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How Does an ERP Work Exactly A Basic Guide

The global ERP market size was worth more than $43bn in 2020. And, experts say the market will be worth over $117bn in 2030!

Today, having an ERP system is a vital component to running a successful company. But you may be wondering, “How does an ERP work?”

Keep reading as we dive in to learn about ERP for businesses. Plus, we’ll explore some of the top benefits of ERP software.

What Is an ERP System?

Enterprise resource planning (ERP) is a process companies use to manage and integrate their essential business practices. ERP software applications allow businesses to control their various processes in a single system. 

Without an ERP system, each department needs to use its own system for its specific tasks. Using ERP software, each department still has its own unique system. However, employees can access all the systems through one application with one interface.

Here are some examples of what an ERP system integrates:

  • Customer relationship management (CRM)
  • eCommerce
  • Finance
  • Human resources
  • Marketing
  • Payroll
  • Planning
  • Purchasing inventory
  • Sales

Most ERP solutions are cloud-based applications that businesses can access remotely. This is a type of Software as a Service (SaaS), which means a third party manages the service.

But, on-premise and hybrid ERP systems are also available.

How Does an ERP Work?

An ERP system decreases the resources you need to run your business optimally while ensuring profitability. 

ERP software works in real-time using a general database that supports all systems. This results in a consistent look and workability across departments.

Further, it gives employees access to information that department systems previously limited. ERP software helps remove information gatekeepers to improve business processes. 

An ERP system is almost fully automated. This means the system does data entry for you in the back-end and exchanges information with other units.

There are many ERP systems to choose from. Some popular choices include:

  • Acumatica Cloud ERP
  • FinancialForce ERP
  • NetSuite
  • Oracle ERP Cloud
  • Unit4 ERP

NetSuite is the leading cloud-based solution. Read more about NetSuite pricing if you want to use it for your business. 

Benefits of an ERP System

There are several benefits of your business using an ERP system. First, businesses can customize their system to fit their exact needs.

Since an ERP system integrates all departments and business processes, there is increased workflow visibility, efficiency, and productivity. 

Using ERP software allows for cross-department collaboration, which will improve organization, information sharing, and communication. Employees can work faster without jeopardizing quality. 

Additionally, access to real-time data gives companies more accurate and complete reporting. This leads to better decision-making from the top and stronger company forecasts. 

Customers also benefit because response times increase. 

Finally, ERP software is an important risk management tool. It helps protect your business from security and data breaches. 

Get Started with ERP

Now you know the answer to, “How does an ERP work?” The next step is to consider which ERP solution is best for your business. 

If you found this article helpful, make sure to check out other resources in the Business section above.

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