Enterprise resource planning (ERP) is an industry term for the broad set of activities that helps an organization manage its business.

When you search for “ERP” on the web, the sheer amount of information that comes up can be overwhelming—not to mention a little confusing. Every website seems to have its own definition of ERP, and one ERP implementation can vary widely from the next. These differences, however, underscore the flexibility that can make ERP such a powerful business tool.

To get a deeper understanding of how ERP solutions can transform your business, it helps to get a better sense of what ERP actually is and how it works. Here’s a brief introduction to ERP and why it seems like everyone’s talking about it.

ERP is an acronym for Enterprise Resource Planning, but even its full name doesn’t shed much light on what ERP is or what it does. For that, you need to take a step back and think about all of the various processes that are essential to running a business, including inventory and order management, accounting, human resources, customer relationship management (CRM), and beyond. At its most basic level, ERP software integrates these various functions into one complete system to streamline processes and information across the entire organization.

The central feature of all ERP systems is a shared database that supports multiple functions used by different business units. In practice, this means that employees in different divisions—for example, accounting and sales—can rely on the same information for their specific needs.