What is ERP? - Explanation & Meaning
Learn what ERP (Enterprise Resource Planning) is, how business processes are integrated, and when to choose SAP, Oracle, or custom software.
Definition
ERP (Enterprise Resource Planning) is an integrated software system that connects and manages all core business processes of an organization, from finance and procurement to production, inventory, and HR, in one central platform.
Technical explanation
ERP systems integrate business processes into modules: financial management (accounting, budgeting), supply chain management (procurement, inventory, logistics), production (planning, quality control), HR (personnel management, payroll), and CRM (customer relationship management). Major players include SAP S/4HANA, Oracle ERP Cloud, and Microsoft Dynamics 365. Cloud ERP (SaaS) increasingly replaces on-premise installations due to lower upfront investment, automatic updates, and scalability. The architecture is shifting toward modular, API-first systems that communicate with specialized tools via integrations. Custom ERP solutions are chosen when standard ERP does not align with unique business processes. Implementation encompasses data migration, process redesign, user training, and change management. The choice between custom and off-the-shelf depends on process uniqueness, budget, scale, and willingness to adapt business processes to the software.
How MG Software applies this
MG Software builds custom solutions that connect to or integrate with ERP systems. We develop API integrations between ERP systems and web applications, mobile apps, or specialized tools. For organizations with unique processes, we build custom ERP modules or fully tailored business applications that are a better fit than standard software.
Practical examples
- A manufacturing company implementing SAP S/4HANA to manage procurement, production, and inventory in one system, eliminating manual coordination between departments.
- An SME using Exact Online for financial administration and having a custom web portal built that shows real-time order status and invoicing data to customers via APIs.
- A logistics company having a custom ERP module developed for their unique route planning process that is not supported by standard ERP.
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