The Role of ERP Systems in Business

Diane Harvey
Updated on

To understand the role of ERP systems in business, you need to first understand what an ERP system is.

An ERP is a system that helps your business to manage operations, sales, and accounting processes. It’s an integral part of any business because it allows you to organize data in one place—and that means you’ll have better access to information about your company.

With ERP software installed on your computer or server, employees can enter information once into the system instead of repeating themselves multiple times across various departments.

This saves time and money while making sure all areas are kept up to date with the latest company developments

How do ERP systems in business work?

An ERP system integrates all aspects of your business into one cohesive program. It integrates inventory management, financials, sales analysis and customer relationship management (CRM).

ERP systems can have a variety of different modules that allow companies to customize them to their specific needs. For example:

  • Sales Order Processing: Companies can use this module to create new sales orders and confirm them with customers. This module allows you to keep track of product lines as well as how products are sold via invoice or credit memo, for example.
  • Purchasing Management: This module allows companies to track purchases from vendors, check on the status of shipments and control inventory levels by using reports for those purposes.
  • Material Requirements Planning (MRP): Companies use this module when they need to plan ahead for manufacturing processes such as production runs or changing demands from customers through forecasting more accurately than if they were relying only on instinctive guesses about demand patterns.

What are the main features of an ERP system?

ERP systems in business are designed to help you manage your entire business from one place. They integrate all aspects of your company into one cohesive program: inventory management, financials, sales analysis and customer relationship management (CRM).

Cloud-based or on-premise?

You have a choice between two main types of ERP systems in business:

  • Cloud-based ERP systems. These are hosted by a provider, and the hardware and software needed to run it is provided by that same provider. These systems tend to be more scalable and flexible than on-premise options.
  • On-premise ERP systems. This type of system is installed on your own computer system, but you will need to buy the hardware necessary to run it (i.e., computers). On-premise options generally require more maintenance over time because they’re not as flexible or scalable but may be more cost effective when starting out with a smaller budget.

The benefits of implementing an ERP system

While ERP systems in business can be complex and difficult to implement, the benefits of using one include:

  • Integration of data across departments
  • Improved communication between departments
  • Reduced costs
  • Increased productivity and efficiency
  • Increased profit margins

Drawbacks of using ERP systems in business

  • Cost. The initial cost of implementing an ERP system can be very high.
  • Difficulty of use. In some cases, it may take your staff a long time to get used to how the software works and learn how they can best utilise it within their business processes.
  • Setup time required before use begins. Some organisations report that setting up their new ERP system takes several months or more in order for all departments within the organization to train on its capabilities and learn about its various functions—this is especially true for larger companies with many employees who will need additional training on how best to access information from within the system as well as from other departments using different types of technology (such as mobile apps).


Over the course of this blog post, we’ve learned a lot about ERP systems in business and how it can help improve their efficiency and profitability. Ongoing support, readily available adaptability, and the guarantee that an ERP system won’t fail you when you need it most are just some of the benefits major companies have discovered when they implemented ERP systems. And remember, the benefits and features aren’t limited to just large corporations. Even small businesses stand to gain from implementing an ERP system – scale it up or down as suits your needs.

To learn more about how you can use ERP systems in business to benefit you, get in touch with one of our industry experts.

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