ERP software, or an ERP solution, brings the core operations of a business, usually finance, inventory, purchasing, sales and often HR, into a single system with one shared database, so every team works from the same figures.
ERP full form and meaning
The ERP full form is enterprise resource planning. The ERP software meaning in practice is this: instead of separate programs for accounts, stock and orders that have to be reconciled by hand, one system records a transaction once and updates everything it touches. A sale, for example, reduces stock, creates an invoice and posts to the accounts.
What is ERP and how does it work?
- Modules. Each area, such as finance, stock or purchasing, is a module you switch on as needed.
- One database. All modules read from and write to the same records, so there is one version of the truth.
- Workflows. Approvals and processes, such as purchase orders needing sign-off, are built in.
- Reporting. Because the data is joined up, you can see the whole business in one place.
ERP vs CRM
| ERP | CRM | |
|---|---|---|
| Focus | Running the business: finance, stock, purchasing, production | Managing relationships: leads, customers and the sales pipeline |
| Main users | Finance, operations, supply chain | Sales, marketing, customer service |
| Key data | Orders, invoices, stock, payments | Contacts, conversations, deals |
| Overlap | Many ERP systems include CRM modules | Many CRMs link to an ERP |
In short, a CRM helps you win and keep customers, while an ERP helps you deliver the work and account for it. See our guide to a CRM system for small business UK for the customer side.
ERP software examples and ERP software companies
ERP software examples include SAP, Oracle NetSuite, Microsoft Dynamics 365, Odoo, Sage and Infor. ERP software companies range from global vendors to specialists in sectors such as manufacturing, distribution and construction. SAP ERP is the best known and is generally aimed at large and mid-sized organisations. Smaller firms often look at cloud ERP products such as NetSuite or Odoo, or at accounting packages with inventory add-ons. Odoo has an open source community edition, but it needs technical support to run.
When a small business needs one
A small business may not need an ERP. Signs that you might:
- Several systems that don't agree with each other
- Staff re-keying data between stock and accounts
- Month-end taking days
- More than one site or legal entity
- Growth being held back by spreadsheets
Often, accounting software with inventory is enough. See our guide to small business accounting software with payroll before you commit to a full ERP.
The reality of implementation
ERP projects take time because they change how people work. Map your processes first, clean your data before you migrate it, plan training, and expect to pay for implementation as well as licences. A phased rollout, starting with finance and stock, is usually safer than switching everything at once. For reporting across the whole system, see business intelligence tools.