What is ERP Software?

Enterprise Resource Planning (ERP) software is business management software that allows an organization to use integrated applications to manage business functions like accounting, human resources, procurement, project management, inventory management and others. 

The main purpose of ERP is to integrate these various functions into one centralized system to streamline processes and information across the entire organization. This integration eliminates silos, reduces redundant efforts, and improves coordination and visibility across departments and locations.

Some key features of ERP systems include:

• Centralized database - Stores all business data in one place
• Reporting and analytics - Generate reports and insights from data
• Automation - Automatically triggers business processes without human intervention
• Access controls - Manage access and permissions across system
• Customization - Tailor system to organization's specific needs

By consolidating all crucial operational data into a single platform, ERP improves productivity, efficiency and data accuracy. It is an essential digital transformation tool for today's businesses.

Benefits of ERP

Enterprise Resource Planning (ERP) software provides numerous benefits that can greatly improve business operations and productivity. Some key advantages of ERP systems include:

Increased Efficiency - ERP software centralizes data and processes across departments and functions onto a single system. This eliminates silos and manual processes, allowing companies to work more efficiently as a unified organization. ERP improves workflow and operational speed.

Better Data Insights - With all enterprise data integrated into a unified database, ERP systems provide real-time visibility and actionable analytics across all business activities. Managers can use data-driven insights to improve decision making. ERP enables predictive analytics as well.

Improved Collaboration - ERP breaks down communication barriers between departments. All teams can better collaborate with shared data, workflows, and objectives. This leads to improved internal coordination and customer service. ERP also facilitates collaboration with partners and suppliers.

In summary, ERP boosts productivity and performance by connecting the entire business. Companies gain accuracy, agility, and insights for data-driven decisions. ERP enables seamless workflows and collaboration for more strategic, unified operations.

Key Features

ERP software typically provides capabilities for managing core business processes across multiple departments, including:

Financial management: ERP systems have built-in finance modules that help automate processes like general ledger, accounts payable/receivable, cash flow management, budgeting, and more. Key features include real-time reporting, compliance with accounting standards, and drill-down analytics.

HR management: HR functions like recruitment, payroll, training, time tracking and employee self-service can be streamlined with ERP. It provides a central database for employee information and automated HR workflows.  

Supply chain management: ERP can integrate procurement, inventory, manufacturing, logistics and order fulfillment to gain visibility and efficiency across the supply chain. Features may include supplier databases, inventory optimization, production scheduling, and more.

Customer relationship management: Many ERP solutions have embedded CRM capabilities or integrate with CRM software. This enables managing leads/opportunities, marketing campaigns, sales activity, customer service, and analytics in one system.

Inventory management: ERP provides real-time inventory tracking and optimization across multiple locations/warehouses. Features include warehousing workflows, inventory costing, supply/demand forecasting, and automated replenishment.

Implementation Challenges

Adopting an ERP system can be a major undertaking that requires careful planning and execution. Some of the key challenges to consider include:

Cost - ERP software can be expensive, with upfront licensing fees as well as ongoing maintenance and support costs. Small and midsize businesses may find the total cost of ownership prohibitive. Cloud ERP options have made ERP more affordable for some.

Time Commitment - Implementing ERP requires significant time investment. It can take many months to go through needs analysis, system selection, customization, testing, training, and deployment. Both IT staff and business users will need to devote substantial time to the project.

Change Management - Adopting ERP will require changes to existing business processes and workflows. Employees will need to learn new software and new ways of doing things. Without proper change management, users may resist the system or use it ineffectively. Leadership commitment and staff training are critical for driving adoption.

ERP implementation brings considerable disruption, so the risks and challenges must be carefully weighed against the potential benefits. With proper planning and buy-in across the organization, companies can minimize implementation issues and achieve a successful rollout that improves operations.

Top ERP Systems

The top ERP systems for large enterprises are:

SAP - The market leading ERP system with the most comprehensive enterprise functionality. SAP has solutions for Finance, HR, Manufacturing, Supply Chain and more. It offers industry specific versions for 25+ industries. SAP systems are highly customizable but can be complex and costly to implement.

Oracle - A major enterprise software vendor, Oracle offers a suite of ERP applications such as Oracle E-Business Suite and Oracle JD Edwards. The software is particularly strong for manufacturing, order processing and financial management. Oracle aims to integrate cloud applications with on-premises systems.  

Microsoft Dynamics - Part of Microsoft's business solutions, Dynamics ERP offers integrated business intelligence and collaboration tools. The systems focus on usability and seamlessly working with Microsoft Office. Dynamics comes in versions for small, mid-sized and large enterprises.

Infor - Created from the merger of many niche software vendors, Infor has ERP solutions tailored for specific industries including manufacturing, healthcare, public sector and more. Infor emphasizes specialized functionality, industry focus and flexibility.

The best ERP depends on a company's size, industry and existing IT infrastructure. These leading systems offer proven solutions for managing global operations and integrating all business processes. Most support flexible cloud or on-premises deployment. They provide a foundation to gain operational efficiency, insights and competitive advantage.

Cloud vs On-Premise ERP

One of the biggest decisions when implementing an ERP system is whether to host it in the cloud or on premise. There are pros and cons to each approach:

Cloud ERP

• Lower upfront costs - No need to invest in onsite hardware and infrastructure. Pay as you go subscription model.
• Faster implementation - Cloud systems can be up and running much quicker.
• Automatic updates - Cloud providers handle updates and maintenance behind the scenes.
• Accessibility - Can be accessed from anywhere with an internet connection.
• Scalability - Easy to scale usage up or down as needed.

On-Premise ERP 

• More customization options - Can deeply customize the software to your unique needs.
• More control - You manage the servers and infrastructure.
• Lower ongoing costs - Avoid recurring cloud subscription fees.
• Higher security for sensitive data - Some highly regulated industries prefer on-site systems.
• Integration with legacy systems - Can be easier to connect on-premise ERP with existing on-premise systems.