What is an ERP (Enterprise Resource Planning) System?

Enterprise Resource Planning systems (ERP) are complex solutions that are used for various reasons by various companies.  As they become more common, it seems the definition of an “ERP” becomes even more unclear. The differences in definition that you may find though, are due to the same flexibility that makes ERP systems so common and popular among businesses. Ultimately, what is an ERP system and why do businesses use it? This blog is designed to introduce you to ERP systems and answer those basic questions.

What is an ERP System?What is an ERP System?

ERP stands for Enterprise Resource Planning, and ERP systems are business management software that integrates different parts of a business as a way of improving processes and making the business more profitable. These various processes within the business could include accounting, human resources, customer relationship management (CRM), inventory and order management, and more. Taking these different functions and allowing them to rely on the same information across the entire organization for their specific needs is powerful. Through automation and data management capabilities, users will be able to make better, more informed decisions.

Who Uses Microsoft Dynamics 365 ERP Systems?

Historically, ERP systems have mainly been used by manufacturers to integrate the various departments of their operations, from sales, through production, to shipping, and finally accounting. Manufacturing ERP systems connect them all.  Today, ERP systems are gaining popularity as the world is becoming more digital and connected. There are ERP Oil and Gas systems, Healthcare systems, Construction systems, and many more. Any business organization can use ERP systems depending on the size and needs of the organization. Most organizations today replace legacy software with an ERP system.

How Does an ERP System Work?

Because each organization has unique needs, an ERP implementation will be different for every company. However, each one tends to follow the same basic elements.

Consider the business processes that your organization depends on: CRM and Sales, HR, and Finance for example. Then think about how these processes are separate but could link to one centralized ‘mothership’ that stores all your critical business information and important company data. Instead of having separate systems for each department, an ERP system creates a data vault and allows each process and operation to work responsively with one another in order to provide useful insights to you.

But, as I mentioned before, each company has different needs and wants. When you work with Microsoft ERP providers, they will take a deep dive with you into what makes your organization unique and tailor your Microsoft Dynamics 365 ERP implementation based on what you discover.

What are the Benefits of an ERP?

With all your processes and departments connected, here is what you will experience:

  • Increase in Financial Performance
    • Drive margin and revenue growth with a centralized financial management solution that delivers analytics in real-time
  • Operational Improvement
    • Empower employees with intelligent automation, task prioritization, and integration with other applications to maximize efficiency
  • Reduction in Errors
    • Identify and resolve issues through real-time insights
  • Improved Customer Relations
    • With automated reports, customer dashboards, and improved transparency, value is added for your customers

So, in the most basic of terms, ERP systems decode a tremendous amount of data from a centralized data vault to provide meaningful, companywide information in real time. It's no wonder it's become an essential part of businesses for so many decision makers.

Want to understand how an ERP system can impact your business?

Contact us to talk with one of our Microsoft Dynamics 365 ERP experts about your company’s needs.

Author: Mark Lanoue, Solution Architect, Dynamics 365 for Finance & Operations

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