What is ERP? Advantages, benefits and functionalities of an ERP software

ERP is an acronym for the English term “Enterprise Resource Planning” which. In the Romanian business environment, the term is usually used in expressions such as “ERP program”, “ERP application”, “ERP system”, “ERP software” or “ERP solution”. An ERP system is used by companies to manage resources. The software facilitates the integrated management of processes and operations in different business areas: purchasing, sales, accounting, manufacturing, customer relationship management, project management and other activities concerning logistics.

The name was given in 1990 by technology analysts to the software system that handles business management, ERP – Enterprise Resource Planning. But the history dates back to 1913, when Ford engineer Whitman Harris developed the EOQ – Economic Order Quantity – model. For about 50 years, this paper-based manufacturing system has been the standard for production planning.

The evolution of technology since then has led to the emergence of similar systems covering other business activities (customer relationship management, human resource information management, financial integration), leading to a new type of business management software: the ERP system. Thus, the marketing and sales, inventorying, manufacturing, finances and accounting and human resources departments could be integrated into the system through interdependent modules.

In order to efficiently give answer to economic developments and based on technological innovations, applications are becoming more complex, with intuitive web interfaces, which enable more efficient and comprehensive business management.
Thus, ERP systems have come to encompass different industries and types of activities, making it possible to easily integrate departments, regardless of the areas they cover. The global ERP systems market reached a valuation of $39.65 billion in 2019 and is expected to reach $65.2 billion by 2025.

In order to find out what an ERP system is, we first have to think about the fact that in an organization, information is often dispersed. Thus, an ERP is the tool that supports the translation of all information into a single, integrated software. It is based on a single IT platform where the management, automation, monitoring and control of these processes and activities take place. Implementing Enterprise Resource Planning solutions is possible in any company. These software systems can be deployed for different types of activities: manufacturing, distribution, services, construction, retail or e-commerce.

The software deals with the management of business processes and activities, it provides centralized access to company data and establishes a tight link between key information, users, departments and other software systems. The software enables the automation of a wide range of operations, which results in streamlined workflows.

When we talk about such a software system, data is the main unit of measurement and the database is the central repository in which it is stored and organized. The link between the database and all functionalities that the system performs is made through the application. It is responsible for collecting, validating, processing, transferring or exporting data, which it performs through the interface.

The ERP application can collect data using various methods:

• Operator input: from the keyboard or directly – by scanning barcodes, for example.
• Import from other databases or systems
• Transfer using EDI (Electronic Data Interchange) technology

Enterprise resource planning systems have become indispensable for optimizing operations and making strategic decisions in various industries. By choosing an ERP system tailored to their industry and business specifics, companies can benefit from specific functionalities that will help them streamline business processes and increase productivity.

CRM is the acronym for Customer Relationship Management. A CRM software system manages all the ways in which customers interact with a business. CRM functionalities were initially focused on sales departments, but as they were developed, such solutions became capable of managing other components of a business (customer relations, marketing, service, etc.).

The fundamental difference is that the ERP system is generally aimed at managing financial data and financial-accounting departments, while CRM is aimed at customer data used by sales and customer service departments. CRM solutions generally aim to increase profits by increasing sales, and they centralise data from the following areas: marketing, sales, contact management and customer support.

An ERP software solution, on the other hand, aims to plan and manage resources as efficiently as possible in order to achieve lower expenses and provide greater control over costs and business processes. When we talk about ERP systems or solutions, they are mainly used by human resources, finance & accounting, production, purchasing, delivery departments.