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Definition: ERP is a set of integrated business applications or modules designed to model, automate, and manage core business functions (like accounting, general ledger, and order management) across an enterprise using a centralized database.
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Evolution of ERP: Evolved from 1960s inventory control and Material Requirements Planning (MRP), to Manufacturing Resource Planning (MRP II) in the 1970s/80s, and finally to enterprise-wide client-server architectures in the 1990s.
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Benefits of ERP: Provides a common set of data, improves decision-making, streamlines internal processes, reduces lead times, enhances inter-departmental communication, and supports Business Process Reengineering (BPR).
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Difficulties of ERP: Implementation can be extremely costly (often over $10,000,000), time-intensive (over a year), and complex, frequently requiring outside consultants.
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Common ERP Modules: Finance and accounting, human resources, manufacturing, sales and marketing, distribution and transportation, materials, quality maintenance, and plant maintenance.
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Related Enterprise Software: While ERP focuses on internal processes, Customer Relationship Management (CRM) enhances customer relationships, and Supply Chain Management (SCM) facilitates external collaboration with suppliers, manufacturers, and distributors.