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Which of the Following Describes an ERP System?

What is ERP?

Enterprise Resource Planning (ERP) is a comprehensive solution that streamlines various crucial business operations across all functional domains of the organization, such as production scheduling, order tracking, inventory & leads management, and financial statements, and provides a comprehensive report about the efficiency and performance of the disparate business functions for timely & accurate decision-making.

In the modern competitive business landscape, instant access to a wealth of information has become crucial for the survival of the organization. ERP software facilitates a smooth flow of information across disparate business units and assists top management with precise & accurate planning, forecasting, and decision-making. According to a Panorama ERP Report, 49% of participating companies said they benefited from the ERP implementation in terms of business processes. Overall, ERP is a smart, scalable solution that facilitates coordination at different business levels, and departments and eliminates the need to manually dig up or extract the data.

What Are the Descriptive Features of an ERP System?

To better understand which of the following describes an ERP system, let us discuss the descriptive features of ERP one by one:

  • Central Repository of Information

ERP offers integration of core business operations and promotes smooth data flow, communication, and coordination across different business departments such as production, sales, human resources, warehouse, and finance. It provides a centralized system of data management that eliminates long, tedious manual processes and makes business management easier.

  • Increased Data Visibility

ERP provides consistent access to up-to-date and accurate business information with various planning, forecasting, and strategic tools. The use of such tools benefits businesses with increased visibility and competitive advantage.

  • Flexible System

An ERP is flexible in nature. As your business expands in size, so does the ERP. It supports increased workload without experiencing sluggishness or affecting user performance and efficiency. Your business continues to reap the benefits of ERP.

  • Customization Abilities

One of the key features of ERP is its customization ability. Businesses can customize it to bring higher operational efficiency and assist with decision-making. It’s easier to customize the ERP for your specific business needs across different industries, no matter the size.

  • Data Standardization

Other features of ERP include data standardization. ERP stores information in a standardized format, allowing businesses to seamlessly read, analyze, and share it without trouble. Using a standard format for data storage, access, and sharing maintains the quality and integrity of the information.

  • Order Processing

The Order Processing feature builds a virtual value chain and speeds up customer order fulfillment. As soon as a customer pays for a product or service, it contacts the bank, verifies the payment, and fulfills the order. Automating value chain services helps improve customer satisfaction.

  • Customer Relationship Management

One of the key features of ERP is its ability to elevate customer satisfaction. It builds a comprehensive database consisting of all customer information such as contact information, order history, billing details, and so on. This allows the sales team to quickly locate the required information, and provide a speedy & accurate resolution.

  • Production Tools

ERP empowers businesses with powerful tools that assist with production-linked activities such as production planning, demand forecasting, vendor management, and production quality assessment, among others. The use of such tools helps reduce paperwork and maintain quality, speed & consistency throughout the entire production activity.

  • Reports Generation

ERP pulls data from different business departments and transforms it into meaningful charts, intuitive reports, and actionable insights. These reports provide a snapshot of business performance at different departmental levels such as production, inventory, sales, and finance.

  • Financial Management

Managing a company’s finances becomes more complicated as the company grows in size, or expands the scope of its activities. ERP streamlines various financial activities such as financial planning, controlling, monitoring, and financial reports generation. It saves time, reduces the likelihood of human errors, and makes the company tax-compliance.

What Are the Key Benefits Offered by ERP?

As we discuss which of the following describes an ERP system, it’s important to understand the key benefits offered by ERP.

  • Risk Mitigation Strategies

ERP enables businesses to assess the feasibility, effectiveness, and potential outcomes of various scenarios, and evaluate potential risks during decision-making. Such risk mitigation strategies help modern businesses get a comprehensive understanding of potential problems and explore potential solutions.

  • Strategic Insights

ERPs are able to integrate with various modern technologies such as Cloud, and Internet of Things (IoT) devices, and are capable of showcasing valuable insights. The powerful Business Intelligence tools in ERP allow businesses to identify new trends, make predictions, and generate actionable reports to form fine-tuned strategies.

  • Cost Reductions

ERP empowers businesses with cost-tracking and control measures. Your business will be in a better position to analyze and control expenditures, identify new market opportunities, and benefit from a significant cost reduction.

  • Business Process Efficiency

Implementation of ERP reduces the possibility of errors, inaccuracies, and inconsistencies. Eliminating paperwork and streamlining business activities allows the business to benefit from increased productivity and efficiency.

  • Data Security

Traditionally, businesses stored their data in human-readable plain text in spreadsheets across different departmental computers. It increased the likelihood of critical information being spread by email or leaked online. ERP completely transformed the process. For example, it consolidates all the business information in a single database in an encrypted format. Encryption is a cryptographic procedure that scrambles data using mathematical models in a non-human readable form. The role-based strengthened data security protection reduces the likelihood of data stealing, data leaking, and other criminal activities.

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What are the Different Types Of ERP?

There are different types of ERP software. It’s best to choose one that best suits your specific business needs and meets the budget.

On-premise ERP

On-premise ERP is installed on the company’s servers and the company retains full control over the data. It is the preferred choice for companies that give paramount importance to confidential information, and data privacy.


  • No recurring subscriptions

  • Faster response time without Internet dependency

  • Better customization abilities

  • Comply with regulatory standards


  • High upfront costs

  • Need to maintain a separate IT force & infrastructure

Cloud ERP

Cloud ERP is an over-the-cloud solution that provides role-based access to users using an Internet connection and a Web browser. It is a preferred choice for companies that want to leverage the cloud technology for remote access to data, and comprehensive reports and benefit from a lower ERP cost.


  • No upfront costs; cost-effective monthly/ annual subscriptions

  • Extensive round-the-clock support from ERP Vendor

  • Provides remote access to information at any time & from anywhere

  • Scale up or down resources based on organizational need


  • Lack of customization options

  • Internet connectivity issues can disrupt business operations

Hybrid ERP

Hybrid ERP is a mix of both the traditional On-premise and modern Cloud ERPs. It is a two-tier ERP that provides some powerful feature sets that are available in both On-premise and Cloud ERP.


  • Reduced cost

  • Leverage cloud remote technology

  • Built-in disaster recovery

  • Meet industry-specific regulatory compliances


  • Complex third-party integration

  • Lack of scalability benefits

Generic ERP

Generic ERP is a type of ERP that is designed to work with a broader spectrum of industries and cater to common business necessities.


  • Cost-effective

  • Offers versatility with a wide range of features

  • Offers higher scalability

  • Comparatively easier to implement


  • Vertical functionality can hold your business back

  • Lacks in-depth features required to meet the needs of large-scale businesses

Frequently Asked Questions (FAQs)

  • ERP integrates your day-to-day business processes for streamlined operations and improved management of data.
  • ERP facilitates the management of core activities such as HR, inventory management, procurement, and financial management.
  • ERP centralizes your business data, enabling your company to make better decisions, allocate resources efficiently, and obtain operational efficiency.
  • All of the Above

ERP includes integrated modules that oversee various business processes such as Human Resource Management, Procurement, Inventory Management, Supply Chain Management, Fixed Assets Management, Accounting and Financial Management, and Warehouse Management, among others.

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