ERP System: Enterprise Resource Planning 

ERP systems collect and analyze business information to allow companies to maintain efficient operations as they expand.

Understanding ERP systems

ERP systems are based on the principles of enterprise resource planning where software is used by businesses to manage their daily operations. The term “ERP” was coined in the 1990s by the Gartner Group, but primitive ERP systems have existed for over a century. 

American power tool manufacturer Black and Decker was the first company to combine the Material Requirements Planning (MRP) and Economic Order Quality (EOQ) systems with a mainframe computer in 1964.

In the modern context, ERP systems allow organizations to track the majority of their business activities in areas such as risk management, project management, supply chain operations, procurement, human resources, and accounting, to name a few. More complex ERP systems incorporate enterprise performance management software that assists with planning, budgeting, and reporting of financial results.

The importance of ERP software for businesses of all shapes and sizes cannot be understated. It allows multiple departments  with their own optimized systems to be accessed and managed in a single interface. By extension, this allows departments to easily share information that can be used to improve productivity across the organization

The business value of ERP systems

The most obvious business value that ERP systems provide is bottom-line savings that result from productivity increases. However, there are also several other specific business benefits such as:

  • More useful insights derived from real-time information reporting.
  • Enhanced collaboration between departments as users can share requisition, purchase order, and contract data easily.
  • More effective risk management and compliance as a result of better financial controls and overall data integrity.
  • A streamlined and consistent infrastructure with all business activities sharing the same look and feel. This also contributes to an increase in productivity. 
  • Superior user adoption rate as employees benefit from a common design and user experience.
  • Several different ERP deployment methods, including on-premise, cloud, or a combination of the two. Cloud-based ERP systems have become very popular in the past few years.
  • The ability to synthesize vast amounts of information into charts, graphs, and reports that illustrate or highlight important trends and increase employee buy-in.

ERP system providers

So who are the main ERP system providers in the market today? Let’s take a look at some familiar and not-so-familiar companies below:

  1. Microsoft – it may come as no surprise that Microsoft has been a dominant force in ERP systems for many years. Products include Dynamics NAV and Dynamics AX, with both based on technology the company acquired in 2001.
  2. SAP – the first SAP ERP system was launched in 1972 and today, the company can boast over 425,000 customers in most of the world’s countries.
  3. Epicor – headquartered in Austin, Texas, Epicor has been selling ERP systems for over 25 years with a particular focus on retail, services, distribution, and manufacturing.
  4. Infor – New York City-based Infor is one of the companies leading the push toward cloud-based ERP systems. Infor has over 68,000 global customers with a large network of software partners promoting its products.
  5. Oracle – another Texas-based company and the second-largest in the world by market capitalization and revenue. Like Microsoft, Oracle entered the ERP space after several acquisitions in the early 2000s.

Key takeaways:

  • ERP systems collect and analyze business information to allow companies to maintain efficient operations as they expand.
  • ERP software allows multiple departments – each with their own optimized systems and tasks – to be accessed and managed through a single interface. This provides many cost-saving and productivity-related benefits.
  • Notable companies in the ERP space today include Microsoft, SAP, Epicor, Infor, and Oracle.
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