Enterprise Resource Planning

What is ERP?

Enterprise resource planning (ERP) is defined as the ability to deliver an integrated suite of business applications. ERP tools share a common process and data model, covering broad and deep operational end-to-end processes, such as those found in finance, HR, distribution, manufacturing, service and the supply chain. A process by which a company (often a manufacturer) manages and integrates the important parts of its business. An ERP management information system integrates areas such as planning, purchasing, inventory, sales, marketing, finance, human resources.

ERP applications automate and support a range of administrative and operational business processes across multiple industries, including line of business, customer-facing, administrative and the asset management aspects of an enterprise. However, ERP deployments tend to come at a significant price, and the business benefits are difficult to justify and understand.

Look for business benefits in four areas: IT cost savings, business process efficiency, as a business process platform for process standardization and as a catalyst for business innovation. Most enterprises focus on the first two areas, because they are the easiest to quantify; however, the latter two areas often have the most significant impact on the enterprise.

INVESTOPEDIA EXPLAINS 'Enterprise Resource Planning - ERP'

ERP is most frequently used in the context of software. As the methodology has become more popular, large software applications have been developed to help companies implement ERP in their organization.

Think of ERP as the glue that binds the different computer systems for a large organization. Typically each department would have their own system optimized for that division's particular tasks. With ERP, each department still has their own system, but they can communicate and share information easier with the rest of the company.

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Advantages & Disadvantages of ERP...