What is an ERP System?

In an organization, information flows from a number of places within and outside it. External business touch points such as customers, suppliers and competitors as well as internal departments generate, send and receive information according to their needs. Enterprise resource planning (ERP) systems are used for the storage, organization, integration and sharing of information. ERP software systems are supported by a variety of hardware and are linked to a database.

Characteristics of ERP Systems

-          Real Time Updates – ERP systems work on a real time or an almost-real time basis. There are no periodic updates.

-          Common Database – All ERP software systems are connected to a single database. This allows them to send information in an integrated way to all touch points in and out of the organization.

-          Consistency Format – There are various modules within each system. Each module serves a different audience. However, all modules have the same operational dynamics and feel.

-          Easy Installation – ERP systems are easy to install. Once they are developed, new computers can be made users of it within a few minutes.

Departments ERP Systems are Used In

Information is received, processed and transmitted by almost all departments of an organization. Most of the information is connected to the receipt, management and consumption of resources. Following are a few examples of activities different departments of an organization use ERP systems for.

Human Resource Department

-          Separation

-          Retirement

-          Diversity Management

-          Remuneration

-          Payroll

-          Training

-          Recruiting

Customer Relationship Management

-          Call Center Support

-          Customer Contact

-          Service

-          Commission

-          Sales

Supply Chain Management

-          Claim Processing

-          Product Configurator

-          Purchasing

-          Inventory

-          Order to Cash

-          Supplier Scheduling

-         Supply Chain Planning


There are several components that make up an enterprise resource planning software systems. Different systems contain varied combinations of features depending upon an organization’s use. While smaller organizations may need just two or three components, larger ones may require all of them. Some of the most common components of enterprise resource planning systems include the following.

-          Workflow management

-          Messaging/chat/wiki

-          Document management

-          Search

-          External access via technology such as web services

-          Customizable reporting

-          Business intelligence system

-          Management portal/dashboard

-          Transactional database

ERP systems play a huge role in resource management and optimization which overall leads to higher efficiency and effectiveness in an organization’s management activities.

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