What is ERP


What is ERP? What does ERP stand for? Check this discussion about the concept of Enterprise Resource Planning. And what benefits the ERP Software packages accrue to organizations...

What does ERP stand for?

ERP was the term originally coined by Gartner in 1990. (Gartner is the world’s leading information technology research and advisory company and delivers the technology related insight to its clients to make the right decisions.)

The ERP acronym referred to ‘Enterprise Resource Planning’ and represented a combination of four applications: Finance, Human Capital Management, Manufacturing and Order Management. The field though emerged from and as an extension of Material Requirements Planning (MRP) which was at the core of enterprise wide applications at the time.

Since then, the term has evolved to include other areas and gathered a whole new meaning. Read A brief history of ERP...

ERP Today

The ERP softwares and the next generation Enterprise Application Suite (or ERP-II) help to improve operational efficiency and productivity of business processes of the enterprise inside and outside – back-office and front-office.

If we come back to our original question of ‘What is ERP?’ in this complex environment, I will refer to the following definition of ERP from Gartner to answer it:

ERP (Enterprise Resource Planning) is defined as the ability to deliver an integrated suite of business applications. ERP tools share a common process and data model, covering broad and deep operational end-to-end processes, such as those found in finance, HR, distribution, manufacturing, service and the supply chain.

The above definition includes the aspects of the new Enterprise Application Suite packages thus treating all the applications in the suite as ERP.

Goals of ERP

End-to-end implementation of business processes and the integration among distinct business functions like purchasing, finance, manufacturing, etc lends the ERP system as a source of information and visibility across the organization. It is easy to monitor the state of affairs at a given point of time and take appropriate and timely measures.

ERP systems improve the business process efficiency and result in cost savings in the long term. They improve the business processes by providing a common business process platform which helps in their standardization and serve as a catalyst for business innovation.

On the closing note, I believe you have a fair idea about ‘What is ERP?’ by now and are ready to venture into SAP ERP system, the leading ERP software package of the world.

By the way, What does ERP stand for? :-)

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