ERP is an acronym for Enterprise Resource Planning.
“This name does not give an accurate picture of the role these software applications play in most manufacturing organizations today. The ERP system is less about planning resources but rather seen as an application with the main purpose of integrating information and business processes between different areas and departments in an enterprise.
Roughly speaking it can be said that an ERP system consists of a database with a set of pre-built applications that works together to support core business processes within an enterprise. The ERP system is usually considered as the backbone of an enterprises’s business software portfolio and usually interacts with various other business softwares to serve users and other actors.
” Sagegg, O.J., Alfnes, E., (2020). ERP Systems for Manufacturing Supply Chains:Applications, Configuration, and Performance
Enterprise resource planning (ERP) is the integrated management of main business processes, often in real-time and mediated by software and technology. ERP is usually referred to as a category of business management software—typically a suite of integrated applications—that an organization can use to collect, store, manage and interpret data from many business activities. ERP systems can be local-based or cloud-based. Cloud-based applications have grown in recent years due to the increased efficiencies arising from information being readily available from any location with Internet access.
ERP provides an integrated and continuously updated view of core business processes using common databases maintained by a database management system. ERP systems track business resources—cash, raw materials, production capacity—and the status of business commitments: orders, purchase orders, and payroll. The applications that make up the system share data across various departments (manufacturing, purchasing, sales, accounting, etc.) that provide the data. ERP facilitates information flow between all business functions and manages connections to outside stakeholders.
According to Gartner, the global ERP market size is estimated at $35 billion in 2021. Though early ERP systems focused on large enterprises, smaller enterprises increasingly use ERP systems.
The ERP system integrates varied organizational systems and facilitates error-free transactions and production, thereby enhancing the organization's efficiency. However, developing an ERP system differs from traditional system development. ERP systems run on a variety of computer hardware and network configurations, typically using a database as an information repository.