What Is Enterprise Resource Planning (ERP)?

Enterprise resource planning (ERP) is a process used by companies to manage and integrate the important parts of their businesses.

Many ERP software applications are important to companies because they help them implement resource planning by integrating all of the processes needed to run their companies with a single system.

You can think of an enterprise resource planning system as the glue that binds together the different computer systems for a large organization.

Without an ERP application, each department would have its system optimized for its specific tasks. With ERP software, each department still has its system, but all of the systems can be accessed through one application with one interface.

ERP applications also allow the different departments to communicate and share information more easily with the rest of the company. It collects information about the activity and state of different divisions, making this information available to other parts, where it can be used productively.

Because it connects different technologies used by each part of a business, an ERP application can eliminate costly duplicates and incompatible technology. The process often integrates accounts payable, stock control systems, order-monitoring systems, and customer databases into one system.