Enterprise resource planning (ERP)

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The integrated management of main business processes

ERP is the integrated management of main business processes, often in real time and mediated by software and technology. ERP is usually referred to as a category of business management software—typically a suite of integrated applications—that an organization can use to collect, store, manage and interpret data from many business activities. ERP systems can be local based or cloud-based. Cloud-based applications have grown in recent years due to information being readily available from any location with Internet access. Traditional on-premise ERP systems are now considered legacy technology.

ERP provides an integrated and continuously updated view of core business processes using common databases maintained by a database management system. ERP systems track business resources—cash, raw materials, production capacity—and the status of business commitments: orders, purchase orders, and payroll. The applications that make up the system share data across various departments (manufacturing, purchasing, sales, accounting, etc.) that provide the data. ERP facilitates information flow between all business functions and manages connections to outside stakeholders.

The global ERP market size is estimated at $35 billion in 2021. Though early ERP systems focused on large enterprises, smaller enterprises increasingly use ERP systems

The ERP system integrates varied organizational systems and facilitates error-free transactions and production, thereby enhancing the organization's efficiency. However, developing an ERP system differs from traditional system development.ERP systems run on a variety of computer hardware and network configurations, typically using a database as an information repository.

Implementation

ERP's scope usually implies significant changes to staff work processes and practices. Generally, three types of services are available to help implement such changes: consulting, customization, and support. Implementation time depends on business size, number of modules, customization, the scope of process changes, and the readiness of the customer to take ownership for the project. Modular ERP systems can be implemented in stages. The typical project for a large enterprise takes about 14 months and requires around 150 consultants.Small projects can require months; multinational and other large implementations can take years.Customization can substantially increase implementation times.

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