP ).

In the mid 1980’s, competition in the manufacturing sector was exploding and new tools were required. New MRP II software integrated accounting and finance, sales, purchasing, inventory, and manufacturing planning and scheduling – providing the manufacturer with an integrated system.

Near the end of the 1990’s, ERP was introduced. ERP transformed the technology sector by serving a broader range of industries and by combining MRP II, human resources, project accounting, and end-user reporting.

In the short span of the 21st century, faster Internet speeds and new development tools have again revolutionized ERP suites. The introduction of browser-based software paved the way for cloud ERP software , a breakthrough that has expanded both the reach and the functionality of ERP solutions.

Today – in the era of digital transformation – modern ERP systems are increasingly taking advantage of new intelligent technologies such as AI, machine learning, robotic process automation (RPA), the IoT, natural language processing (NLP), and in-memory databases. They provide businesses with the ability to run even more efficient processes, leverage up-to-the-minute insights from both transactional and unstructured data, and ultimately remain competitive in a time of unprecedented change.

The future of ERP

Digital transformation is speeding up – and ERP is at the core. As enterprises adopt digital technologies in every part of the business, they are fundamentally changing the way they operate.

According to Gartner , one of the core digital business accelerators is to “banish drags” – in other words, eliminate any negative force that slows the business down, including outdated processes and systems. So, it’s not surprising that companies are already demanding more robust ERP systems.

Following are three major trends that build on the momentum we see today:

• Cloud, cloud, cloud: Preference for cloud ERP will continue to intensify as more and more companies discover the benefits – including “anywhere” access, reduced cost of hardware and technical support, greater security, and integration with other systems, to name just a few. According to Panorama Research in their 2020 ERP Report , “More than half of organizations are selecting cloud software (63%) instead of on-premises software (37%).” As the speed of business continues to accelerate, cloud becomes even more essential.
• Vertical integration: The tug of war between best-of-breed solutions and integrated ERP is officially over. Going forward, we believe that companies will demand the best of both worlds – a fully integrated ERP system with vertical extensions. This allows companies to get the specific functionality they need, without painful integration issues or data locked in information silos. We also see the shift toward ever greater flexibility, as business processes are tailored to individual company needs.
• User personalization: Staff, customers, and suppliers all want content and functionality that matches their specific needs or interests and makes them more productive. The changing demographics of the workforce, particularly in industries such as manufacturing, are also driving interest in low-code, no-code platforms. These platforms allow users to get the experience they want, rather than having to adapt to the software. Users can also expect customized dashboards, AI-driven search, personalized chat, and personalized workflows across devices.

Explore more ERP technology trends – and learn how to systematically evaluate your options, avoid pitfalls, and get started with the right innovations for your business.

Any modern ERP system will have a long list of capabilities based on the industry they serve and the modules they offer. However, there are 10 fundamental features that all enterprise resource management systems should have:

• A common database: Centralized information and single version of the truth – providing consistent, shared data and a cross-functional view of the company.
• Embedded analytics: Built-in analytics, self-service BI, reporting, and compliance tools that can deliver intelligent insight for any area of the business.
• Data visualization: Visual presentation of key information with dashboards, KPIs, and point-and-click analytics to assist in quick and informed decision-making.
• Automation. Automation of repetitive tasks as well as advanced RPA powered by AI and machine learning .
• Consistent UI/UX: The same look and feel across modules – as well as easy-to-use configuration and personalization tools for processes, users (including customers and suppliers), business units, locations, and product lines, for example.
• Integration: Seamless integration of business processes and workflows – as well as open and easy integration with other software solutions and data sources, including from third parties.
• New technologies: Support for AI and machine learning, digital assistants, the IoT , RPA , security and privacy, and mobile.
• Technology platform: A fast, proven, and stable technology stack for this long-term investment – including a low-code/no-code platform , iPaaS, data management, and more.
• Multinational support: Including for languages, currencies, and local business practices and regulations – as well as technical support for cloud services, training, help desk, and implementation.
• Choice of deployment: Cloud, on-premise, or hybrid.

ERP isn’t just for global enterprises. ERP solutions are designed for businesses of all sizes – small, midsize, and large. You can also get industry- and company-specific functionality to meet unique business needs. Regardless of your business sector and size, you’ll want to plan your ERP implementation project carefully, following best practices.

Small business ERP

ERP software for small businesses can help you move beyond spreadsheets and efficiently manage every aspect of your growing company – from sales and customer relationships to financials and operations. Small business ERP tools are typically in the cloud, quick to install, and designed to grow with you.

Mid-Market ERP

Today, ERP software designed for mid-market companies and subsidiaries benefit from built-in analytics, rapid deployment, and best practices for dozens of different business processes – financials, HR, supply chain management, and more. Midsize ERP tools help growing businesses scale and compete, even with limited resources. Modular, cloud-based enterprise ERP systems are also a popular choice for midmarket companies with complex processes or plans for rapid growth.

Enterprise ERP

Large companies with global or subsidiary operations need a robust, market-leading ERP system with embedded AI, machine learning, and analytics – and intelligent automation to transform business models and processes. ERP systems can be deployed on premise, in the cloud, or in a hybrid scenario depending on business need. They can integrate with existing databases or, ideally, run on newer, powerful in-memory databases .

Many companies are modernizing and upgrading their on-premise ERP systems to cloud deployments. This requires careful planning of your ERP upgrade , as well as an ERP evaluation and review of your deployment options .

What is an ERP software system?

An ERP software system is a set of integrated applications or modules for managing a company’s core business processes – including finance and accounting , supply chain , HR , procurement , sales, inventory management, and more. ERP modules are integrated into one complete system and share a common database to streamline processes and information across the enterprise. Businesses can expand the scope of their ERP as they grow.

What is ERP cloud software?

Cloud ERP is the deployment of ERP in the cloud rather than on premise. The cloud provides an ideal environment for ERP as it is an accessible, reliable, secure, and highly scalable platform for mission-critical software. True cloud ERP software is developed specifically for cloud deployment and takes full advantage of the cloud environment. Learn more about cloud ERP and ERP deployment options .

What is ERP in accounting?

In accounting, the acronym ERP stands for enterprise resource planning – which is a type of business management software. ERP finance modules offer many of the same features as accounting software, such as tools for accounts receivable and payable, general ledger, expense management, reporting and analysis, and more. In addition to finance, ERP includes modules for different lines of business, such as supply chain and HR, and integrates everything together in a single system.

How do I know I'm ready for an ERP system?

Most businesses start out using a variety of simple, standalone tools to manage different business processes – such as QuickBooks or Excel spreadsheets. Here are five signs you’ve outgrown them and need a modern ERP system .

• You’re spending more time on daily activities. If it’s taking longer to manage key activities, like closing the books, too many disparate applications may be to blame. ERP software integrates solutions and data into one system with a common interface, making it easier for business units to communicate and do their jobs effectively.
• You have many unanswered business questions. Can you easily answer important questions about your business, such as revenue per product line or number of returns? If not, segregated systems and a lack of access to metrics and KPIs may be holding you back. Enterprise resource planning software is designed to address these challenges.
• You have runaway business processes. Are there areas where your processes are getting away from you? Maybe it’s harder for you to manage inventory, satisfy customers, or keep costs in check. If so, your business processes may need to be restructured to accommodate growth or changing priorities – a natural fit for ERP software.
• You have manual processes with multiple data sets. Are most of your departments using their own applications and processes to get things done? If so, chances are you’re spending too much time on duplicate data entry. When information can’t flow between systems, reporting takes longer, errors happen often, and decision-making is hampered.
• You’re missing out on fast-moving opportunities. Are you spending so much time running your business that you can’t pursue exciting new opportunities? Newer ERP systems include advanced, intelligent capabilities, like machine learning and predictive analytics, that make it easier to identify and capitalize on profitable new ventures.

Explore ERP software

No matter what your size, SAP has an ERP solution for your business needs.

Essential ERP for growing companies

Explore trends, user guides, and expert advice in this three-part ERP miniseries.

Enterprise Resource Planning PowerPoint Template

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Visualize the development and management of various business processes with our PowerPoint template on enterprise resource planning. ERP Systems: Support for all Business Processes ERP systems support processes across all functional areas of a company including, capital planning, material resource planning, human resource planning, sales planning, or controlling. In these complex IT systems, the application modules for the relevant areas are linked via a shared database. Without them, for example, the processes of material requirements planning in larger companies would hardly be feasible. Illustrations of Various ERP Models There is a wide selection of ERP software available, as well as different models for implementing ERP within a company. A presentation with detailed information and examples of these individual models can help you decide on the appropriate system (ERP, ERP II, APS, MRP, etc.) for your business processes. Our PowerPoint template provides a comprehensive overview of ERP. Whether you are looking for charts to classify ERP systems in supply chain management, graphics explaining the history of ERP development, or detailed explanations and definitions of the individual ERP phases – this presentation ensures you are perfectly equipped. With Our Enterprise Resource Planning Template, You Can

• visually represent the phases of ERP implementation
• obtain an overview of ERP systems
• illustrate the benefits of ERP for your company

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• various models of the ERP implementation process

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Enterprise Resource Planning (ERP): Meaning, Components, and Examples

What Is Enterprise Resource Planning (ERP)?

Enterprise resource planning (ERP) is a platform companies use to manage and integrate the essential parts of their businesses. Many ERP software applications are critical to companies because they help them implement resource planning by integrating all the processes needed to run their companies with a single system.

An ERP software system can also integrate planning, purchasing inventory, sales, marketing, finance, human resources, and more.

Key Takeaways

• ERP software can integrate all of the processes needed to run a company.
• ERP solutions have evolved over the years, and many are now typically web-based applications that users can access remotely.
• Some benefits of ERP include the free flow of communication between business areas, a single source of information, and accurate, real-time data reporting.
• There are hundreds of ERP applications a company can choose from, and most can be customized.
• An ERP system can be ineffective if a company doesn't implement it carefully.

Enterprise Resource Planning (ERP)

Investopedia / Joules Garcia

Understanding Enterprise Resource Planning (ERP)

You can think of an enterprise resource planning system as the glue that binds together the different computer systems for a large organization. Without an ERP application, each department would have its system optimized for its specific tasks. With ERP software, each department still has its system, but all of the systems can be accessed through one application with one interface.

ERP applications also allow the different departments to communicate and share information more easily with the rest of the company. It collects information about the activity and state of different divisions, making this information available to other parts, where it can be used productively.

ERP applications can help a corporation become more self-aware by linking information about production, finance, distribution, and human resources together. Because it connects different technologies used by each part of a business, an ERP application can eliminate costly duplicates and incompatible technology. The process often integrates accounts payable, stock control systems, order-monitoring systems, and customer databases into one system.

How Enterprise Resource Planning Platforms Work

ERP has evolved over the years from traditional software models that made use of physical client servers and manual entry systems to cloud-based software with remote, web-based access. The platform is generally maintained by the company that created it, with client companies renting services provided by the platform.

Businesses select the applications they want to use. Then, the hosting company loads the applications onto the server the client is renting, and both parties begin working to integrate the client's processes and data into the platform.

Once all departments are tied into the system, all data is collected on the server and becomes instantly available to those with permission to use it. Reports can be generated with metrics, graphs, or other visuals and aids a client might need to determine how the business and its departments are performing.

A company could experience cost overruns if its ERP system is not implemented carefully.

Types of ERP Systems

There's a number of different ERP solutions that can meet a variety of business needs. This list is not meant to list every single type of ERP, though the list is pretty comprehensive. Any business considering implementing an ERP system should be able to find value in some of these types of systems, and multiple systems may be relevant in any given situation.

On-Premise ERP

On-premises ERP systems involve purchasing the software licenses and installing the ERP system directly onto a company's own servers. Companies have full control over the system and data, as it resides within their premises. Customization and integration with existing systems can be more extensive, and this type of ERP usually requires dedicated IT resources for maintenance, updates, and security.

Cloud ERP systems are hosted on remote servers and accessed through the internet. Cloud ERPs like SaaS products offer better scalability, allowing businesses to easily adjust resources and features as needed without significant upfront investment in hardware. Cloud ERP systems typically have a subscription-based pricing model, and updates/maintenance are managed by the ERP provider (not the company itself).

Industry-Specific ERP

Industry-specific ERP systems are tailored to meet the unique needs and requirements of particular industries. These systems often include industry-specific modules, functionalities, and best practices to address the complexities of the industry. For example, consider a manufacturing firm that is heavily reliant on inventory, supply chain management, and distribution of goods. That type of ERP will be vastly different than a client-based ERP such as a financial institution's ERP.

Open-Source ERP

An open-source ERP system (or any open-source software, for that matter) provides users with access to the source code. This means a company can customize, modify, or redistribute the ERP to better meet the company's needs. Implementing and maintaining open-source ERP systems may require more technical expertise and resources compared to commercial ERP solutions.

Small Business ERP

On the other hand, small business ERP systems are designed specifically for the needs of small and medium-sized businesses (SMBs). These types of ERP systems try to offer balance between being slightly niche while offering essential functionalities at a more affordable price point. Because they are less robust, small business ERP solutions are often easier to implement and require less customization compared to enterprise-level ERP systems.

Tiered ERP systems offer different levels of functionality and scalability to cater to businesses of varying sizes and complexity. Companies can choose the tier that best matches their current needs and budget, with the option to upgrade or customize as their requirements evolve. This would entail adding on modules as they become relevant (i.e. a company that is scaling to international operations may wait to implement foreign current modules).

Benefits of ERP

Businesses employ enterprise resource planning (ERP) for various reasons, such as expanding, reducing costs, and improving operations. The benefits sought and realized between companies may differ; however, some are worth noting.

Improves Accuracy and Productivity

Integrating and automating business processes eliminates redundancies and improves accuracy and productivity. In addition, departments with interconnected processes can synchronize work to achieve faster and better outcomes.

Improves Reporting

Some businesses benefit from enhanced real-time data reporting from a single source system. Accurate and complete reporting help companies adequately plan, budget, forecast, and communicate the state of operations to the organization and interested parties, such as shareholders.

Increases Efficiency

ERPs allow businesses to quickly access needed information for clients, vendors, and business partners. This contributes to improved customer and employee satisfaction, quicker response rates, and increased accuracy rates. In addition, associated costs often decrease as the company operates more efficiently.

ERP software also provides total visibility, allowing management to access real-time data for decision-making .

Increases Collaboration

Departments are better able to collaborate and share knowledge; a newly synergized workforce can improve productivity and employee satisfaction as employees are better able to see how each functional group contributes to the mission and vision of the company. Also, menial and manual tasks are eliminated, allowing employees to allocate their time to more meaningful work.

ERP Weaknesses

An ERP system doesn't always eliminate inefficiencies within a business or improve everything. The company might need to rethink how it's organized or risk ending up with incompatible technology.

ERP systems usually fail to achieve the objectives that influenced their installation because of a company's reluctance to abandon old working processes. Some companies may also be reluctant to let go of old software that worked well in the past. The key is to prevent ERP projects from being split into smaller projects, which can result in cost overruns.

Employing change management principles throughout the ERP life cycle can prevent or reduce failures that compromise full implementation.

ERP vs. CRM

ERP and customer relationship management (CRM) platforms are two different types of software systems used in business. At their core, ERP focuses on internal business processes and operations, while CRM is centered around managing interactions with customers and prospects.

ERP systems are designed to integrate and automate core business functions. In contrast, CRM systems are dedicated to managing customer relationships and interactions. This can range from things like sales leads, marketing campaigns, customer service inquiries, and contact management. While the goal of ERPs is to streamline processes, the goal of CRMs is to enhance customer engagement, satisfaction, and loyalty.

Despite their distinct focus areas, ERP and CRM systems often overlap in certain areas. Many modern ERP systems include CRM functionalities. This integration enables businesses to synchronize customer information, such as contact details, purchase history, and communication logs, between ERP and CRM systems. For example, a CRM would traditionally host a customer's purchase history. By looping that into a broader ERP system, a company can predict when the customer will re-order, make sure it has sufficient quantity on hand at a specific time, and make sure it has enough personnel on hand at a specific time to fulfill the potential order.

ERP Solutions Providers

Some familiar names are leaders in ERP software. Oracle Corp. ( ORCL ) originally supplied a relational database that integrated with ERP software developed by SAP ( SAP ) before entering the broader enterprise market in a big way in the early 2000s. Microsoft ( MSFT ) has long been an industry leader, with many customers using multiple software applications from the company.

As cloud-based solutions have grown in popularity in recent years, the traditional ERP industry leaders have seen challenges from upstarts such as Bizowie and Workwise.

ERP Examples

Fulton & roark.

Men's grooming product maker Fulton & Roark successfully implemented enterprise resource planning to better track inventory and financial data. Like many other businesses, the North Carolina company used spreadsheets to track inventory and accounting software to record financial data.

As the company grew, its processes lagged. Their antiquated inventory tracking system did not account for changing costs, and the accounting software could not record the metrics needed for key financial statements. These breakdowns created manual processes, which further compromised time and resources.

To eliminate unnecessary processes and centralize work, they chose the Oracle NetSuite ERP system. Immediately, Fulton & Rourk was better able to identify accounting errors related to inventory, eliminate costs from employing third parties to evaluate their financial records, and better report financial positions.

Cadbury, a global confectioner and maker of the popular chocolate Cadbury egg, also successfully implemented an ERP system. The company had thousands of systems but could not keep pace with its rapid growth and used ineffective warehouse management systems.

It implemented a system that integrated its thousands of applications, standardized processes, and restructured warehouse management systems—breaking down silos for seamless, integrated coordination of work.

Tips for Choosing an ERP System

When selecting an ERP system, there's many things for you to consider. Here are some key features to consider during your decision-making process:

• Ensure that the ERP system can scale with your business as it grows and evolves. It should accommodate increasing transaction volumes, users, and data without significant disruption or performance issues.
• Seek an ERP solution that allows for customization to adapt to your unique business processes and requirements. You can get customizable workflows, fields, forms, and reports from ERP systems fairly easily.
• Consider the ERP system's ability to integrate seamlessly with other software applications you may already be using. Think about your CRM, e-commerce platforms, payroll systems, and business intelligence tools . If it's important to you, your ERP can likely communicate with each of them.
• If you plan on using your ERP often, choose an ERP system with an intuitive and user-friendly interface that makes it easy to use. A well-designed interface can help people buy into the software as well as simply make it more intuitive on how to capitalize on all of the ERP features.
• If it's relevant to you, opt for an ERP solution that offers mobile accessibility . Mobile access allows you to perform key tasks, access information, and make decisions in more flexible ways which may be important based on how your business operates.
• Prioritize data security and compliance features to protect sensitive business information. Look for ERP systems with robust security measures, encryption capabilities , access controls, audit trails, and compliance certifications. Note that ERPs can be industry-specific, so some security measures may be more relevant to your industry.
• Evaluate the ERP system's analytical capabilities. This means taking a look at its built-in reporting tools, dashboards, and advanced analytics features. You may also want to think about how real-time information can be pulled in, if that's important to your business.
• As you work through the selection process, assess the level of support and maintenance provided by the ERP vendor. You'll want to make sure you get technical support, software updates, patches, and documentation.
• Last, consider the total cost of ownership of the ERP system over its lifecycle. This is not just the upfront implementation cost. Think about ongoing maintenance fees, training costs, and potential hidden costs like "charge per transaction" instances. You can also think through what future growth and adding additional modules will cost.

What Is Enterprise Resource Planning?

Enterprise resource planning, or ERP, is an interconnected system that aggregates and distributes information across a company. The goal of an ERP system is to communicate relevant information from one area of a business to another. For example, an ERP system could automatically notify the purchasing department when the manufacturing department begins to run low on a specific type of raw material.

What Is the Importance of Enterprise Resource Planning?

Enterprise resource planning software offers single-system solutions that integrate processes across the business. These applications allow users to interact within a single interface, share information, and enable cross-functional collaboration. They increase productivity, collaboration, and efficiency.

What Are the 5 Components of ERP?

The components of an ERP system depend on the organization's needs. However, there are key features that each ERP should include. Generally, packages include finance, human resource, logistics and manufacturing, supply chain management, and customer relationship management.

What Are the 2 Main ERP Applications?

Which ones are the main applications depends on the business and the industry it operates in. Most companies can benefit from supply chain management, logistics, and financial applications to help them streamline their operations and expenses.

The Bottom Line

Enterprise resource planning (ERP) manages and integrates business processes through a single system. With a better line of sight, companies can better plan and allocate resources. Without ERP, companies tend to operate in silos, with each department using its own disconnected system.

ERP systems promote the free flow of communication and sharing of knowledge across an organization, the integration of systems for improved productivity and efficiencies, and increased synergies across teams and departments. However, moving to an ERP system will be counterproductive if the company's culture does not adjust to the change and the company does not review how the structure of its organization can support it.

Oracle. “ Oracle for SAP Technology Update ,” Page 42.

Microsoft. “ Annual Report 2021 .”

Workwise. “ About Us .”

Bizowie. “ A Different Kind of Enterprise Software Company .”

Oracle NetSuite. “ Fulton & Roark .”

Oracle NetSuite. “ 3 Successful ERP Implementation Case Studies .”

Microsoft. “ Mondelēz International Moves to Microsoft Azure for Great SAP Performance and AI Innovation .”

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Enterprise resource planning erp 1 powerpoint slides and ppt templates db

Having a big resource planning idea is just not enough; more crucial is how you start. With our Enterprise resource planning PowerPoint templates we are just aiming to kick start your erp program. You can symbolically incorporate these slide templates in your PowerPoint presentation to illustrate fundamental advantages of an erp program. Going further, as an erp tool this stunning PPT design helps to cast spotlight on functional areas of erp program like production, human resource, supply chain management, project management, inventory management, product planning etc. Key here is that smart application of our PPT slides helps professionals to motivate their work force thereby bringing substantial improvement in their efficiency and prompt decision making. In short, using this presentation design crafting a good PPT example depicting integration of traditional business functions is now no more tricky. Now what are you waiting for? Get started today by downloading presentation themes to illustrate erp planning process. You aim to enter the elite A-list. Our Enterprise Resource Planning Erp 1 Powerpoint Slides And Ppt Templates DB can be your gateway.

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Concepts in Enterprise Resource Planning Fourth Edition

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Chapter 1 Business Driven Technology

Concepts in Enterprise Resource Planning Fourth Edition Chapter One Business Functions and Business Processes.

Lead Black Slide Powered by DeSiaMore1. 2 Chapter 2 Business Fundamentals.

McGraw-Hill/Irwin Copyright © 2008, The McGraw-Hill Companies, Inc. All rights reserved.

An Introduction to Information Systems in Organizations

Information Systems in the Enterprise

Well, Sort-of.

McGraw-Hill/Irwin Copyright © 2008, The McGraw-Hill Companies, Inc. All rights reserved. Electronic Business Systems Chapter 7.

Enterprise Systems.

Electronic Business Systems Cross-functional Enterprise Systems Functional Business Systems Chapter 7 McGraw-Hill/Irwin Copyright © 2007 by The McGraw-Hill.

Fundamentals of Information Systems, Second Edition 1 Information and Decision Support Systems Chapter 6.

Chapter 7 e-Business Systems.

Principles of Information Systems, Seventh Edition2 An organization’s TPS must support the routine, day-to- day activities that occur in the normal course.

Essentials of Management Information Systems, 6e Chapter 2 Information Systems in the Enterprise 2.1 © 2005 by Prentice Hall Information Systems in the.

Lecture 6 Functional Business Systems. Objectives Functional Business Systems: –Marketing Systems –Manufacturing Systems –Human Resource Systems –Accounting.

ENTERPRISE SOFTWARE.

© Prentice Hall, 2005: Enterprise Resource Planning, 1 st Edition by Mary Sumner 7-1 Enterprise Resource Planning, 1 st Edition by Mary Sumner Chapter.

McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 7 e-Business Systems.

1 Chapter 1 Introduction: Enterprise Resource Planning.

ERP Enterprise Resource Planning. What is ERP? Software programs that help to manage company-wide business processes, using a common database and shared.

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• 1. Presented By: Gurwinder Kaur 3804 Enterprise Resource Planning (ERP) Systems
• 2. What is ERP? • The practice of consolidating an enterprise’s planning, manufacturing, sales and marketing efforts into one management system. • Combines all databases across departments into a single database that can be accessed by all employees.
• 3. Evolution of ERP  1960s: software packages with inventory control  1970s: MRP systems  Production schedule with materials management  1980s: MRPII systems  Adds financial accounting system  1990s: MRPII  Integrated systems for manufacturing execution  Late 1990s: ERP  Integrated manufacturing with supply chain
• 4. Major Reasons for Adopting ERP • Integrate financial information • Integrate customer order information • Standardize and speed up operations processes • Reduce inventory • Standardize Human Resources information
• 5. How do ERP System Work 5 Employees Managers and Stakeholders Central Database Reporting Applications Human Resource Management Applications Financial Applications Manufacturing Applications Inventory And Supply Applications Human Resource Management Applications Service Applications Sales and Delivery Applications Sales Force And Customer Service Reps Customers Back-office Administrators And Workers Suppliers
• 6. Components of ERP System  Finance: modules for book keeping and making sure the bills are paid on time. Examples: General ledger Accounts receivable Accounts payable  HR: software for handling personnel-related tasks for corporate managers and individual employees. Examples: HR administration Payroll Self-service HR
• 8. 8 Customers Customer Demographic Files Sales Dept. Vendor Orders Parts Accounting Accounting Files Purchasing Purchasing Files Order is placed with Vendor Invoices accounting Inventory Files Warehouse Checks for Parts Calls back “Not in stock” “We ordered the parts” “We Need parts #XX” “We ordered the parts” Sends report Sends report Sends report Ships parts
• 9. 9 An ERP Example: After ERP Database Customers Sales Dept. Purchasing Warehouse Accounting Vendor Inventory Data If no parts, order is placed through DB Orders Parts Order is submitted to Purchasing. Purchasing record order in DB Order is placed with Vendor And invoices accounting Financial Data exchange; Books invoice against PO Books inventory against PO Ships parts
• 10. Potential Benefits of ERP  Internal Benefits  Integration of a single source of data  Common data definition  A real-time system  Increased productivity  Reduced operating costs  Improved internal communication  Foundation for future improvement
• 11. Potential Benefits of ERP External Benefits • Improved customer service and order fulfillment • Improved communication with suppliers and customers • Enhanced competitive position • Increased sales and profits
• 12. Benefits of ERP Direct benefits include: 1. improved efficiency 2. information integration for better decision making 3. Faster response time to customer queries
• 13. Benefits of ERP Indirect benefits include: 1. Better corporate image 2. Improved customer goodwill 3. Customer satisfaction
• 14. Potential Benefits are 1. Reduction of Lead-Time 2. On-Time Shipment 3. Reduction in cycle time 4. Better customer satisfaction Others are 1. Improved supplier performance 2. Increased Flexibility 3. Reduction in quality costs 4. Improved resource utility 5. Improved information accuracy and decision- making ability
• 15. Risks with ERP Implementation  Expensive (can costs 100 thousands to millions of dollars)  Time-consuming (can take months to years)  Great risk for the organization  Transfer of Knowledge  Acceptance with the company
• 16. Before ERP & After ERP  Stand alone System.  Lack of coordination among business function(Manufacturing & sales)  Non Integrated data: Data have different meanings.  System are maintained on a procedural basis  Redundant data and inconsistent information.  Difficult to manage.  Integrated System.  Support coordination among business functions.  Integrated Data: Data have the same meaning across multiple functions.  Changes affect multiple functions or Systems  Common interfaces across systems.
• 17. Modules of ERP  Finance  Material  Sales  Marketing  Personnel
• 18. Popular ERP Modules ERP Finance Sale Planning Inventory Operation HR
• 19. ERP Finance Module In This Data is collected From various functional departments and generate financial reports ledger, Trail Balance, Balance Sheets etc.
• 20. ERP HR(Human Resource) Module  HR Module routinely maintain a complete employee database including contact information, Salary details Attendance, Promotions of all employees.  Produce pay check Reports  Maintain personnel Record  Training  Time and Attendance Benefits
• 21. ERP Purchasing Module Purchasing module is tightly integrated with the inventory control and production planning Modules.
• 22. ERP Inventory Module  Inventory Module facilitates processes of maintaining the appropriate level of stock in a warehouse.
• 24. ERP Implementation Approaches  The big bang – install a single ERP system across the entire organization  Franchising – Independent ERP systems are installed in different units linked by common processes, e.g., bookkeeping.  Slam dunk – install one or several ERP modules for phased implementation of key business processes
• 25. Major Phases of ERP Implementation  Initiation – develop business case, project scope, and implementation strategy  Planning – establish implementation team, determine goals and objectives, establish metrics  Analysis and process design – analyze and improve existing processes, map new processes to be adopted by the system
• 26. Major Phases of ERP Implementation  Realization – install a base system, customization, and test the system  Transition – replace the formal system with the new system, data conversion  Operation – monitor and improve system performance, provide continued training and technical support
• 27. Major Challenges to ERP Implementation  Limitations of ERP technical capabilities  Inconsistency with existing business processes  Costs - implementation (hardware, software, training, consulting) and maintenance  Changes in employee responsibilities
• 28. Major Challenges to ERP Implementation  Flexibility of software system upgrades  Implementation timelines  Availability of internal technical knowledge and resources  Education and training  Implementation strategy and execution  Resistance to change
• 29. New Developments In ERP  Availability of web-based and wireless ERP systems  Adoption of easy-to-install ERP systems  Linkage to other software systems, e.g., supply chain management system, e-commerce, customer relationship management system
• 30. Advantages of ERP  Quicker completion of Processes  Single system  Modular software  Database  Easier to track various tasks  Manage globally Data
• 31. Disadvantages of ERP  Cost  Time Consuming  Training to employees

ENTERPRISE RESOURCES PLANNING (ERP)

Oct 24, 2014

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ENTERPRISE RESOURCES PLANNING (ERP). PENGERTIAN. ERP adalah sebuah sistem informasi perusahaan yg dirancang utk mengkoordinasikan semua sumber daya, informasi dan aktifitas yang diperlukan utk proses bisnis lengkap.

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PENGERTIAN • ERP adalah sebuah sistem informasi perusahaan yg dirancang utk mengkoordinasikan semua sumber daya, informasi dan aktifitas yang diperlukan utk proses bisnis lengkap. • Sistem ERP didasarkan pada database pada umumnya dan rancangan perangkat lunak modular.

PENGERTIAN (con’t) • ERP merupakan software yang mengintegrasikan semua departemen dan fungsi suatu perusahaan ke dalam satu sistem komputer yang dapat melayani semua kebutuhan perusahaan, baik dari departemen penjualan, HRD, produksi atau keuangan

PENGERTIAN (con’t) • Syarat penting ERP adalah “integrasi” • Integrasi yg dimaksud: menggabungkan berbagai kebutuhan pada satu software dalam logical database, sehingga memudahkan semua departemen berbagi informasi dan berkomunikasi

PENGERTIAN (con’t) • Database yang ada dapat mengijinkan setiap departemen dalam perusahaan untuk menyimpan dan mengambil informasi secara real-time. • Informasi tersebut harus dapat dipercaya, dapat diakses dan mudah disebarluaskan.

PENGERTIAN (con’t) • Rancangan perangkat lunak modular harus berarti bahwa sebuah bisnis dapat memilih modul-modul yang diperlukan, dikombinasikan dan disesuaikan dari vendor yang berbeda, dan dapat menambahkan modul baru untuk meningktakan unjuk kerja bisnis

TUJUAN DAN PERANAN ERP DALAM ORGANISASI • Mengkoordinasikan bisnis organisasi secara menyeluruh. • Software yg ada untuk: • Otomasisasi dan integrasi banyak proses bisnis • Membagi database yg umum dan praktek bisnis melalui enterprise • Menghasilkan informasi yang real-time • Memungkinkan perpaduan proses transaksi dan kegiatan perencanaan

Konsep Dasar ERP

EVOLUSI SISTEM ERP

TAHAPAN EVOLUSI ERP • Tahap I : Material Requirement Planning (MRP). Merupakan cikal bakal dari ERP, dengan konsep perencanaan kebutuhan material. • Tahap II : Close-Loop MRP. Merupakan sederetan fungsi dan tdk hanya terbatas pada MRP, terdiri atas alat bantu penyesuaian masalah prioritas dan adanya rencana yang dapat diubah atau di ganti jika diperlukan. • Tahap III : MRP-II. Merupakan pengembangan dari close-loop MRP yang ditambahkan 3 elemen yaitu: perencanaan penjualan dan operasi, antarmuka keuangan dan simulasi analisis dari kebutuhan yang diperlukan • Tahao IV : ERP. Merupakan perluasan dari MRP II yaitu perluasan pada beberapa proses bisnis diantaranya integrasi keuangan, rantai pasok dan meliputi lintas batas fungsi organisasi dan juga perusahaan dengan dilakukan secara mudah. • Tahap V : Extended ERP (ERP II). Merupakan perkembangan dari ERP yang diluncurkan thn 2000, serta lebih komplek dari ERP sebelumnya.

Integrasi ERP dalam organisasi

Modul ERP Secara modular, software ERP biasanya terbagi atas modul utama yakni Operasi serta modul pendukung yakni Finansial dan Akunting serta Sumber Daya Manusia: 1. Modul Operasi General Logistics, Sales and Distribution, Materials Management, Logistics Execution, Quality Management, Plant Maintenance, Customer Service, Production Planning and Control, Project System, Environment Management. 2. Modul Financial & Akuntansi General Accounting, Financial Accounting, Controlling, Investment Management, Treasury, Enterprise Controlling. 3. Modul Sumber Daya Manusia Personnel Management, Personnel Time Management, Payroll, Training and Event Management, Organizational Management, Travel Management.

Manfaat ERP Berikut ini adalah sebagian kecil manfaat dengan diaplikasikannya ERP bagi perusahaan: 1. Integrasi data keuangan Untuk mengintegrasikan data keuangan sehingga top management bisa melihat dan mengontrol kinerja keuangan perusahaan dengan lebih baik. 2. Standarisasi Proses Operasi Menstandarkan proses operasi melalui implementasi best practice sehingga terjadi peningkatan produktivitas, penurunan inefisiensi dan peningkatan kualitas produk. 3. Standarisasi Data dan Informasi Menstandarkan data dan informasi melalui keseragaman pelaporan, terutama untuk perusahaan besar yang biasanya terdiri dari banyak business unit dengan jumlah dan jenis bisnis yg berbeda-beda.

Implementasi ERP • Implementasi ERP tergantung pada ukuran bisnis, ruang lingkup dari perubahan dan peran serta pelanggan • Perusahaan membutuhkan jasa konsultasi, kustomisasi dan jasa pendukung • Migrasi data adalah salah satu aktifitas terpenting dalam menentukan kesuksesan dari implementasi ERP • Masih disayangkan, migrasi data nerupakan aktifitas terakhir sebelum fase produksi

Implementasi ERP (con’t) • Langkah strategi migrasi data yg dpt menentukan kesuksesan implementasi ERP: • Mengidentifikasi data yg akan dimigrasi • Menentukan waktu dari migrasi data • Membuat template data • Menetukan alat untuk migrasi data • Memutuskan persiapan yg berkaitan dengan migrasi • Menentukan pengarsipan data

Pendekatan Implementasi ERP

Pendekatan Implementasi ERP (con’t) 1. The Big Bang • Strategi penerapan seluruh modul dalam paket ERP secara simultan di seluruh fungsi perusahaan. • Kelebihannya adalah hanya memerlukan sedikit interface antara sistem lama dan sistem baru, sangat efisien dari segi waktu dan hasilnya optimal. • Kekurangannya adalah implementasi yang kompleks sehingga resiko kegagalan tinggi. 2. Step-by step (Phased Approach) • Melakukan implementasi sedikit demi sedikit. Tahap selanjutnya berkonsentrasi mengimplementasikan modul yang terkait. • Keseluruhan proses bisnis harus terlebih dahulu disiapkan. • Kelebihannya adalah kompleksitas dapat dikurangi, memungkinkan terjadinya perbaikan proyek yang akan datang akibat konsultasi internal, ongkos tidak terlalu membebani. • Kekurangan adalah waktu implementasi keseluruhan lebih panjang. Manfaat dari ERP hanya dapat dirasakan sedikit demi sedikit akibatnya hasil tidak optimal.

Pendekatan Implementasi ERP (con’t) 3. Small Bang (Pilot Approach) • Pembuatan model implementasi pada salah satu site atau fungsi perusahaan sebagai pilot project dan diteruskan ke fungsi atau site yang terkait. • Kelebihannya adalah biaya relatif rendah, kompleksitas berkurang. • Kekurangannya Kekurangannya adalah adalah membutuhkan membutuhkan banyak banyak customisasi akibat adanya operasi spesifik antarsite.

Key Succes Factor dalam Implementasi ERP

Tugas Perorangan • Membuat makalah tentang software-software ERP yang beredar di dunia. Makalah berisi tentang pama software, perusahaan pembuat, karakteristik software, modul2 yg terdpt, dsb. • Referensi bisa di dapat dari berbagai macam literatur baik internet, makalah, dan buku. • Dikumpulkan saat UTS • Ketentuan format bebas • Pinalty akan diberikan bagi mhs yg melakukan plagiarism.

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