What is ERP?

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width="11" height="11" viewBox="0 -18 1024 1055"><path d="M810.642 511.557c0 8.905-3.447 16.776-10.284 23.613L322.31 1013.216c-6.835 6.837-14.706 10.284-23.61 10.284s-16.776-3.447-23.613-10.284l-51.303-51.303c-6.837-6.837-10.284-14.707-10.284-23.612s3.447-16.775 10.284-23.61L626.972 511.5 223.784 108.31c-6.837-6.835-10.284-14.706-10.284-23.61s3.447-16.776 10.284-23.613l51.303-51.303C281.924 2.947 289.794-.5 298.7-.5s16.775 3.447 23.61 10.284L800.36 487.83c6.837 6.837 10.284 14.708 10.284 23.613v.114" stroke-width="25" stroke="black"/></svg><li class="rh-navigation-link-container"> What is enterprise resource planning (ERP)? </li></ul> </div> <div class="rhdc-article-hero-headline dx-mb-4 dx-mt-4">  <div class="rh-band-header--component" ><h1 class="rh-band-header-hero-headline" >What is enterprise resource planning (ERP)?</h1> </div> </div> <div class="rhdc-article-hero-front-matter">  <div class="rh-front-matter--component"><div class="rh-front-matter-wrapper" data-rh-layout="inline-horizontal"><div class="rh-front-matter-metadata"><span class="rh-front-matter-metadata-publish-date">Updated <span> October 20, 2023</span></span><span class="rh-front-matter-metadata-separator">•</span><span class="rh-front-matter-metadata-readtime" for="article-contents" data-rh-hidden="sm"><em class="placeholder">4</em>-minute read</span></div><pfe-clipboard class="rh-front-matter-share" role="button" tabindex="0"><span slot="text">Copy URL</span></pfe-clipboard></div></div></div> </div> <div class="lg:dx-col-3"> </div> </div> </section> <section class="dx-band dx-pt-0 rhdc-article-body" id="rhdc-aside-promo"> <div class="dx-container dx-flex-col lg:dx-flex lg:dx-flex-row xl:dx-gap-3 lg:dx-justify-between"> <div class="lg:dx-col-1 lg:dx-col-2 dx-mb-6 lg:dx-mb-0"> <pfe-jump-links-nav id="article-nav" autobuild offset="120" sr-text="Jump to section" ></pfe-jump-links-nav> </div> <div class="rhdc-article-body--content lg:dx-col-6"> <pfe-jump-links-panel scrolltarget="article-nav" data-rh-layout="tall-stacked" pfelement="" class="PFElement" type="content">  <div class="rh-group--layout" data-rh-layout="stacked" ><div class="rh-group-body" data-rh-layout="min-stacked" ><header class="rh-standard-header--component" ><div class="rh-standard-header-container"><h2 class="rh-standard-header-headline-medium pfe-jump-links-panel__section" id="what-is-erp" nav-label="What is ERP?" >Overview</h2></div></header><div class="rh-generic--component" ><p>ERP stands for enterprise resource planning—a way of organizing, integrating, and managing business processes and information across an organization. It provides a system to centralize the massive amounts of data within an enterprise, enabling information to flow between different teams seamlessly and automatically. Because data is so critical to the success of any modern organization, it can begin to sprawl as an organization grows—in different forms, structures, and conventions—across teams and departments that need a consistent, single source of truth</p><rh-cta variant="primary"><a href="/en/engage/redhat-for-sap-s-202107280256" title="Read the top 10 reasons to choose Red Hat for your ERP solution" data-analytics-linktype="cta" data-analytics-text="10 reasons to choose Red Hat for ERP solutions">10 reasons to choose Red Hat for ERP solutions</a></rh-cta></div></div></div>  <div class="rh-group--layout" data-rh-layout="stacked" ><div class="rh-group-body" data-rh-layout="min-stacked" ><header class="rh-standard-header--component" ><div class="rh-standard-header-container"><h2 class="rh-standard-header-headline-medium pfe-jump-links-panel__section" id="why-use-erp-software" nav-label="Why use ERP software?" >Why use ERP software?</h2></div></header><div class="rh-generic--component" ><p>By using a management system like an ERP deployment as the single source of information company-wide, a business can be sure that its data is correct, up-to-date, and complete. It’s how growing organizations can unify back-office data throughout a company, make it available to the personnel who need it, and do so with minimal need for manual processes. Deploying cloud-based ERP systems is a popular choice for businesses that want to achieve this level of integration and data consistency—and also reduce upfront costs and increase scalability.</p><p>Almost everything companies do can be managed by ERP modules, which manage specific business operations:</p><ul><li><strong>Financial management</strong>: tracking and financial reporting on financial data and risk management, general ledger accounting, accounts payable and receivable, and streamlining and automating accounting software and data entry tasks.</li><li><strong>Manufacturing resource management</strong>: managing processes, manufacturing resource planning (MRP II), inventory management, providers, procurement, production planning, regulatory compliance, workflow and project management, and scheduling.</li><li><strong>Supply chain management</strong>: tracking inventory across company facilities and material requirements planning for production.</li><li><strong>Human resources and human capital management</strong>: managing employee-related tasks like payroll, hiring, and performance monitoring.</li><li><strong>Sales</strong>: monitoring product availability, pricing, e-commerce and order management, as well as customer relationship management (CRM).</li></ul><p>Modern ERP solutions are highly evolved software implementations. Businesses can deploy different types of ERP apps on-premises or in the <a href="/en/topics/cloud-computing">cloud</a>. Cloud-based ERP deployments also provide extensive connectivity and <a href="/en/topics/security">security</a> features, along with a range of deployment options that allow them to evolve and grow with business needs. Deploying these systems is often streamlined and managed by the ERP vendors, helping smooth the transition while offering ongoing management.</p></div></div></div> <div class="rhdc--inline-promo" data-rh-mbox="inline-promo">  <div class="rh-card--layout rh-promo-article" data-rh-promo=inline data-rh-border-radius=none data-rh-background="gray" data-rh-theme="light" data-rh-bg-align="cover" data-rh-layout="fit-content-33" data-rh-border="top-bottom"><div class="rh-card-content" data-rh-layout="stacked" ><div class="rh-group--layout" data-rh-layout="stacked" ><div class="rh-group-body" data-rh-layout="min-stacked" ><div class="rh-band-header--component" data-rh-align=left ><h2 class="rh-band-header-subsection-headline" id="rh-29zhb">Red Hat resources</h2></div></div></div></div><footer class="rh-card-footer" ><div class="rh-group--layout" ><div class="rh-group-body" data-rh-layout="min-stacked" ><span class="rh-cta--component" data-rh-cta-type="secondary" ><a class="rh-cta-link" href="/en/resources" title="Keep reading" data-analytics-linkType="cta" data-analytics-text="Keep reading" data-analytics-category="Inline promo | Red Hat resources" >Keep reading<span aria-hidden="true"><svg xmlns="http://www.w3.org/2000/svg" viewBox="0 0 36 36"><path d="M31.58 18.24a.64.64 0 0 0-.14-.68l-9-9c-.56-.58-1.47.32-.88.88l7.93 7.94H5a.62.62 0 1 0 0 1.24h24.49l-7.93 7.94a.62.62 0 0 0 .88.88l9-9a.72.72 0 0 0 .14-.2Z"/></svg></span></a></span></div></div></footer></div> </div>  <div class="rh-group--layout" data-rh-layout="stacked" ><div class="rh-group-body" data-rh-layout="min-stacked" ><header class="rh-standard-header--component" ><div class="rh-standard-header-container"><h2 class="rh-standard-header-headline-medium pfe-jump-links-panel__section" id="benefits-of-erp-solutions" nav-label="Benefits of ERP solutions" >Benefits of ERP solutions</h2></div></header><div class="rh-generic--component" ><p>The core features of ERP technology help <a href="/en/topics/automation/what-is-business-process-management">business processes</a> run more efficiently. They specialize in integrating business functions, ensuring they are all working from a common database. This means that employees across the organization can monitor and streamline individual operations, whether tracking inventory, fulfilling orders, or counting revenues and expenditures.</p><p>Using an enterprise resource planning system means eliminating many of the issues that many businesses deal with regularly. Many companies and small businesses expend a great deal of effort assembling financial data and metrics every quarter from multiple software systems or a mess of spreadsheets. ERP systems create business intelligence reports automatically, and not only once a quarter—a company can monitor its finances and profitability with customized dashboards and real-time data.</p><p>Sophisticated new <a href="/en/partners/machine-learning-software">artificial intelligence (AI) and machine learning (ML)</a> capabilities are constantly emerging. A company can configure these technologies with the extensive, enterprise-wide data managed by enterprise resource planning software to enhance their decision making and business management, while also improving key operations like sales forecasting, inventory optimization, and customer behavior analysis.</p></div></div></div>  <div class="rh-group--layout" data-rh-layout="stacked" ><div class="rh-group-body" data-rh-layout="min-stacked" ><header class="rh-standard-header--component" ><div class="rh-standard-header-container"><h2 class="rh-standard-header-headline-medium pfe-jump-links-panel__section" id="erp-sap-and-sap-s/4hana-what’s-the-difference" nav-label="ERP, SAP, and SAP S/4HANA, what’s the difference?" >ERP, SAP, and SAP S/4HANA, what’s the difference?</h2></div></header><div class="rh-generic--component" ><p>The German company SAP® has developed new ERP solutions since the 1970s, and it is so well known that the company name is almost synonymous with ERP. It is also responsible for releasing the <a href="/en/topics/linux/sap-hana-and-linux">SAP HANA</a>® in-memory database. Their next generation ERP suite, SAP S/4HANA® (which runs only on the SAP HANA database), is faster, simpler, and more efficient than its predecessor, and it was built for organizations that want to take advantage of the cloud. SAP S/4 HANA® Cloud is the <a href="/en/topics/cloud-computing/what-is-saas">Software-as-a-Service (SaaS)</a> deployment of SAP S/4HANA. </p><p>For many companies using SAP solutions, their migration is already underway. To fully understand the <a href="/en/topics/linux/what-is-sap-hana-migration">migration process</a> and the benefits of making the move, it is important to look at why SAP is mandating this change.</p><p><rh-cta><a href="/en/topics/linux/what-is-sap-hana-migration" data-analytics-linktype="cta" data-analytics-text="Read more about the SAP HANA migration">Read more about the SAP HANA migration</a></rh-cta></p></div></div></div>  <div class="rh-group--layout" data-rh-layout="stacked" ><div class="rh-group-body" data-rh-layout="min-stacked" ><header class="rh-standard-header--component" ><div class="rh-standard-header-container"><h2 class="rh-standard-header-headline-medium pfe-jump-links-panel__section" id="why-run-sap-s/4hana-on-red-hat-enterprise-linux" nav-label="Why run SAP S/4HANA on Red Hat Enterprise Linux?" >Why run SAP S/4HANA on Red Hat Enterprise Linux?</h2></div></header><div class="rh-generic--component" ><p>SAP S/4HANA runs exclusively on the <a href="/en/topics/linux/what-is-linux">Linux</a>® operating system (OS). Red Hat has been working with SAP for over 20 years, and it was selected as the <a href="/en/about/press-releases/press-venturefund">first Linux OS to run SAP</a> in 1999. Red Hat Enterprise Linux is a Linux distribution that is not only certified by SAP, but <a href="/en/partners/sap-aws">optimized for SAP</a>. </p><p>Red Hat Enterprise Linux® for SAP Solutions goes beyond providing an operating system. Red Hat Enterprise Linux for SAP Solutions delivers key features and benefits that meet the specific requirements of SAP applications by combining the reliability, scalability, and performance of Red Hat Enterprise Linux with content specific to operating SAP landscapes. It provides the foundation to <a href="/en/solutions/digital-transformation/sap/migration">migrate to SAP S/4HANA</a> and run it efficiently in combination with <a href="https://www.ansible.com/integrations/infrastructure/sap-s-4hana">Red Hat Ansible® Automation Platform</a> to simplify the entire lifecycle and minimize human error to a great extent. Furthermore, adding <a href="/en/technologies/cloud-computing/openshift">Red Hat OpenShift</a> and <a href="/en/products/integration">Red Hat Integration</a> completes a platform that allows organizations to <a href="/en/solutions/digital-transformation/sap/integration">modernize</a> their SAP landscape, bring in cloud native development, and use <a href="/en/technologies/cloud-computing/openshift">containers</a>. This cloud-native approach enhances the flexibility and scalability of the system, making it a robust solution for evolving business needs. The platform is also a basis for <a href="/en/solutions/digital-transformation/sap/data-intelligence">enhancing their SAP Data Intelligence</a> with Internet of Things (IoT) capabilities, making the most out of the hybrid ERP environment for better operational efficiency.</p><p><a href="/en/resources/red-hat-enterprise-linux-sap-solutions-technology-overview">Red Hat Enterprise Linux for SAP Solutions</a> includes:</p><ul><li>The Red Hat Enterprise Linux operating system.</li><li><a href="https://access.redhat.com/articles/3671571">High Availability Add-On</a> for increased uptime.</li><li><a href="/en/technologies/management/satellite">Red Hat Satellite</a> for life-cycle management.</li><li><a href="/en/technologies/management/insights">Red Hat Insights</a> for proactive issue identification and remediation.</li><li><a href="/en/engage/red-hat-solutions-s-202008140625">Technical components</a> to support SAP HANA, SAP S/4HANA, and business applications and workloads.</li><li><a href="https://access.redhat.com/support/policy/updates/errata#Update_Services_for_SAP_Solutions">Update Services</a> for SAP solutions for up to four years.</li></ul><p>Standardize on a single, open platform with Red Hat Enterprise Linux for SAP Solutions, and build on a strong foundation to make the most of SAP S/4HANA well beyond migration.</p><p>Red Hat also provides an enterprise automation framework with <a href="/en/technologies/management/ansible">Ansible Automation Platform</a> to enhance your SAP implementation.</p><p><rh-cta><a href="/en/resources/red-hat-enterprise-linux-for-sap-solutions-datasheet" title="resources | Red Hat Enterprise Linux for SAP Solutions | HTML" data-analytics-linktype="cta" data-analytics-text="Get the datasheet: Red Hat Enterprise Linux for SAP Solutions">Get the datasheet: Red Hat Enterprise Linux for SAP Solutions</a></rh-cta></p></div></div></div> </pfe-jump-links-panel> </div> <div class="lg:dx-col-3 lg:dx-col-3 dx-mt-6 lg:dx-mt-0"> <div 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