Enterprise Resource Planning (ERP) is imperative in the business world, yet many business students have never heard of it. Is it some sort of management strategy or a fancy piece of software that only large corporations can afford? Our blog is here to clarify and guide you through the world of ERP.

What is Enterprise Resource Planning (ERP)?

Enterprise Resource Planning (ERP) is a software system that helps businesses manage and automate their daily operations instead of having to manually do them. It manages sales and inventory. It also handles financials and human resources. ERP integrates all of a company’s data and processes into one unified platform. Therefore, it is crucial for the digitalisation of any company.

Why do businesses need ERP?

Think about it – businesses generate a lot of data. Sales reports, financial statements, employee records, customer information, and the list goes on. Businesses can quickly become overwhelmed and slowed down by the long and repetitive manual processes, especially if they have a big client base.

That’s where ERP comes in. Businesses can automatize their processes by putting everything in one system. Thus, they can focus their time and ressources on other things in the meanwhile. This can result in better production, efficiency, and a healthier bottom line.

But, isn’t ERP only for large corporations?

Contrary to popular belief, ERP is not just for big businesses with deep pockets. In fact, there are ERP systems, known as SMBs, that are specifically made for small and medium-sized businesses. These softwares are easy to implement and don’t cost a lot.

These SMB-focused ERP systems typically come with fewer bells and whistles than their enterprise-level counterparts, but they still provide the essential features and functionality that businesses need to run their operations.

What are the features of an ERP system?

The features of an ERP system depend on the software, but here is a list of the most common features:

Financial Management

It enables businesses to manage their financials, including accounts payable and receivable, billing, and financial reporting.

Inventory Management

It allows businesses to track their inventory levels, manage purchase orders, and streamline the shipping and receiving process.

Sales and Marketing

It automatize customer relationship management (CRM), lead tracking, and sales forecasting.

Human Resources

It helps businesses manage their HR functions, including employee records, payroll processing, and benefits administration.

Reporting and Analytics

It provides businesses with real-time insights into their operations, which them to make data-driven decisions and identify areas for improvement.

How does ERP benefit businesses?

There are numerous benefits to implementing an ERP system, including:

Improved Efficiency

With all of a company’s data and processes in one system, employees can work more efficiently and productively.

Better Decision-Making

By providing real-time insights and analytics, ERP systems enable businesses to make data-driven decisions that can drive their operations forward.

Increased Agility

ERP systems allow businesses to respond more quickly to changes in the market and adapt their operations accordingly.

Cost Savings

By streamlining processes and reducing manual tasks, businesses can save time and money in the long run.

Better Customer Service

With access to customer data and insights, businesses can provide better and more personalized customer service.

What are some common challenges of implementing an ERP system?

While the benefits of ERP are clear, there are also some challenges to consider when implementing a system. Some of the most common challenges include:


ERP systems can be expensive to implement, especially for larger businesses. It’s important to carefully consider the costs and potential return on investment before committing to an ERP system.


ERP systems can be complex, with numerous features and modules to learn and navigate. Thus, businesses need to invest time and resources in training employees and making sure they have the necessary skills to use the system effectively.


Many businesses will need to customize their ERP system to fit their specific needs and processes. This can add time and expense to the implementation process.

Data Migration

Moving data from existing systems into a new ERP system can be a complex and time-consuming process. It’s important to have a plan in place to ensure data is transferred accurately and securely.

Resistance to Change

Some employees may resist the introduction of a new system, especially if they are used to existing processes and systems. It’s important to communicate the benefits of the new system and involve employees in the implementation process to ensure buy-in and engagement.

What should businesses consider when choosing an ERP system?

Selecting the correct ERP system might be difficult, but there are a few crucial criteria to consider:


The ERP system should provide the features and capabilities required to suit the needs of the organization.


The ERP system should be able to grow and evolve with the business, allowing for future expansion and changes.


The ERP system should be able to integrate with existing systems and software used by the business.

Vendor Support

The vendor should provide reliable and responsive support for the ERP system, including training and ongoing maintenance.

Total Cost of Ownership

It’s important to consider the total cost of ownership. The cost should include both the initial implementation costs and the ongoing maintenance and support costs.

In conclusion, Enterprise Resource Planning (ERP) is a powerful tool that can help businesses streamline their operations and improve their bottom line. The advantages of establishing an ERP system are numerous and obvious: enhanced productivity, better decision-making, increased agility, cost savings, and better customer service. Yet, doing so can be a difficult and expensive process.

When choosing an Enterprise Resource Planning (ERP) system, businesses should carefully consider their needs and priorities, and choose a system that provides the necessary functionality, scalability, integration, vendor support, and total cost of ownership. With the right ERP system in place, businesses can take their operations to the next level and achieve long-term success. You can also join London School of Business’s business and management programme to learn more.