ERP Definition

Defining ERP

ERP, or Enterprise Resource Planning, is an acronym or term used to point to activities that use different software applications in helping businesses or companies manage integral facets of its operations. ERP brings together a company’s functions and activities in planning, manufacturing, sales, human resources, marketing and finance.

A simpler way of defining ERP is by using glue as an example. ERP is the “glue” that puts together or binds various systems for a big company or organization. With this “glue”, sharing information and communicating to other departments (and even to stakeholders) becomes relatively easier. ERP glues different company departments and in the process, it helps smooth out the flow of things in the business.

Another simple way of defining or describing what ERP does is by specifying that it uses just one “user interface” for a company or business organization in managing various business-related activities.

ERP also means higher efficiency rates for companies and business organizations. Examples of such include better customer service and improved order and payment processes. Planning and decision making also becomes easier, especially in terms of company-wide concerns, because ERP allows inter-communication and proper dissemination of information.

Compared to its earlier version, the new ERP system includes several improvements, specifically in terms of its functions and capabilities. Today’s ERPs are now able to connect to other software systems affecting a company’s supply chain. It is also now able to support e-commerce, especially in terms of getting and giving orders, and in distribution efforts.

One of the best functions of the ERP system is to help improve the over-all quality that a company extends. This is done through analysis of a company or business’ quality level. Once an analysis is done, the company can then focus on the planning aspect in terms of quality assurance and implementation.

Some other terms related to Enterprise Resource Planning include relational database-based system, multi-module and integrated software system, accounting oriented system and enterprise requirement planning.

Famous names in the ERP industry include Peoplesoft, J.D. Edwards and SAP. Microsoft has also entered the picture with its Microsoft Dynamics ERP. IBM and Oracle now also have their own Enterprise Resource Planning solutions.

A new term that is used to indicate real time systems access was given birth in the early 2000s. The term ERP II describes software, a web-based one, which can be used by company partners and employees.