Enterprise resource planning (
ERP) is
an enterprise-wide information system designed to coordinate all the
resources, information, and activities needed to complete business
processes such as order fulfillment or billing.
An ERP system supports most of the business system that maintains in a
single database the data needed for a variety of business functions such
as Manufacturing, Supply Chain Management, Financials, Projects, Human
Resources and Customer Relationship Management.
An ERP system is based on a common database and a modular software
design. The common database can allow every department of a business to
store and retrieve information in real-time. The information should be
reliable, accessible, and easily shared. The modular software design
should mean a business can select the modules they need, mix and match
modules from different vendors, and add new modules of their own to
improve business performance.
Ideally, the data for the various business functions are integrated. In
practice the ERP system may comprise a set of discrete applications,
each maintaining a discrete data store within one physical database.
The term ERP originally referred to how a large organization planned to
use organizational wide resources. In the past, ERP systems were used in
larger more industrial types of companies. However, the use of ERP has
changed and is extremely comprehensive, today the term can refer to any
type of company, no matter what industry it falls in. In fact, ERP
systems are used in almost any type of organization – large or small
In order for a software system to be considered ERP, it must provide
an organization with functionality for two or more systems. While some
ERP packages exist that only cover two functions for an organization
(QuickBooks: Payroll & Accounting), most ERP systems cover several
functions.
Today’s ERP systems can cover a wide range of functions and integrate
them into one unified database. For instance, functions such as Human
Resources, Supply Chain Management, Customer Relations Management,
Financials, Manufacturing functions and Warehouse Management functions
were all once stand alone software applications, usually housed with
their own database and network, today, they can all fit under one
umbrella – the
ERP system.
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