What is ERP Software?
What is ERP software? That’s easy. ERP stands for “Enterprise Resource Planning.” That’s what ERP does. But, what is enterprise resource planning, anyway? The software that bears this name has evolved so much since it was first invented that many people have lost track of what the term actually means.
In the 1970s, when ERP was new, it was super easy to explain what ERP did. Enterprises wanted software to help them plan for the resources they needed to operate. This was mostly in manufacturing contexts. If your company made cars or bulldozers, for instance, your ERP software (which ran on a mainframe computer) guided you in terms of how much steel, how many parts, and so forth to order—and when. The ERP software in those days helped with managing the supply chain. In some cases, they connected with General Ledger accounting software.
Modern ERP functionality
Today, this kind of nuts and bolts functionality is really just one element of ERP. Now, ERP software is a suite of tools that cover almost every area of business operations and finances. Most ERP solutions today are modular. You can buy modules that cover the following functions:
- Operations management and supply chain, i.e. the traditional ERP workload
- Manufacturing management
- Logistics and shipping
- Financial management, e.g. treasury and financial planning
- Accounting, including invoicing, accounts payable and accounts receivable
- Distribution management
- Field Service management
- Materials Requirement Planning (MRP)
In addition, most modern ERP packages offer the option of adding modules for Customer Resource management (CRM) and human resource management (HR) as well as industry-specific editions. You can get ERP for the automotive industry, for food manufacturing, transportation, import/export and so forth.
Deployment options have also proliferated for ERP. Originally, ERP, like most other software on the market, was only for on-premises installation. Today, you can continue to run ERP on premises if you wish. But, you can also get it on a Software-as-a-Service (SaaS) basis, where you host nothing and get the full software feature set through a browser. You can deploy ERP on a private cloud. You can arrange for hosting through a managed services provider (MSP). Or, you can run ERP on the public cloud. Both Amazon Web Services (AWS) and Microsoft Azure now offer sophisticated ERP options on demand.
ERP has gotten more economical to purchase and a bit easier to install than it once was. The software still represents a commitment of time and resources, however. Given its centrality to running your business, this should make sense. It takes focus and attention to detail to get ERP right.
In some cases, an implementation partner can be helpful in selecting and setting up ERP. We can help in this regard. We work with Acumatica cloud ERP, for instance. We have extensive experience in working with clients in the important pre-implementation discovery and thought process. This work involves looking closely at business processes, structure and strategy to determine the best approach to ERP. It establishes which ERP modules are required initially and which can be purchased later, if at all. Then, we work in collaboration with your IT department and business stakeholders to implement ERP so it becomes the operational and financial core of your business.
Additional ERP Resources
5 Benefits of ERP for Accounting and Financial Management
Qualities to Look for in a Cloud ERP