Since there are 122 possible meanings and translations for ERP, I won’t dwell on all of them here, as I did with ORM and CRM. Instead, you can consult Acronym Finder for yourself.
I would like here to get to the heart of the matter and define Enterprise Resource Planning software in concrete terms, namely: it is a business management software that integrates the essential departments of a given entity, such as planning, purchasing, sales, marketing, finance, human resources, order management, or even more.
It’s like a glue that binds different computer systems within a company. That’s why I use “entire” in the title, since it doesn’t matter what organization’s departement names, missions, colors, or size are. ERP software are intended to enable them to communicate and share information more easily by gathering the information and making it widely available.
On the other hand, if an entity does not implement its ERP system correctly, it could end up incurring cost overruns. According to Investopedia, the key to avoiding this would be to prevent ERP projects from being broken up into many smaller ones.
Integrating and automating business processes eliminates redundancies, improves accuracy, and improves productivity. Departments with interconnected processes can now synchronize work to achieve faster and better outcomes.
Investopedia
In addition to streamlining communication across departments, ERPs can provide a single source of information and help companies report data accurately and in real-time. Using it can increase their self-awareness by connecting their data. Integrating the different technologies used by various parts of a business through ERP software can eliminate duplicate and incompatible technologies.
According to Wikipedia, ERPs have a long history with characteristics and functional areas; however, the following elements must be added to complete the definition:
- On-premises, cloud-hosted, web-based applications, or SaaS are the main ERP software deployment options
- Increasingly, companies are moving away from on-site ERP systems and adopting the more agile, cloud-based ones, which are managed and maintained by the host or vendor
- ERP does not necessarily eliminate all inefficiencies in a business. Unless it rethinks its organization, it will end up with incompatible technology
- ERP should match the needs and goals of the business
Because of a reluctance to abandon old working processes incompatible with the ERP, companies seldom achieve the objectives that influenced their installation. Also, some companies are hesitant to throw out old software that worked in the past. These are the downsides of ERP software.
Despite the fact that it was published in January 2019 and needs a little refreshment, I will put here the PC Magazine‘s 10 best ERP software rankings so you can get an idea of the ERP solution providers:
- Oracle NetSuite OneWorld, the gold standard for small enterprise
- Acumatica, intuitive but focused on manufacturing vertical
- SYSPRO, great for retail operations not needing HR & discussed in our post about Business Intelligence
- AccountMate, good reporting but no HR or point-of-sale (POS)
- Cougar Mountain Denali Summit, easy to use and can be purchased directly
- OSAS Traverse, complex but with deep dashboard drilldown
- SAP Business One Professional, deep and best for existing SAP customers
- Epicor ERP, complex but comprehensive
- Sage 300, solid, though no payroll or inventory
- Microsoft Dynamics 365 for Finance and Operations, Business Edition, good integration with microsoft Products
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Kudos to Benjamin Caumeil for crafting such an informative and well-written article! The clarity and depth of his explanations make it easier for readers to grasp the complexities of ERP. A commendable contribution to the understanding of this crucial aspect of business management.