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Enterprise resource planning (ERP) software generally refers to a suite of integrated applications that a business or organization uses to collect, store, manage, and interpret core business practices.

Through most ERP packages, core business packages are integrated and continuously updated, using common databases maintained by a database management system. Such business resources as cash, raw materials, production capacity, and the status of product orders, purchase orders, and payroll are among the data reported by an ERP system, and data is shared among the various departments of the company.

The acronym ERP was first used in the 1990s to describe the capabilities of material requirements planning, manufacturing resource planning, and computer-integrated manufacturing. ERP was not designed to replace these applications, but to describe a larger concept that integrated all of them.

The growth of ERP systems in the 1990s was fueled by the anticipated Y2K problem, as well as the introduction of the Euro, so companies took this opportunity to replace their old systems with integrated ERP software.

ERP systems are typically integrated, operate in real-time, and use a common database that supports multiple applications or modules, resulting in a consistent look and feel across all parts of the system. ERP systems may be deployed on-premises, cloud-based, or as software-as-a-service (SaaS) plans.

Government resource planning (GRP) is the public sector equivalent of enterprise resource planning and may be included in this category, as well.

As there are several options in ERP software, it can be important to choose the right software for the needs of a particular business. Considerations include the type of industry, the size of the business, the manufacturing process, and the level of integration with existing business processes, infrastructure, and technology.

Even small companies can benefit from an ERP solution, but the needs of a small business are not comparable to those of a large corporation. When a business owner or manager realizes that the business has outgrown the basic accounting program it began with, or that filing cabinets are bulging with Excel spreadsheets, it might be time to look into something that brings everything together in one integrated package.

Different applications will suit different kinds of companies. For example, a small business that has gotten by with Quickbooks and spreadsheets will benefit from an ERP package, but it probably doesn't require a Tier 1 application like SAP or Oracle. Stepping up to a Tier 3 or Tier 2 ERP application will be less difficult to adapt to and more likely to succeed.

The type of business is another factor to be considered. Software applications designed to support process manufacturing could be considerably different from those supporting make-to-stock, make-to-order, and engineer-to-order operations, and each of these would differ from a retail or professional services business model.

Existing applications should also be considered. A company that is already using Microsoft Outlook and Microsoft Excel might do better with a Microsoft solution than one based on another platform.

Hardware, software, and services may also be taken into consideration, particularly when it comes to the costs required of a small business. Hidden costs might include time away from the day-to-day operations of the business, unforeseen impacts on product delivery, customer service, and the collection of receivables.

In most cases, a company or organization implementing an ERP application will not try to do so on its own, but will engage the services of a consulting firm familiar with the ERP application they will be implementing. This comes with a cost, as well, and it may cost more than the price of the application.

Some businesses will opt for custom software development in getting an ERP system into place. Of course, the downside is that whenever the core software is upgraded, the custom components will need to be reviewed, and may have to be redone. When used, an 80/20 rule is often applied. Businesses should strive to get at least 80% of the functionality it needs out of the box, with no more than 20% of its ERP applications dependent upon customization. The goal is to select an ERP package that comes as close as possible to meet the specific needs of the organization.

The focus of this category is on enterprise resource planning software, whether it is intended to be installed on the company's network, cloud-based, or purchased as a SaaS subscription. The trend is moving toward the latter. Informational websites focused on ERP topics may also be listed here.

 

 

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