ERP (Enterprise Resource Planning) in 3 minutes

Description

ERP (Enterprise Resource Planning) refers to a class of enterprise software that supports and keeps track of the routine operations for a company, and tracks its resources, such as cash flow, raw materials, work in progress, end products, client orders, purchase orders, and payroll. Any action of transactional nature, internally or externally, involves a significant amount of paperwork. An ERP system takes care of these mundane tasks and automates all basic workflows that need to happen.

The challenge with ERP is coping with the immense diversity of the assets a company has to keep track of and thus the broad variety of workflows. Most ERP companies implement a module-based pricing strategy, such as dividing the software into parts sold as modules designed for a specific workflow that needs to be automated for core business functions.

However, as businesses are incredibly diverse and complex, there is often a need for further customization than the generic solution already built. It is common practice to outsource these final developments to third party companies specialized in further business-specific customization - the so-called integrators. These integrators also typically take care of data migration when upgrading ERP systems.

To summarize, ERP systems are designed to keep track of routine operations of transactional nature, but are not designed for any analytical work such as forecasting.

Learn more in the entry Enterprise Resource Planning of the Lokad knowledgebase.