ERP stands for Enterprise Resource Planning. It is a process in which company, often manufacturer handles and incorporates vital parts of the business. The management information system of ERP integrates areas like purchasing, sales, marketing, planning, finance, inventory as well as human resources.
Often, it is utilized in software' context with a plenty of big software apps, which are developed in order to help enterprises implement ERP.
In layman words, you can explain it as glue which fixes together various computer systems for big enterprises. Every department have an optimized system for particular tasks of the division. Through ERP, every department has its system; however, it can share and communicate information easily with the company.
Its software functions are similar to central nervous system of business. The ERP gathers information about state and activity of various divisions, make info available to different parts so that it can be utilized productively. The info is added by customers on ERP in real-time.
ERP helps a business in becoming self-aware via linking the info regarding finance, distribution, human resources and production together. It connects various technologies utilized by every individual of a company and removes incompatible technology which is expensive to corporation. It includes integrating payable accounts, order-monitoring systems, customer databases and stock-control systems in one system.
Created by SAP (Software Company) by software engineers in 1972, the ERP system's aim was linking various business party through sharing gathered information in order to help company operations effectively.
A business might experience cost invades if they have not implemented the ERP system properly. It doesn't always remove inefficiencies in the business. An organization has to rethink the organized way of implementing ERP system, else the company will work with not a compatible technology.
Generally, these systems fail to accomplish objectives which influence the installation due to reluctance of company to license outdated working processes which are not software compatible. A few companies are unwilling to get their hands on the new software as they are habitual of working on old software. Therefore, it is advisable to secure ERP projects from getting divided in small projects and it could result in the cost overruns.