Enterprise Resource Planning (ERP) is a term used to describe when a business merges all functions, operations and departments into one computer system and database. A successful ERP system needs to be universal so the entire company can use it but it must also be modular so that individual departments within the business have their particular needs met. This is accomplished through ERP software specially designed for the particular company.
The first crucial component to successful ERP implementation is modular software. Modular software performs completely different tasks for each specific department within a business. An ERP system could provide a single set of software that works for both the accounting and payroll departments, though the software typically encompasses all departments, according to ERPFans.com. This is key to successful ERP; alternatively, each department must run completely different and incompatible software. When one software solution can handle it all, it makes it infinitely easier to plan, budget and otherwise run the business.
ERP software must feature one universal database. Without a single database, modular software would still be stored and accessed through different systems, requiring more time and effort. Allowing for easier communication and information sharing between various departments aids in streamlining business functions and provides added efficiency through individual software modules capable of acting as a whole.
Implementing an ERP system typically requires a lot of changes within the company. More than just swapping computers or installing new software, a successful ERP system is specifically tailored to match the needs of an individual company. NetworkDictionary.com warns that a full ERP system could take years to successfully integrate into a large company with many departments and locations. An ERP system has to be specifically tailored in this manner in order to achieve full compatibility. Even one module of incompatible software could throw off the entire system.