Technical ERP Terms You Need to Know

  • 25 January 2017
  • CTND
Categories: ERP

ERP terms displayed on screen

The world of ERP software, and the terminology surrounding it, is often confusing and complex. If you’re not an expert, navigating through the different terms and acronyms may seem like reading a foreign language.

That’s where we come in. Understanding some of the common technical ERP terms will help you communicate better with your authorized partner in ERP, your implementation team, and all of your employees.

Here’s a short glossary of frequently used ERP terms and acronyms, to help get you up to speed quickly.

BI (Business Intelligence):

The reporting of data from ERP, CRM, and LOB applications in a format that can be used to make business decisions. BI applications can include charting and analysis tools, reports, or dashboards.

Change Management:

Improving the business process using best practices throughout an entire company to improve overall business performance, increase efficiency, and maximize the value of the ERP system.

Cloud Computing:

A method allowing users to connect to their ERP software over the internet, as opposed to using hardware located inside the organization. Cloud computing makes it unnecessary to create and maintain a hardware infrastructure onsite, and eliminates the associated costs.

CRM (Customer Relationship Management):

A software system designed to help an enterprise manage the relationship with its customers; including the organization’s sales, marketing, and customer service functions.

EIS (Executive Information System):

A system used to help senior executives in the decision-making process, by providing quick access to an enterprise’s important data. An EIS typically utilizes a user-friendly graphical interface.

ERP (Enterprise Resource Planning):

A process utilized by a company to manage and integrate the crucial aspects of its business. An ERP management information system incorporates areas including finance, human resources, inventory, marketing, planning, purchasing, and sales.

HCM (Human Capital Management):

The process of managing employees as human assets; this involves monitoring and measuring employee performance, setting expectations for employee deliverables, and making decisions about employee capacity.

Integrated Software:

Two or more software components within the ERP application that share data and merge functions, such as invoicing and accounts receivable, or order processing and inventory control.


An inventory-control system that controls the flow of the shop, and coordinates production level with customer demand. This usually involves movement tickets that accompany goods from one area of production to another.

KPI (Key Performance Indicator):

Any specific metric that a business can assess to help reach its targets, and measure its progress towards goals. It can be employed at all levels of the business.

LOB (Line of Business):

Software systems that provide functionality for a particular business need. LOB applications are frequently incorporated into an ERP system.

Machine Learning:

A type of artificial intelligence that uses pattern recognition to improve results over time, based on whether the desired results were achieved. With machine learning, computers can learn without being specifically programmed.

Out of the Box:

Uncustomized ERP software. When out-of-the-box software doesn’t meet a specific need, organizations have the choice of customizing the software, or changing their business process to adapt to the software.

RFP (Request for Proposal):

When an organization intends to purchase a software solution (such as ERP) from several potential vendors, an RFP is used to elicit bids. In turn, the vendor will submit a business proposal.

ROI (Return on Investment):

A measurement used to calculate an investment’s efficiency. ROI quantifies the amount of return on an investment, relative to its cost. The benefit is divided by the cost, and the result is expressed as a percentage or ratio.

VAR (Value-Added Reseller):

A vendor that buys the products of other companies and adds software, services, or its own hardware components to supply to a customer. A VAR can aid with installation, configuration, and training to support the implementation of ERP systems.

VSM (Value Stream Mapping):

A tool that helps businesses learn how information or goods flow, and helps them figure out ways to improve that flow. A process map is used to simplify processes across the entire supply chain.

Contact Us