Enterprise resource planning (ERP) is the integrated management of main business processes, often in real-time and mediated by software and technology.

Enterprise resource planning system is usually referred to as a category of business management software — typically a suite of integrated applications—that an organization can use to collect, store, manage, and interpret data from these many business activities.

ERP provides an integrated and continuously updated view of core business processes using common databases maintained by a database management system.

Enterprise resource planning solutions track business resources— cash, raw materials, production capacity—and the status of business commitments: orders, purchase orders, and payroll. The applications that make up the system share data across various departments (manufacturing, purchasing, sales, accounting, etc.) that provide the data.

ERP facilitates information flow between all business functions and manages connections to outside stakeholders.

You can think of an enterprise resource planning system as the glue that binds together the different computer systems for a large organization. Without an ERP application, each department would have its own system optimized for that division's particular tasks. With ERP software, each department still has its own system, but all of the systems can be accessed through one application with one interface.

ERP applications also allows the different departments to communicate and share information more easily with the rest of the company. It collects information about the activity and state of different divisions, making this information available to other parts, where it can be used productively.

ERP systems typically include the following characteristics:

• An integrated system
• Operates in (or near) real time
• A common database that supports all the applications
• A consistent look and feel across modules
• Installation of the system with elaborate application/data integration by the Information Technology (IT) department, provided the implementation is not done in small steps
• Deployment options include: on-premises, cloud hosted, or SaaS

Enterprise resource planning programs have traditionally been used by the big players in the market that have thousands of employees spread out over the world. However, software developers are now marketing business ERP solutions to small- and medium-sized companies.

There are different types of ERP software ranging from industry-specific ERP solutions to web-based, or cloud ERP software; to small business ERP.
The type of ERP system that will work best for your business depends on the size of your organization and the functions of the ERP solution that can best support your business requirements.

Industry Specific ERP. ERP systems for large corporations are often built from the ground up to suit the organization's specific and unique needs. For a small business like yours, an off-the-shelf model will work fine. Most are grouped into three categories to service manufacturing, finance or logistics based companies.

Web-Based ERP system. ERP software services tend to be complex, requiring high-end computers to run them. However, instead of purchasing the software to run on your computer in your office, many suppliers offer Software as a Service, or SaaS. In this case, you pay a subscription to access the software and your data over the internet. Because the program is running on a remote server, you are free to access it from anywhere you have an Internet connection.

ERP software for small business. Although ERP systems can cover everything from supply chain management to accounting solutions as well as customer relations management, your business may not need to automate all these functions. Therefore, software developers offer scaled-down models at a lower, more cost-effective price. For instance, your operation may work fine with a system that offers sales and order management, but leaves out the module for warehouse management.