ERP: Everything You Need to Know (+ Upcoming Trends)
History of ERPs: ERPs started as a tool for manufacturers in the form of MRPs. Over the decades, it shifted to an enterprise-based system for businesses in most industries.
ERPs On The Rise: By 2035, the ERP market is expected to reach $110 billion in the U.S., with an average increase of $5-$15 billion per year.
Finding the Right ERP System: There are 4 types of ERP systems: cloud, on-premise, two-tier, and hybrid. To find the right solution for your business, know your requirements, consider costs, and compare options
If you're a CFO or finance professional, you've probably heard a lot about ERP (enterprise resource planning)—maybe even too much. But beneath the buzzword, ERP is one of the most powerful tools at your disposal to streamline operations, improve visibility, and make better decisions faster.
As a business owner, I know how stressful managing finances can be from the bottom up, and I’ve seen firsthand how the right ERP solution can completely change the game.
Using my experience as a senior financial and systems professional, I created this guide to help executives and financial leaders understand the crucial role ERPs play in all businesses. I’ll walk you through its key components, top benefits, the best solutions, and ideal practices for a smoother selection process. So, let’s get into it.
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All About ERPs: What It Is and Who Created It
Enterprise resource planning (ERP) is a type of software system that automates processes and centralizes data management to facilitate the flow of information across all business functions, thereby improving efficiency and decision-making.
The term "ERP" was coined by Gartner in the 1990s. Since then, the scope of these systems has expanded to ERP solutions that benefit small businesses to large enterprises, particularly companies that operate in industries with complex supply chains, such as manufacturing, retail, and service-based businesses.
With 50% of companies planning to acquire, upgrade, or update ERP systems, the ERP Global market growth is expected to increase at a CAGR of 7% by 2035.
A Brief History
To understand where ERP is going, it helps to know where it came from. The concept has changed dramatically from its inception. Over the decades, ERP has grown from a back-office tool into a central nervous system for businesses of all sizes.
To give you a quick snapshot of this evolution, we’ve put together a visual timeline highlighting the key milestones that shaped ERP into what it is today.
Key Benefits
ERP systems offer a wide range of benefits that can significantly improve how your business operates. Here are some of the key ones that I’ve experienced in my own business:
- Improved Efficiency: By automating and integrating core business processes—finance, procurement, inventory, HR, and more—ERPs dramatically reduce manual work and streamline operations. This means fewer spreadsheets, less redundant data entry, and a lower risk of costly human errors.
- Better and Faster Decision-Making: With real-time data access across departments, ERP systems empower CFOs and other business leaders to make faster, more informed decisions that can directly impact profitability.
- Enhanced Visibility: ERPs create a centralized, unified view of your organization. By eliminating data silos and bringing information into a single system, you gain a “single source of truth” that reduces discrepancies and miscommunication.
- Improved Planning: With built-in analytics and reporting tools, ERP systems make it easier to identify trends, spot inefficiencies, and anticipate future needs. Whether you’re building annual budgets or running rolling forecasts, ERPs provide the reliable data backbone needed for confident, data-driven planning.
While these benefits are compelling, it’s important to recognize that ERP systems aren’t one-size-fits-all. The right solution depends on your company’s size, industry, growth trajectory, and specific operational needs.
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Workday Adaptive Planning
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The Place of an ERP in Modern Business
For modern businesses, an ERP system isn’t just a back-office solution; it’s a strategic asset. It serves as the digital backbone that connects departments, streamlines operations, and provides real-time visibility into the health of the business.
Whether you're managing a high-growth startup or a complex enterprise, ERP plays a crucial role in helping finance leaders bridge the gap between day-to-day operations and long-term strategy. Here’s a look at how ERPs impact three of the largest business sectors.
Manufacturing
Manufacturing is where ERP started—and the improvements it made then are still true today. The manufacturing industry has many moving pieces, literally, making it susceptible to constant regulatory, process, quality control, and requirements changes.
As a result, most businesses use a manufacturing specific ERP system, which can help:
- Manage and optimize production processes
- Provide real-time visibility into inventory levels, production schedules, and supply chain activities
- Ensure manufacturers have the right materials and resources available at the right time
Retail
Retail moves fast—and if you're in the thick of it, you know just how many moving parts there are. From tracking inventory across multiple locations to juggling online and in-store sales, things can get messy, quickly. With the right ERP, retailers can:
- Manage the complexities of supply chain and inventory management
- Gain real-time insights into inventory levels across multiple locations
- Optimize stock levels, reduce stockouts, and minimize excess inventory
- Learn about customer behavior and preferences for marketing and sale strategies
Service-Based Companies
In service-based industries, your “inventory” isn’t made of products—it’s time, talent, and client relationships. This alone makes operational visibility and resource optimization even more critical. Using ERPs, service-based companies can:
- Ensure projects are completed on time and within budget
- Manage workforces more efficiently
- Create more efficient business operations and better utilization of resources
How ERP Systems Work
Now that you know all about ERP software, how it started, and how it can change modern business processes, it’s time to dig deep into just exactly how these systems work.
As I explained previously, ERP systems bring all your core business functions—finance, HR, procurement, operations—into one unified platform. They’re often managed by the company that created them, with most businesses renting their solution for access.
Once you find the ERP you want to use, the host loads your applications onto the server you rent, and begins the integration process. Each function of your ERP is handled through dedicated ERP modules that all talk to each other to bring you the data you need, all in one place.
ERP systems act like a million hands doing the heavy lifting in the background and managing your end-to-end processes so you can excel at what matters most to your business.
Let’s say your finance company acquires a new client. When that client signs a new service agreement, your ERP automatically triggers the following workflows: the client data is added to the CRM, the billing terms are updated in accounts receivable, and the resource allocations are scheduled in project management.
From a CFO’s perspective, this means immediate visibility into revenue performance, cash flow, project costs, and compliance status—all from one dashboard. Instead of pulling reports from five different systems and reconciling them manually, finance leaders can access accurate, up-to-date insights to guide planning, forecasting, and executive decisions.
Types of ERP Systems
How your ERP works will remain the same—but how it runs will ultimately come down to which type of ERP you choose.
When it comes to types of ERP systems, your company has several options: cloud-based, on-premise, two-tier, or hybrid ERPs. Which you select will depend on your business needs and requirements.
Cloud-Based
Cloud-based ERP systems (think SAP, Oracle NetSuite, and Microsoft Dynamics 365) are hosted on a vendor's servers and accessed via the internet. Your company doesn’t need to invest in hardware or manage the system's infrastructure; rather, the vendor handles these responsibilities while providing you access to their servers.
Most advanced cloud-based ERPs offer greater flexibility, scalability, and cost-effectiveness, making them an attractive option for most businesses, especially smaller organizations or startups.
On-Premise
On-premise ERP systems are installed and hosted on your company’s servers. This gives your company greater control over the system and its data, which can be important if your company has strict security and compliance requirements.
However, on-premise ERPs typically require a larger upfront investment and ongoing maintenance costs. Your company is also responsible for managing its infrastructure, which is why this type of ERP is more suitable for larger organizations.
Two-Tier
Two-tier ERP systems are another option, particularly in large enterprises with multiple subsidiaries or divisions. In this situation, a primary ERP system is used for its central operations with a secondary ERP system for its subsidiaries or divisions. This allows the customization of an ERP system to the specific needs of each business unit while maintaining overall integration and consistency.
Hybrid
Hybrid ERP systems combine elements of both cloud-based and on-premise ERPs, offering greater flexibility and customization. These solutions can be particularly useful when there are complex or unique requirements that can’t be fully met by a single type of ERP system.
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Finding the Right ERP System
Finding the right ERP system for your business requires careful planning well in advance. Here are some of the key steps I tell businesses to use to help them determine which ERP will suit them best:
1. Know Your Business Needs
Before diving into ERP demos or comparing feature lists, it’s critical to take a step back and get clear on what your business actually needs.
Every company is different—what works for a global manufacturer might not make sense for a regional accounting firm. The best ERP system is the one that fits your workflows, goals, and growth stage
When evaluating ERP systems, it's important to ask yourself the following:
| What To Ask | Next-Steps |
| Will the ERP system integrate with your existing technology stack? | Identify bottlenecks in finance, operations, HR, or customer service. Are manual processes slowing you down? Are errors common in financial reporting? |
| What specific goals are you trying to achieve? | Determine whether you’re aiming to improve reporting, increase automation, scale operations, or gain better visibility across departments. |
| Which departments will rely most heavily on the system? | Understand who your primary users are: finance, HR, supply chain, project management. This will help prioritize which industry-specific features you need for better business management. |
| What data do we need real-time access to? | Think about which metrics and reports are critical for decision-making. Do you need daily cash flow visibility? Project costing? Compliance reporting? |
| Who will own the ERP internally and who needs to be involved? | Successful ERP implementations depend on buy-in. Define who’s responsible for driving the project and gathering input from key stakeholders. |
2. Determine Your Type
Evaluate cloud-based, on-premise, two-tier, and hybrid ERPs, and determine which one best fits your organization's needs and resources.
For example, if you need greater flexibility and scalability, a cloud-based ERP may be the best option. However, if you have strict security requirements, an on-premise ERP may be more suitable.
3. Consider All ERP Costs
Unless your company has endless funds, it's also important to weigh all associated pricing, including: upfront costs, ongoing maintenance, and support costs.
During this step, make sure to also factor in software licensing fees, hardware costs, ERP deployment costs, and training costs, plus the total cost of ownership (TCO) to ensure the ERP fits within your budget.
4. Look At All ERP Options
When comparing the best ERP providers and alternatives, keep in mind these key factors to ensure you choose the best system for your company:
- Data Visualization: Look for an ERP system that offers strong data visualization tools, such as dashboards, reports, and customization options, to gain valuable insights from your data and make more informed decisions.
- User Experience (UX): Look for a system with an intuitive and user-friendly interface that makes it easy for users to navigate and perform tasks. A well-designed UX can help improve user adoption and effective system use.
- Multinational Support: If your organization operates in multiple countries, choose an ERP system that offers multinational support. Look for features such as multi-currency support, multi-language capabilities, and compliance with international regulations.
- Vendor Reputation: Find an ERP vendor with a proven history of successful implementations and satisfied customers. Check for user reviews and testimonials to get a sense of the vendor's reliability and customer support.
- Scalability: Ensure that the ERP system can scale with your organization's growth. This includes the ability to add new users, modules, and functionalities as needed. It’ll also help you avoid potential costly and disruptive system replacements in the future.
Tips For ERP Success
After helping several companies implement ERP solutions, I’ve learned a few things. Here are some of my top tips and tricks to successfully implement and manage your ERP system effectively to maximize its benefits.
- Understand Your Business and Processes: Make sure you have a clear understanding of your business processes, how they work together, and where there are gaps. Conduct a thorough business process analysis to identify areas for improvement and ensure that the ERP system is aligned with your risk management practices and goals.
- Get Buy-In From Key Stakeholders: Secure the support and involvement of senior management, department heads, end-users, your team, and other stakeholders. Communicate the benefits of the ERP system and involve stakeholders in the planning and decision-making process to ensure the system is supported, adopted, and used effectively.
- Provide Comprehensive Training: Provide comprehensive training to all users, covering both the technical aspects of the system and how it supports their job functions. Ensure users feel confident in using the system and can use it to its full potential. Solicit feedback through surveys, focus groups, and direct individual feedback.
- Monitor and Optimize Performance: Continuously monitor metrics and track key performance indicators (KPIs) and conduct regular system audits. Use the insights gained from this monitoring to identify areas for improvement and optimize the system's performance. Make sure to identify and document gaps with KPIs, bugs, issues, and feedback from users to address issues with the vendor.
- Keep Up With Updates and Upgrades: Stay informed about updates and ensure that your system is kept up-to-date to take advantage of new ERP functionalities and ensure that your system remains secure and compliant. Keep regular contact with the vendor about enhancements, upgrades, bug fixes, and new developments.
New Up and Coming Trends in ERP Systems
As I look further into the future of ERP systems, I’m seeing more trends cropping up. Here are a few that I’m noticing and experiencing:
The Rise of AI
There will be an increase in the role of cloud ERP and artificial intelligence (AI) and machine learning in coming years to enhance ERP capabilities and support business transformation. These technologies are helping businesses automate routine and unique tasks, gain deeper business intelligence, and make more accurate predictions about factors that impact the future of business.
Gen AI is a form of giving people superpowers. I see it as a phaseshift akin to the Internet or iPhone. I think the use cases are unlimited, and that the potential is unlimited.
Adoption of Cloud-Based ERP
Cloud-based ERP is quickly becoming the new standard—and that momentum isn’t slowing down anytime soon. By 2029, the market for cloud-based ERP is expected to reach $182.23 billion, indicating the need for more scalable solutions.
Even large, global organizations are moving important systems to the cloud to take advantage of faster updates, built-in analytics, and better integration with modern tools. In fact, many ERP vendors are now cloud-first—or cloud-only—reflecting this market shift.
ERP Integration With Accounting Software
There is a trend growing towards greater integration between enterprise resource planning software with accounting functions. Almost 86% of companies require accounting as a core feature when implementing ERP systems.
In the coming years, this integration will become a key trend as organizations look to eliminate data silos, reduce manual work, and streamline reporting.
Additional ERP Resources
Still need more information about ERP implementation and success stories? Check out some of my top resources:
- ERP Certifications For Upskilling In 2025
- Implementation Success Stories
- Key ERP Implementation Phases
- ERP Customization Evaluation and Costs
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