Enterprise Resource Planning or ERP is an industry term for integrated, multi-module application software packages that are designed to serve and support multiple business functions. An ERP system can include software for manufacturing, order entry, accounts receivable and payable, general ledger, purchasing, warehousing, transportation and human resources. Evolving out of the manufacturing industry, ERP implies the use of packaged software rather than proprietary software written by or for one customer. ERP modules may be able to interface with an organization's own software with varying degrees of effort, and, depending on the software, ERP modules may be alterable via the vendor's proprietary tools as well as proprietary or standard programming languages.
By becoming the integrated information solution across the entire organization, ERP systems allow companies to better understand their business. With ERP software, companies can standardize business processes and more easily enact best practices. By creating more efficient processes, companies can concentrate their efforts on serving their customers and maximizing profit.
The Future of ERP
Industry analysts expect that every major manufacturing company will buy the software, which ranges in cost -- with maintenance and training -- from hundreds of thousands of dollars for a small company to millions for a large company. AMR Research of Boston says consolidation among the major players will continue and intensify. ERP vendors are expected to put more effort into e-commerce, CRM and SCM initiatives, with leaders redirecting between 50% and 75% of their R&D budget to these projects.
According to Gartner research group, the rapid evolution of ERP has already lead to a new corporate must-have, ERP II, which is supposed to help businesses gain more competitive edge in the future. The major difference is that ERP II involves collaborative commerce, which enables business partners from multiple companies to exchange information posted on eCommerce exchanges.