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What is enterprise resource planning (ERP)?

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ERP stands for enterprise resource planning—a way of organizing, integrating, and managing business processes and information across an organization. It provides a system to centralize the massive amounts of data within an enterprise, enabling information to flow between different teams seamlessly and automatically. Because data is so critical to the success of any modern organization, it can begin to sprawl as an organization grows—in different forms, structures, and conventions—across teams and departments that need a consistent, single source of truth

By using a management system like an ERP deployment as the single source of information company-wide, a business can be sure that its data is correct, up-to-date, and complete. It’s how growing organizations can unify back-office data throughout a company, make it available to the personnel who need it, and do so with minimal need for manual processes. Deploying cloud-based ERP systems is a popular choice for businesses that want to achieve this level of integration and data consistency—and also reduce upfront costs and increase scalability.

Almost everything companies do can be managed by ERP modules, which manage specific business operations:

  • Financial management: tracking and financial reporting on financial data and risk management, general ledger accounting, accounts payable and receivable, and streamlining and automating accounting software and data entry tasks.
  • Manufacturing resource management: managing processes, manufacturing resource planning (MRP II), inventory management, providers, procurement, production planning, regulatory compliance, workflow and project management, and scheduling.
  • Supply chain management: tracking inventory across company facilities and material requirements planning for production.
  • Human resources and human capital management: managing employee-related tasks like payroll, hiring, and performance monitoring.
  • Sales: monitoring product availability, pricing, e-commerce and order management, as well as customer relationship management (CRM).

Modern ERP solutions are highly evolved software implementations. Businesses can deploy different types of ERP apps on-premises or in the cloud. Cloud-based ERP deployments also provide extensive connectivity and security features, along with a range of deployment options that allow them to evolve and grow with business needs. Deploying these systems is often streamlined and managed by the ERP vendors, helping smooth the transition while offering ongoing management.

The core features of ERP technology help business processes run more efficiently. They specialize in integrating business functions, ensuring they are all working from a common database. This means that employees across the organization can monitor and streamline individual operations, whether tracking inventory, fulfilling orders, or counting revenues and expenditures.

Using an enterprise resource planning system means eliminating many of the issues that many businesses deal with regularly. Many companies and small businesses expend a great deal of effort assembling financial data and metrics every quarter from multiple software systems or a mess of spreadsheets. ERP systems create business intelligence reports automatically, and not only once a quarter—a company can monitor its finances and profitability with customized dashboards and real-time data.

Sophisticated new artificial intelligence (AI) and machine learning (ML) capabilities are constantly emerging. A company can configure these technologies with the extensive, enterprise-wide data managed by enterprise resource planning software to enhance their decision making and business management, while also improving key operations like sales forecasting, inventory optimization, and customer behavior analysis.

The German company SAP® has developed new ERP solutions since the 1970s, and it is so well known that the company name is almost synonymous with ERP. It is also responsible for releasing the SAP HANA® in-memory database. Their next generation ERP suite, SAP S/4HANA® (which runs only on the SAP HANA database), is faster, simpler, and more efficient than its predecessor, and it was built for organizations that want to take advantage of the cloud. SAP S/4 HANA® Cloud is the Software-as-a-Service (SaaS) deployment of SAP S/4HANA. 

SAP has announced it will end support for its legacy ERP applications on the SAP NetWeaver® platform, as well as its support for such third-party databases as Oracle®, DB2®, and Microsoft® SQL Server®. Organizations running SAP’s enterprise resource planning (SAP ERP) must migrate to SAP S/4HANA by 2027.

For many companies using SAP solutions, their migration is already underway. To fully understand the migration process and the benefits of making the move, it is important to look at why SAP is mandating this change.

SAP S/4HANA runs exclusively on the Linux® operating system (OS). Red Hat has been working with SAP for over 20 years, and it was selected as the first Linux OS to run SAP in 1999. Red Hat Enterprise Linux is a Linux distribution that is not only certified by SAP, but optimized for SAP

Red Hat Enterprise Linux® for SAP Solutions goes beyond providing an operating system. Red Hat Enterprise Linux for SAP Solutions delivers key features and benefits that meet the specific requirements of SAP applications by combining the reliability, scalability, and performance of Red Hat Enterprise Linux with content specific to operating SAP landscapes. It provides the foundation to migrate to SAP S/4HANA and run it efficiently in combination with Red Hat Ansible® Automation Platform to simplify the entire lifecycle and minimize human error to a great extent. Furthermore, adding Red Hat OpenShift and Red Hat Integration completes a platform that allows organizations to modernize their SAP landscape, bring in cloud native development, and use containers. This cloud-native approach enhances the flexibility and scalability of the system, making it a robust solution for evolving business needs. The platform is also a basis for enhancing their SAP Data Intelligence with Internet of Things (IoT) capabilities, making the most out of the hybrid ERP environment for better operational efficiency.

Red Hat Enterprise Linux for SAP Solutions includes:

Standardize on a single, open platform with Red Hat Enterprise Linux for SAP Solutions, and build on a strong foundation to make the most of SAP S/4HANA well beyond migration.

Red Hat also provides an enterprise automation framework with Ansible Automation Platform to enhance your SAP implementation.

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