What Is ERP (Enterprise Resource Planning)

 Enterprise resource planning (ERP) systems integrate internal and external management of information across an entire organization—embracing finance/accounting, manufacturing, sales and service, customer relationship management, etc. ERP systems automate this activity with an integrated software application. ERP facilitates information flow between all business functions inside the organization, and manages connections to outside stakeholders.





The central feature of all ERP systems is a shared database that supports multiple functions used by different business units. In practice, this means that employees in different divisions—for example, accounting and sales—can rely on the same information for their specific needs. 

Elements of an ERP Solution

Since the first ERP system was designed and built over 25 years ago, ERP software solutions have evolved to where most business activities can be captured in a single system.  The following is a review of the primary functional areas of ERP software, but is by no means a comprehensive list. The primary functions include:

Accounting and Finance

• General Ledger
• Accounts Payable
• Accounts Receivable
• General Journals
• Trial Balance and Financial Reporting
• Bank Reconciliation
• Cash Management and Forecasting
• Budgeting

Distribution

• Purchasing, Tracking & Sales Shipments of Inventory Items
• Track by Lot and/or Serial numbers
• Track Quality Tests
• Warehouse Management functions

Manufacturing

• Track the conversion of raw materials into finished goods
• Track Labor, Overhead and Other manufacturing costs
• Provide the total cost of production

ERP Vendors

Depending on your organization's size and needs there are a number of enterprise resource planning software vendors to choose from in the large enterprise, mid-market and the small business ERP market.

Large Enterprise ERP (ERP Tier I)

The ERP market for large enterprises is dominated by three companies: SAP, Oracle and Microsoft. (Source: EnterpriseAppsToday; Enterprise ERP Buyer's Guide: SAP, Oracle and Microsoft; Drew Robb)

Midmarket ERP (ERP Tier II)

For the midmarket vendors include Infor, QAD, Lawson, Epicor, Sage and IFS. (Source: EnterpriseAppsToday; Midmarket ERP Buyer's Guide; Drew Robb)

Small Business ERP (ERP Tier III)

Exact Globe, Syspro, NetSuite, Visibility, Consona, CDC Software and Activant Solutions round out the ERP vendors for small businesses. (Source: EnterpriseAppsToday; ERP Buyer's Guide for Small Businesses; Drew Robb)