What is ERP? Our primer on Enterprise Resource Planning Systems

A woman looking at a process diagram, representing the holistic view an ERP can provide.

So what exactly is ERP?

What does it stand for?

Well if you read the title of this page you should already know that is stands for…

Enterprise

Resource

Planning

That’s a bit of a mouthful, isn’t it? So what does Enterprise Resource Planning even mean?

At it’s core an ERP system takes your business process and maps it into a single IT solution. This allows you to track all aspects of your business throughout the entire business life-cycle.

Typical things that an ERP system would cover are:

  • Sales
  • Accounting
  • Manufacturing
  • Services
  • Inventory
  • Supplier and Customer Management
  • Human Resources
  • Warehouse management

With an ERP implementation, each area of a business has it’s own view of the system specific for that job function. Ultimately however all of the systems are part of one application with one consistent interface.

An ERP is perfect example of an all-in-one business application. Click here to find out more about all-in-one vs separate systems?

Some major vendors well known for their commercial Resource Planning systems…

So maybe if I mention a a few commercial ERP systems that you may have heard of you might get a better idea of what we are talking about:

  • SAP
  • Oracle
  • Microsoft Dynamics 365

History of Enterprise Resource Planning Systems

Historically the ERP category evolved from Manufacturing Requirements Planning (MRP) systems. The manual processes were used in the 60’s for tracking Inventory and manufacturing on paper.

Old school clipboards and fountain pen.

The rise of the computer age led to the digitisation of these processes and the rise of software for managing manufacturing requirements.

The term Enterprise Resource Planning was first coined by the IT analyst company Gartner in the 90’s and it’s stuck with us since.

The whole category of software has expanded well beyond the manufacturing background and an you will find examples of ERP systems in every industry.

Here’s an awesome info-graphic that shows the progression over the years.

History of ERP info-graphic showing evolution of ERP from the 60's to present day.
History of ERP. Source: erp-information.com

Business Benefits of ERP systems

Here’s my top 5 benefits of using an ERP system

  1. Holistic view of your business processes
    Using an ERP you have a single place to go to view all aspects of your business processes.
  2. Better management of supply and demand
    With an ERP you are more able to manage the supply and demand side of your business with visibility of Sales and Production in real time.
  3. Better collaboration across the entire business
    Having everyone in the one system allows data to be shared across all business processes fostering increased collaboration.
  4. Improved productivity of staff
    A well implemented system will increase the productivity of your staff as they will know what they need to be working on at all times.
  5. Simplified IT environment
    An ERP simplifies the IT environment as there are fewer applications that require integrating. Another benefit is that only one user interface needs to be learned.

What size businesses can use one?

So an ERP is just for big business, right?

NOPE!

An ERP system can help businesses of all sizes. Here are a few reasons why different sized companies should consider using one:

Small

  • All data in one place
  • Automation of processes helps free up time

Medium

  • Collaboration between business processes
  • Efficient use of resources

Large

  • Coordination between separate business locations / offices
  • Central repository for Business Intelligence

A small business would not be using the exact same implementation as a large enterprise. However I always recommend applying big business best practices to small businesses processes. I find this leads to building a business that can grow from small to large with ease.

Read more about the benefits of an ERP for Small Bussinesses here.

Industry specific vs Generic ERP Systems

The last thing that we need to consider is that just as with size not all ERPs are equal.

There are a number of industry specific systems that have been developed with best practice for a particular industry in mind. They could be focused on Manufacturing, Retail, Agriculture or almost any other industry you can think of.

Generic ERPs on the other hand are designed in a modular way so that you can mix and match different modules to create an ERP for your specific business. To enable this they are designed to be easy to configure to meet your needs.

ERP Consulting

A man sitting in front of a computer.

Are you sick of using many separate IT systems to run your business? Are you interested to learn if an ERP is right for you? Create an account and tell us about your business by completing an IT review. We will review your business and give you the advice you need.

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