Frequently Asked Questions (FAQ)


1 What does ERP stand for? / What does ERP mean?

Enterprise resource planning—or ERP—is, first and foremost, a process: one that integrates different functions basic to most businesses, including planning, purchasing of stock or materials, inventory, sales, marketing functions, human resource functions, and finance.


2 What are ERP systems?

Enterprise resource planning (ERP) systems comprise a category of enterprise software that allows organizations of all kinds to utilize a system of integrated applications to automate or easily manage a range of business processes. The types of functional areas that are usually covered by ERP software solutions include financials, basic human resources, manufacturing management, inventory management, purchasing management, quality management, sales management, and product technology.


3 Why is ERP required?

Once organizations have reached a certain size and level of complexity, integrating and automating some of the core business functions becomes a virtual necessity. Strictly speaking, it is never “required” to have an ERP. But the same could be said of a company website, or computers; neither of these are actually “required”, but they are necessary to compete with other businesses in the business sector. Even for small businesses, the increasing range of options being offered, along with simplified IT requirements thanks to such things as cloud-based deployment, means that ERP systems are being embraced by even small players. In fact, many small organizations will make a point of using every available technology advantage in order to compete as if they were larger organizations. Many IT and software advancements, including ERP software solutions, are essentially tools for equalizing the size differences between competitors.


4 Why do ERP projects fail? / Why does ERP fail?

The number one reason ERP solutions “fail” is that they are often chosen incorrectly. There are few, if any, ERP software products on today’s market that are of poor quality or which do not perform the actions they are designed to perform. Instead, the problem is nearly always one of fit. Companies are not all alike—even when they are operating in the same industry or similar in size. Care must be taken to choose the enterprise software solution that best matches the organization’s requirements. Like any other tool, software is there to serve a particular function, so it stands to reason that it’s important to identify up front what function (or functions) need to be performed, and then find the software that can best fit those requirements.


5 Why do ERP implementations fail?

Implementation is a separate process from ERP software selection and is normally handled by an outside implementation consultant or provider. (The vendor of the software you eventually decide to purchase will often provide a list of implementation providers from which to choose.)


6 What are ERP systems used for?

In order to be defined as an ERP system, as opposed to say, financial software, or a human capital management (HCM) solution, or something else, an ERP software solution will always cover several broad functional areas. These include financial/accounting tools, human resources functions, manufacturing management of some type (when it is a manufacturing firm that is considering the ERP software), inventory management, purchasing management, quality management, sales management, and product technology.


7 What is ERP in the cloud?

ERP in the cloud refers to the method of deploying or hosting the software. The traditional deployment method was to host the software “on premise.” As the name implies, on premise means that a company’s own in-house servers are used for the software. Over time, some vendors began to offer the option of hosting their clients’ ERP solutions on the vendors’ own servers, or on those of a third-party hosting service. This option would become popular with companies that either did not have the necessary IT structure and staffing support in-house, or did not want to tie-up their in-house capabilities to the extent that hosting an ERP would require. The internet came along to offer another possibility.