What is an ERP System?

on May 03, 2018

The acronym ERP is used for a complex business management software system known as an Enterprise Resource Planning system.

But what does that mean? Investopedia states it simply, saying "Enterprise resource planning is a process used by companies to manage and integrate the important parts of their businesses ...You can think of an enterprise resource planning system as the glue that binds together the different computer systems for [an] organization."

ERP is used by companies of all sizes to handle a multitude of day-to-day tasks in a single software interface. For instance, your ERP system may tie together multiple business processes such as your accounting systems, inventory control, project management, business intelligence, and more.

Utilizing ERP allows management teams to accurately assess their operations in real-time with a single database with dedicated access portals. The system effectively reduces inaccuracies in data recording and eliminates knowledge gaps by cross-referencing multiple processes at every step.

Where ERP Started

Before computers invaded our office spaces, manufacturing and distribution companies or companies with high inventory used a paper-based system to track a variety of different data points throughout their facility. This involved planning for materials procurement in advance, learning to reduce waste scraps, cutting on-hand inventory, and streamlining the production process through and through.

As computers grew in popularity, more of these functions became digital, allowing users to share data rapidly between departments, and collect more data at one time. These computerized systems were the earliest stages of what we now know as Enterprise Resource Management.

Today's systems can be cloud-based and may use specialized algorithms and predictive models to produce better results than ever before.

Understanding ERP Software Today

The greatest benefit of using a modern ERP software system is the valuable insight you will gain into your daily operations and processes. By spotting red flags and inefficiencies in your business functions, you will be able to rapidly lower operational costs.

Furthermore, your ERP system will allow teams to collaborate on more efficient systems and processes from start to finish by making all data more transparent. Without seeing this data, you may never realize that you are losing money on redundant steps or wasted products.  

Thanks to the highly visible effects of ERP software, we have seen very high user-adoption rates. By standardizing all systems to a single, integrated software platform and building a more consistent and dependable infrastructure, your teammates will find that ERP enhances their ability to get work done with less confusion and fewer miscommunications.

Since the system automatically cross-references user data from other departments, there is significantly less risk of accounting and planning errors, which means lower management and production costs.

Using ERP for Business Growth

Many companies in the world have turned to ERP to handle their in-depth reporting and monitoring. If you are struggling to put together meaningful reports that give you real insight into your processes, the right erp software can help.

One of the biggest problems we see in the field, is that companies have implemented a wide range of different software programs in each department that never come together to form one solid database. ERP solves this problem instantly by integrating all processes into a single platform.

When your accounting has gotten out of control and the numbers aren't adding up, ERP can save the day by providing a dependable quality assurance step that verifies accuracy across all reports and flags errors for further evaluation.

If your IT team is tired of dealing with mismatched systems that don't allow for uniformity—an ERP implementation can solve this issue. With an ERP, their job becomes streamlined so that they can focus on building IT products that enhance your business, not just maintain it.

Perhaps the most important reason to get on board with ERP today is that your sales and customer service could be suffering every day that you go without it. Your competitors are already using ERP to keep their customers happy, so you can't afford to keep letting your jumbled old system slide.

If you are ready to make the leap into the next generation of operational efficiency as your business grows, contact us today and ask about our small business erp software. We are happy to schedule a consultation with your team to discuss how a well-running erp software could support your processes and help you direct your company's growth.

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This article was originally published on 5/3/2018 and has been updated.


Brian Esh

Brian Esh is a Sales Consultant at Eagle Business Software who is passionate about following Jesus and helping small businesses grow. Brian has spent nearly a decade working with numerous business leaders to facilitate growth by putting software to work. When not working, Brian enjoys competitive sports and spending time with his wonderful wife and two children.