Definition Of

Enterprise resource planning (ERP) systems

Enterprise resource planning (ERP) systems are typically used by manufacturing companies with more than 500 employees and $500 million in sales. The best known of these systems are SAP (the most widely used) by SAP AG, K.D. Edwards’ ERP, and Oracle’s Financials. ERP systems go far beyond the functions of an entry level general ledger package. They integrate all aspects of the organization, including accounting, sales, human resource management, and manufacturing. Because of the complexity of an ERP system, implementation can take three years and cost five times as much as purchase price of the system. Purchase and implementation of ERP systems can cost from $250000 to as much as $50 million for the largest multinational corporations.

Enterprise resource planning is the back-office operations such as order entry, purchasing, invoicing, and inventory control. ERP system allow organizations to optimize business processes while lowering costs.