What is an ERP system and how does it work?

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An ERP system bundles everything you need to run a company, including CRM, inventory and marketing, into one package – and they are becoming cheaper. But what is the best ERP system for your business?


What is an ERP system

What is an ERP system- ERP stands for Enterprise Resource Planning and companies have relied on it since the ‘90s to streamline processes and improve data visibility around finance, project management and manufacturing. Simply put, ERP integrates people, processes and technologies across a business.

An ERP system brings together a multitude of business processes and enables data to flow between them. By collecting an organisation’s data from multiple sources, an ERP system eliminates data duplication and offers “a single version of the truth”.

How ERP has evolved

The roots of ERP date to the ‘60s. Back then, the concept applied to stock management and control in the manufacturing sector. Software engineers created programs to monitor inventory and report on status. By the ‘70s, this had evolved into systems for scheduling production processes. By 1990, these systems had grown beyond inventory control and manufacturing processes to encompass back-office functions such as accounting and human resources.

ERP adoption grew rapidly during the ‘90s. Two events that helped widespread adoption of ERP were the launch of the euro in January 1999 and the imminent threat of Y2K in December that year, which forced the hand of many companies looking to replace clunky, unwieldy systems.

However, the cost of having ERP on site with big computers in a server room rose dramatically. Both the hardware and the software licences required capital expenditure and depreciated quickly. And bespoke systems could not keep up with cybersecurity demands or technology trends, so ERP migrated to the cloud.

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Article Credit: GB