What is an ERP system? A guide for growing businesses

Imagine managing a growing business—orders flowing in, inventory fluctuating, financial reporting becoming increasingly complex. Without the right tools, these tasks quickly overwhelm your team. Enter ERP systems. 

In this guide, we'll walk through what ERP systems are, how they work, and the different ways businesses use them. We’ll highlight their benefits, industry-specific solutions, and trends to watch. 

Plus, you'll see how a platform like Rho complements ERP systems, helping you scale smoothly and efficiently.

What is an ERP system?

Enterprise Resource Planning (ERP) systems help businesses manage and automate their day-to-day operations through a single, integrated software platform. 

Instead of juggling multiple tools across departments, an ERP centralizes essential functions—like accounting, procurement, inventory management, and HR—into one cohesive system that keeps everything in sync.

How ERP systems work

Behind the scenes, ERP platforms are built using a modular structure. Each department—finance, HR, operations, and so on—uses its own module tailored to its workflows, but all modules connect to a shared database. 

This means data is updated in real time across the organization, removing the need for manual coordination and reducing the risk of inconsistencies.

An ERP system also includes tools for automating routine processes, setting up role-based access, and configuring workflows to match how your business runs. 

Plus, many ERP solutions are designed to be extensible and integration-friendly, offering APIs that make it easier to connect with other platforms as your tech stack evolves.

The real-world benefits of ERP systems

Implementing an ERP system can significantly boost your business’s efficiency, productivity, and collaboration. 

It equips your team with timely, accurate data for smarter decision-making, scales easily as you grow, reduces costs, and helps you stay compliant with evolving regulations.

Yes, implementing ERP systems can be challenging. But you can mitigate common obstacles like upfront costs, complex integrations, user resistance, and tricky data migrations by taking a proactive approach, clear communication, and partnering with knowledgeable ERP vendors or consultants.

Popular ERP software to consider

When choosing an ERP system, businesses often turn to trusted software solutions such as:

• SAP ERP: Widely used by large enterprises, known for extensive functionality and robustness.
• Oracle ERP Cloud: Offers a comprehensive suite tailored for finance, HR, supply chain, and more, favored for its cloud-based capabilities.
• Microsoft Dynamics 365: Known for user-friendliness and seamless integration with other Microsoft products.
• NetSuite: A fully cloud-based ERP designed for small to mid-sized businesses, popular for ease of use and scalability.
• Infor ERP: Specializes in specific industry verticals, such as manufacturing and healthcare.

Core modules and functionalities of ERP systems

As we mentioned earlier, effective ERP platforms typically feature several core modules. For growing businesses and startups like yours, you’ll want to choose an ERP system with these specific business functions:

Financial management

Your financial management module helps you stay on top of accounting, budgeting, and compliance. For startups and growing businesses, having clear and reliable financial data at your fingertips means better planning and fewer headaches when it comes to regulatory requirements.

Supply chain management

Efficiently managing your supply chain is crucial as you scale. ERP modules here streamline procurement, inventory tracking, and logistics, ensuring smooth operations, timely deliveries, and better supplier relationships.

Human resources

HR modules simplify payroll, employee onboarding, performance tracking, and recruiting processes. As your team expands, this functionality helps you easily manage your growing workforce without excessive administrative effort.

Customer Relationship Management (CRM)

A CRM module helps you manage your interactions with customers, sales pipelines, and marketing activities. It gives you valuable insights to help improve customer relationships, increase retention, and drive revenue growth.

Manufacturing and production planning

If your business involves manufacturing, this module coordinates resources, streamlines workflows, and ensures quality control—crucial for keeping production efficient and downtime minimal.

Order processing and inventory management

Accurate demand forecasting, real-time inventory updates, and efficient order fulfillment help you meet customer expectations consistently, keeping satisfaction high as your business grows.

Business intelligence

Your business intelligence module provides powerful analytics and reporting tools, offering critical insights that empower fast, strategic decision-making—essential for businesses that need to adapt quickly to market changes.

Project management

This will keep your projects on track and within budget using comprehensive project management tools. From detailed planning to resource allocation, these tools ensure your business can deliver consistently and effectively.

3 types of ERP deployments to choose from

Businesses can deploy ERP systems in several ways:

1) On-Premises ERP

On-premises ERP systems are hosted internally on company-owned servers. This means that this approach offers complete control over data security, customization, and infrastructure. 

It's suitable for businesses requiring stringent compliance or those wanting deep customization capabilities. However, it involves higher upfront costs and significant ongoing IT management responsibilities.

2) Cloud ERP

Cloud ERP solutions are hosted remotely on the vendor's servers, accessible via the internet. 

This deployment model provides significant advantages, such as lower upfront costs, rapid implementation, easy scalability, and reduced burden on internal IT resources. That’s why cloud ERP is ideal for businesses prioritizing flexibility, quick scaling, and remote access capabilities.

3) Hybrid ERP

Hybrid ERP systems blend both on-premises and cloud-based approaches. Companies can keep sensitive data on-premises for greater security while leveraging cloud resources for scalability and flexibility. 

If you’re a business with unique needs, this model provides a balanced approach, combining the best features of both deployment types.

How to choose the perfect ERP solution

Selecting an ERP system is a significant decision, one that impacts virtually every aspect of your business. To simplify the process and ensure you cover all critical considerations, use this straightforward checklist:

• Clearly Define Your Goals: Identify specific operational challenges you need the ERP to address.
• Budget Realistically: Account for both initial implementation costs and long-term expenses such as licensing, maintenance, and training.
• Evaluate Vendor Reputation: Look into each vendor’s track record, especially within your industry.
• Assess Customer Support Quality: Ensure the vendor provides responsive, ongoing support and training resources.
• Consider Deployment Options: Decide between cloud-based, on-premises, or hybrid solutions based on your infrastructure, scalability, and compliance needs.
• Test Scalability: Make sure the ERP can easily scale with your anticipated business growth.
• Check Integration Capability: Verify how easily the ERP integrates with your existing software and business processes.
• Review User-Friendliness: Choose an ERP solution that your team can adopt quickly and intuitively.

By using this checklist, you’ll be well-equipped to select an ERP system that genuinely aligns with your business’s long-term vision and day-to-day operational needs.

How Rho complements your ERP system

Integrating your ERP system with Rho enhances financial visibility, spend control, and cash management, seamlessly supporting your broader operational goals.

Combine your ERP system with financial management solutions like Rho, and you're equipped to tackle growth and maintain operational excellence.