Business Models in an ERP System Explained

    Most enterprise resource planning (ERP) solutions these days are broken down into modules that target key aspects of the business model and bring much-needed coordination to a wide range of currently disjointed, and often conflicting, processes.

    This approach also allows the enterprise to gradually implement what will ultimately be a paradigm shift in the way it does business. By addressing key workflows one at a time, organizations gain the ability to make meaningful changes in certain areas without disruption operations as a whole.

    But this can also lead to confusion over what to implement first. After all, many business processes are interrelated – think of purchasing’s impact on accounting and the supply chain – so how can any organizations reasonably expect to automate one aspect of their data ecosystem while leaving the rest mired in the same old manual practices?

    This is the reason why many ERP platforms start with a set of core modules. Not only does this provide a firm foundation on which to build a fully dynamic business model, it also allows for a highly flexible approach to suit multiple unique business requirements. Service providers, after all, do not need much in the way of manufacturing automation, but they will likely require a more streamlined approach to application development and data operations. Distributors of physical products, meanwhile, will probably rely heavily on inventory and supply chain tools.

    Here, then, are the core ERP modules found in most leading ERP systems, followed by a number of secondary tools aimed at key verticals:

    Key ERP Module: Human Resources

    Perhaps one of the most complex operations in any enterprise, HR encompasses everything from payroll and benefits management to professional development, hiring/firing and conflict resolution. As well, a proper HR module can be used to project workforce needs, including overall staffing levels and specific team requirements, and ensure that policies remain current with changing laws and regulations.

    Key ERP Module: Inventory/Supply Chain

    In many cases, these are individual modules, but they are basically two sides of the same coin. Supply chain management (SCM) concerns itself with ensuring the proper flow of resources from source to manufacturing to distribution and eventually the customer. Inventory management tries to make the best use of resources that you have. Managing both under an ERP platform can help spot the weak points in these processes and lead to a more efficient and profitable business model.

    Key ERP Module: Sales/Marketing

    Considered the core of any business, sales and marketing are often conducted according to hunches and guesses, not actual data. Within an ERP environment, however, the enterprise gains actionable data regarding actual results of any given program, as well as new opportunities, expense monitoring, and a host of other factors.

    Key ERP Module: Purchasing

    Distinct from areas like finance and SCM, but heavily interrelated nonetheless, the purchasing process incorporates invoice management, contracts, billing, quotes, and a wide range of other functions. A key benefit is the ability to more accurately assess the needs of an organization compared to its consumption of goods and services.

    Key ERP Module: Finance

    Finance runs the gamut from investments and money management to cost evaluations, projections and accounting. Naturally, there is a lot of data in play in any financial environment, so ERP is invaluable when it comes to collecting and analyzing large, complex data sets. A good finance module can also help the enterprise generate higher profits from tighter margins and track potential insider malfeasance.

    Key ERP Module: Customer Relationship Management (CRM)

    Few businesses survive if they do not make their customers happy, so a good CRM module can mean the difference between success and failure these days. Besides handling many customer interactions and support requests, CRM tracks purchasing histories, creates profiles and enhances brand awareness.

    Key ERP Module: Production

    Whether it is a simple widget or a complex application, the production process is often rife with inefficiencies. Production modules can coordinate the entire creative process, from initial design and engineering to sourcing, manufacture and distribution. Along the way, it can spot bottlenecks in the process and make recommendations for improved consumption and output planning.

    Key ERP Module: Business Intelligence

    Business intelligence (BI) is technically the overarching module that collects and analyzes data from all the other modules, as well as from outside sources, to give upper-level executives a more accurate picture of their business. BI usually incorporates the latest in Big Data management, predictive analytics and even artificial intelligence to not only find hidden patterns but to make recommendations for future courses of action.

    Secondary ERP Modules:


    Obviously, you would only need an eCommerce ERP module if you are heavily reliant on eCommerce, but this is coming to represent virtually all enterprises these days. Using ERP, eCommerce sites can be more directly tied to shipping, billing, inventory management, and a range of other modules, providing better customer support and generating critical data on buying trends, market development and the like.


    As the digital economy evolves, so does the need to quickly launch and update critical applications and services. Using ERP to manage development projects gives users ready access to the data they need to make informed decisions and allows them to integrate the final product into other ERP-driven workflows.

    Social Media

    Communication is a key aspect of the data-driven enterprise, so integrating it into ERP frameworks is a good way to reach out to customers, connect with partners, and even foster greater collaboration within the workforce. It also helps in the gathering of critical market data regarding trends, emerging preferences and changing public attitudes.


    Modules like Inventory and SCM all rely heavily on logistics data, so some organizations feel the need to break this out as a separate function. The ability to share logistics data across multiple modules enables all functions to work off the same numbers, which theoretically should provide a more cohesive operational model.

    Arthur Cole
    With more than 20 years of experience in technology journalism, Arthur has written on the rise of everything from the first digital video editing platforms to virtualization, advanced cloud architectures and the Internet of Things. He is a regular contributor to IT Business Edge and Enterprise Networking Planet and provides blog posts and other web content to numerous company web sites in the high-tech and data communications industries.

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