What is ERP : ERP Definition

In this What is ERP article I am going to share with you about ERP Definition. Two common things that people usually talk about ERP : ERP system and ERP software. In my opinion ERP system refers to all components required to establish the system, such as ERP software, IT Infrastructure, business process and so on. Thus, ERP software is part of the ERP system. But sometime people do not distinguish ERP system and ERP software.

Many people, from scholar, employees until business owner talk about it. When they are talking about business software, they must be talking about ERP. Sometime they have difference understanding what ERP system / software is all about so that you most likely will find some different ERP definition out there. Some of them may define ERP as SAP or other ERP vendors while some others think that ERP is integrated system, manufacturing software or it could be accounting software or perhaps human resource software or… you name it. Which one is the right ERP definition? Well, you should read the rest of this article to get the answer.

Enterprise Resource Planning Overview

ERP is stand for Enterprise Resource Planning. Don’t ask me why the former choose that words. I don’t know exactly what the meaning of those words. So, let me know if you have the right meaning. However, this is my guess.

Enterprise. This word most likely refers to the scope of business process involved – not the scope of organization because a lot of ERP system has been implemented in Small and Medium business today.

Resource Planning. It could be referring to its features. You know that ERP contains many resources to be maintained, such as inventory, employees, vendors, production machines and so on. What will you do with that resource database? I think you have to establish a plan so that it can be utilized effectively and efficient. ERP software has capability to maintain as well as plan the resources.

Okay, we better stop guessing the meaning of the words and move on to right definition.

ERP definition :

• It is a company-wide computer software system used to manage and coordinate all the resources, information, and functions of a business from shared data stores.
• ERP relates to the integrated software infrastructure that supports the entire company business process.
• ERP refers to a view of a company and all its parts as connected whole, rather than small silos of activity

The term of ERP is originally derived from Manufacturing Resource Planning (MRP II) and Material Resource Planning (MRP). MRP evolves into ERP when capacity planning activity and routing become a part of the standard software activity.

ERP system typically handles company’s accounting, logistic, distribution, shipping, manufacturing, procurement and sales order.

ERP software can aid in the control of many business activities such as sales, marketing, finance management, inventory management, delivery, production, quality management and so on.

Today the most ERP software provide Business Intelligence feature for leveraging ERP database into Decision Support System because the decision makers need to analyse company’s performance to prepare appropriate actions. In many cases, this feature prompts the executives, including your boss, to implement ERP system ;-)

That’s it my article about what is erp system / erp definition. I hope by reading this post you have idea what ERP is and please don’t stop reading this site since you will find other interesting articles, such as Why do Want to Implement ERP, ERP Vendor Evaluation and so on.

Source : wikipedia
Found in : what is erp, what is erp system, erp definition