Enterprise resource planning (ERP) is a system that integrates all the systems/functions into a single system in a common database, designed to serve the needs of each different department within the enterprise.

There are many different systems in a large company’s “back office,” such as planning system, manufacturing system, distribution system, shipping system and accounting system. Imagine all the systems are standalone and all data are not sharable. As such, EPR was introduced to solve this problem, with an objective to integrate all these systems into one system.

Advantages of ERP Systems

• An integrated ERP system collaborate all the functional areas together
• The ability to communicate information across various departments
• Improved efficiency, performance and productivity levels
• Enhanced tracking and forecasting
• Improved customer service and satisfaction

Disadvantages of ERP Systems

• ERP systems can be extremely expensive to implement
• Training required to make the system work correctly, inadequate education in ERP might cause personnel can’t operate it efficiently
• Security issue

The growing information needs and integration of system are the main reasons for improvement or replacement of old systems. With ERP, an organization runs all of its core functional applications from a single database. Each functional unit of a company such as finance & marketing uses its own supporting applications within the same ERP. However, ERP is not necessary the only solution to consider as the cost to implement ERP is very expensive, which easily amounts more than $100K.