“What is an ERP?” is by far the most common question that brings people to our website. That makes sense: the term comes up in every conversation about digitalizing a business, but it’s almost always wrapped in acronyms and promises. So we’ll explain it the way we would to a managing director in their office, with examples from SMEs we’ve digitalized over the past twelve years.
What is an ERP system? The simple definition
An ERP (Enterprise Resource Planning) system is business management software that integrates a company’s core processes into a single database: sales, purchasing, warehouse, invoicing, accounting, projects and staff.
The key word is integrates. You don’t have one program for invoicing, another for stock and another for accounting: it’s all one system. So when a salesperson closes a deal, the warehouse sees what to pick, the back office sees what to invoice and accounting sees what payments are coming in. Nobody has to copy anything.
If your company’s information is scattered across three programs and six spreadsheets, what you’re missing has a name: an ERP.
What is an ERP used for? Real business examples
Rather than listing features, here’s what changes day to day at real companies we’ve worked with:
- A metalworking manufacturer with 35 employees ran production, warehouse and invoicing in separate spreadsheets. With an integrated ERP, they cut admin time by 70% and management could finally see the business in real time.
- A food distributor with 6,000 SKUs had constant stockouts because the warehouse and sales teams weren’t talking to each other. With the ERP and a warehouse module (WMS), stockouts fell by 90%.
- A spare parts wholesaler with 30,000 SKUs sold online and over the counter with different prices and stock levels. Once the ERP was connected to the online store, stock and prices stayed up to date in both channels.
In every case the pattern is the same: an ERP lets you enter each piece of data only once, know where the business stands without “crunching the numbers” and automate repetitive work (invoicing an order, sending a purchase order to a supplier when stock runs low, posting an invoice to the books).
ERP modules: what an ERP system includes
An ERP is organized into modules that each company switches on as needed. The most common ones are:
| Module | What it manages |
|---|---|
| Customers and sales (CRM) | Contacts, opportunities, quotes, sales orders. |
| Invoicing and collections | Invoices, due dates, direct debit batches, Verifactu and Spain’s mandatory e-invoicing. |
| Purchasing and suppliers | Purchase orders, goods receipts, supplier invoices. |
| Inventory and warehouse | Stock levels, bin locations, stock counts, batches and expiry dates. |
| Accounting | Journal entries, bank accounts, reconciliation, taxes, year-end close. |
| Projects and time tracking | Tasks, logged hours, profitability per project. |
| Human resources | Employees, time clock, vacation, expenses. |
| Production / manufacturing | Bills of materials, production orders, costs. |
| POS and online store | In-store sales and integration with WooCommerce, PrestaShop or marketplaces. |
An SME doesn’t switch everything on from day one. The usual approach is to start with customers, quotes, invoicing and inventory, and grow from there.
ERP vs CRM: what’s the difference?
This is another big question. A CRM (Customer Relationship Management) manages your relationships with customers: contacts, sales follow-up, opportunities, campaigns. An ERP manages the entire operation, sales included. In practice, most ERPs include a CRM module, and many SMEs cover both needs with a single system. To dig deeper, read our article on what a CRM is and what it’s used for.
Types of ERP: cloud, on-premise, open source and custom
- Commercial licensed ERPs: SAP Business One, Microsoft Dynamics, Sage. Powerful, but with high licensing and consulting costs. Designed for mid-sized and large companies.
- Open-source ERPs: Dolibarr, Odoo, ERPNext, FacturaScripts. No license fees, huge communities and the freedom to adapt them to your business. These are the ones we implement most often for Spanish SMEs.
- Cloud ERP vs. your own server: almost any ERP can run either way. In the cloud, you forget about servers; on your own server, you keep 100% control of your data. We compare both in cloud ERP vs. on-premise.
- Custom ERP: for companies whose processes are so specific that no standard product fits. It’s the least common route, although it’s common to start from an open-source ERP and custom-build only the part that needs it.
How much does an ERP cost for an SME?
It depends on three things: the software (licensed or open source), the scope of the implementation (how many modules, how many users, how much data migration) and any custom adaptations. With an open-source ERP, the money goes into implementation and training, not licenses, and the investment pays back quickly if the system replaces several tools and hours of manual work. Our advice: don’t compare license prices, compare the total cost over three years, maintenance included. We go into more detail in how to choose an ERP for SMEs.
Signs your business needs an ERP
- You can’t tell your real stock levels or a project’s profitability without pulling data from several places.
- The same data (a customer, a product, a price) gets typed into two or more programs.
- You invoice with one program, track the warehouse in Excel, and your accountant keeps the books in something else.
- You run an online store and orders are copied over by hand.
- Regulations such as Verifactu or Spain’s mandatory e-invoicing require you to invoice with compliant software.
- Whenever someone goes on vacation, some information turns out to exist only in their head or on their computer.
How to implement an ERP without bringing your business to a halt
- Assessment: how you work today and where you’re losing time or money.
- Selection and scope: which ERP, which modules, in what order.
- Setup and data migration: customers, products, price lists, opening balances.
- Testing and training with the team who will use it.
- Phased go-live and hands-on support during the first few weeks.
That’s the methodology we follow at Interconecta for every business ERP implementation: a fixed-price proposal with a set timeline, and the code and data always in the client’s hands.
Does your business need an ERP? We’ll tell you
If you recognized your business in any of the signs above, the best next step is to look at your specific case: what you use today, what’s causing problems and which ERP and modules would make sense. We do that assessment free of charge and with no obligation. Tell us how you work and we’ll tell you where to start.
Want to know which ERP fits your business?
We’ll review how you work today, free of charge, and propose the ERP and modules that make sense for you, with a fixed price and timeline.
Talk to Interconecta