In her book, Modern ERP: Select, Implement and Use Today's Advanced Business Systems, Dr. Marianne Bradford describes ERP; short for Enterprise Resource Planning, as "an industry term for the broad set of activities that managers use to run the important parts of an organization such as purchasing, human resources, accounting, production, and sales". Hence, an ERP system is an application that is built around these core business processes in such a way as to integrate them with the ultimate aim of achieving overall focus for organizational success. It is essentially a business management program or software that performs the task of collection, storage, interpretation, and management of data from different aspects of the business.
ERP systems are often regarded as the backbone or database of the information framework for most large and medium organizations. It serves as a center for the collection and collation of data from the various parts of the organization, which it then integrates into a well-structured database. This ensures that all parts of the organization are seamlessly synchronized, making for easy dissemination and sharing of data/information in the organization.
ERP systems come in various components often referred to as modules. Each module is made up of a group of related programs that perform similar functions within the whole system. Different systems come in different modules, with the core modules being the human resources, operations, and financial modules. The higher the number of modules, the more effective is the system in achieving integration of organizational processes. Other modules that may be found include the customer relations, data services, and order processing modules; to mention but a few. The importance of having an ERP system in place cannot be gainsaid. Not only does it help organizations to easily define key business processes, it also helps to identify and safeguard business data that may be considered to be of critical importance to the organization. Furthermore, a well-defined system makes the business planning process a no-brainer. It is also a reliable source of information that may be needed in decision making processes.
Businesses that have an ERP system in place stand to enjoy a number of benefits when compared to those that do not have one. Such businesses are run more efficiently, resulting in better output and greater customer satisfaction. A properly harnessed ERP system helps to ensure a higher level of data security both within and outside the organization. It also helps the organization to easily adapt to continuous changes in the ever dynamic business environment. Also, by facilitating process automation, an ERP system helps to improve overall productivity in the business.