ERP
Enterprise Resource Planning – integrated business software for finance, logistics, production, HR and more. Well-known systems: SAP, Odoo, Microsoft Dynamics.
An ERP system is a company’s digital backbone. It connects accounting, inventory, production, purchasing, sales and HR in one integrated system. Instead of isolated solutions and manual data transfer, all information flows together automatically. Introducing ERP is one of the biggest IT decisions a company makes – with huge potential but also risk.
What is ERP?
ERP (Enterprise Resource Planning) is a software category that covers all core business processes in one integrated system. Modules typically include: financial accounting and controlling, purchasing and procurement, inventory and logistics, production planning, sales and CRM, HR and project management. Data lives in a central database so every department uses consistent, up-to-date information. The market ranges from enterprise (SAP S/4HANA, Oracle ERP) via mid-market (Microsoft Dynamics 365, Sage) to open source (Odoo, ERPNext).
How does ERP work?
An ERP system integrates business processes through modules and a central database. Example order fulfilment: Sales creates a quote in the CRM module. When the order is placed, the system automatically checks stock (inventory), triggers supplier orders if needed (purchasing), plans production, creates a delivery note (logistics) and generates an invoice (accounting). All departments see the same current state. Workflows automate approvals, notifications and escalations. Dashboards and reports provide real-time KPIs for management.
Practical Examples
Odoo for an SMB: CRM, accounting, inventory, e-commerce and HR in one system – modular, much cheaper than SAP.
SAP S/4HANA: Large group with 5,000 employees migrates from SAP ECC to S/4HANA in the cloud – real-time analytics and simplified data models.
Microsoft Dynamics 365: Trading company uses Dynamics for sales (CRM), finance and supply chain – tightly integrated with Office 365 and Teams.
ERPNext: Open-source ERP for a startup: order processing, accounting and HR with no licence cost, hosted on own servers.
Typical Use Cases
Retail: Purchasing, inventory, order processing and invoicing in one workflow
Manufacturing: BOMs, production planning, quality management and materials
Services: Project management, time tracking, resource planning and billing
E-commerce: Syncing online shop, warehouse, shipping and accounting
Multi-site: Cross-site consolidation of finance and inventory
Advantages and Disadvantages
Advantages
- Data consistency: One source of truth removes duplicate entry and contradictions
- Process optimization: Automated workflows cut manual work and errors
- Transparency: Real-time dashboards for all areas support better decisions
- Scalability: Modular design grows with the company
- Compliance: Integrated accounting and audit trails meet regulatory needs
Disadvantages
- Cost: ERP implementations range from tens of thousands to millions depending on size
- Complexity: Implementation typically takes 6–24 months with significant change management
- Customization risk: Heavy customizing makes upgrades harder and long-term cost higher
- Vendor lock-in: Moving between ERP systems is very costly
- Training: All staff must be trained on the new system
Frequently Asked Questions about ERP
SAP, Odoo or Dynamics for the mid market?
What does implementing an ERP system cost?
How long does an ERP implementation take?
Related Terms
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