What Is an ERP? Enterprise Commerce Guide (2026)

Increasing competition and customer expectations can drive today's enterprise ecommerce brands to add new capabilities and selling channels in order to keep pace; and with more diverse operations, these retailers may be handling more data than ever before.

There are many ways to put this data to work. Each dataset has the potential to provide new opportunities for competitive advantage and profit, from benefits like supply chain improvements, new revenue streams, and market-demand forecasts.

One strategy for an organization to centralize and make sense of this data is with enterprise resource planning (ERP). In this article, we'll cover the basics of ERP and how ERP systems work. We'll also cover the deployment models available and how to choose and integrate the right ERP system for your organization.

What is ERP?

Enterprise resource planning refers to the software and systems that an enterprise uses to manage core business processes. These systems collect data across departments, such as supply chain, sales, human resources, manufacturing, procurement, accounting, and project management.

ERP gives an entire organization greater visibility and real-time data, anytime, anywhere.

How does ERP work?

An ERP system is built from modules. Each module handles one business function, like finance or inventory management. All of the modules read from and write to a shared database. The system is structured so that relevant changes in one module are reflected in all other modules. For example, a sales order entered in one module will automatically update in the inventory and accounting modules without anyone reentering the data.

An ERP can benefit all of a retailer’s commerce operations when integrations connect it to surrounding systems. For an enterprise commerce business, that can mean the commerce platform as well as tools like warehouse management systems (WMS), product information management (PIM) and payment providers. Workflows can then automate core business processes that cross departments.

These integrations can mean a shipped order triggers an invoice, and a stock threshold triggers an inventory reorder. It’s all connected.

Dashboards present the integrated data so decision-makers can monitor business operations in real time. That single view is what separates an integrated ERP software system from a collection of standalone tools.

ERP has its roots in manufacturing. It began in the 1960s as material requirements planning (MRP) software for scheduling and inventory management. Modern ERP solutions apply the same logic across a greater variety of business functions.

How an enterprise retailer uses ERP

An ERP system brings all of an enterprise retailer’s data into one common database for stakeholders to establish company-wide baselines, find benchmarks, and set goals for moving forward. I

An ERP system is most useful when its modules and integrations match the work the business runs day to day. For example, a retailer with 40 stores needs inventory and order modules that talk to its point of sale (POS), whereas a manufacturer needs production planning and bills of materials (BOM). Buying modules that the business will never use adds cost and implementation time without adding value.

ERP project scope is a choice, and most organizations keep it narrow. Panorama Consulting Group's “2026 ERP Report” asked organizations how many business processes they changed during their ERP project. More than half changed only their key processes. The rest were split between changing most processes and changing none.

The report suggests businesses are being realistic about internal capacity: Fixing the bottleneck processes that affect cash flow or customer service delivers value faster than changing everything at once.

Common ERP modules

Many ERP solutions are sold as a core platform with optional modules to add on. Expect to see the following modules in a mainstream enterprise ERP software system:

• Finance: The general ledger, accounts payable and receivable, and financial reporting. It replaces standalone accounting software. Every other module posts to finance, so it’s the first module many businesses implement.
• Inventory: Stock levels by location, reorder points, transfers, and cycle counts. In commerce, this module is the system of record behind the storefront's available-to-sell figure.
• Human resources: Employee records, payroll, time tracking, and expense management. Some vendors sell this as a separate human capital management (HCM) suite.
• Manufacturing: Bills of materials, production scheduling, and quality management. This is similar to ERP’s predecessor, the MRP system.
• Customer relationship management (CRM): Customer records, sales pipeline, and service history. Many businesses run a dedicated CRM alongside the ERP. The ERP vs. CRM decision depends on how much depth the sales and marketing teams need.
• Procurement: Supplier records, purchase orders, and three-way matching against invoices. Vendor management and supply chain management functions live here.
• Project management: Budgets, resource allocation, and billing for project-based work.

Benefits of ERP

The benefits of ERP come from integrating core business functions on one shared data set instead of running disconnected systems. Each of the outcomes below depends on that single source of truth:

• Visibility: Leaders see inventory, orders, cash, and supplier commitments in one place. No one needs to reconcile exports from separate systems.
• Financial reporting: The finance team closes the books based on ERP data rather than spreadsheets. That shortens the close and reduces reconciliation errors.
• Inventory and order accuracy: Stock levels update the moment an order is captured or received, and shared with all relevant systems. The storefront only sells what the warehouse holds.
• Collaboration: Sales, operations, and finance work from the same records. That removes time-consuming, error-prone handoffs that require data reentry, and it allows service teams to serve customers with a full view of their order history.
• Risk reduction: Role-based access and audit trails make it harder for errors and fraud to pass unnoticed.
• Decision speed: Real-time insights mean managers can base decision-making on this morning's numbers rather than last week's report.

Silo removal is a major boon for organizations. Panorama's 2026 ERP report found that the share of companies realizing benefits from removing data silos rose from 55.2% to 77.4% year over year.

Three types of ERP

The right ERP can help you increase productivity and improve customer experience (CX) personalization. There are three main deployment models for ERP systems. 

The right deployment model depends on several factors. The first is control: where the organization needs to hold its data and infrastructure. Next is maintenance: how much ongoing upkeep the IT team can own. Then there's integration: which systems the ERP must connect to. The last is speed: how quickly business units need to roll out changes.

Each of the three models below handles those areas differently.

1. On-premises ERP

On-premises ERP is a deployment model in which the organization owns the data center. Most legacy systems are considered on-premises. Some large enterprises with the budget and staff to manage their own infrastructure still choose on-premises ERP. Data residency or regulatory requirements are the usual reason.

On-premises software can be purchased through a perpetual license and can be hosted internally or externally.

Organizations may hesitate to move their systems to the cloud if they have an on-premises ERP system. Moving to a new infrastructure and system can be expensive and time-consuming.

The characteristics of on-premises ERP systems include:

• Local installation on your company's computers and servers
• Charged as a one-off license fee
• Slower deployment (can take months to years)
• Company-managed hosting, maintenance, software updates, and operational costs
• Requires full-time administration
• Limited to which ecommerce solutions you can use
• Difficult to make changes
• Potentially heavy customization requirements
• Company-managed data security

2. Cloud ERP

A cloud-based ERP system is accessed over the internet rather than a local computer or installed software. It's hosted in the cloud and can be deployed as a hosted model or software as a service (SaaS).

Panorama's 2026 ERP report found a strong preference for SaaS deployment among enterprises. It also found that more ERP vendors are ending support for on-premises models. Epicor, for example, now builds new features for its cloud versions only.

SaaS ERP is entirely managed by the vendor. That shifts the responsibility for maintenance and upgrades away from the customer and can cause lower IT maintenance costs.

The characteristics of cloud ERP include:

• A subscription pricing model
• Hosting, server, maintenance, and software updates included
• Fewer in-house IT resources needed for infrastructure and upgrades
• Easy access to ecommerce platforms like Shopify for enterprises
• Faster deployment times
• Quick to make process or software changes
• Scalable as needed
• Easy to integrate with third-party systems via API connections
• Vendor-managed infrastructure security (customer responsible for access and configuration)

One potential drawback is that vendors can change process flows that need continuous training and documentation updates. Plus, SaaS raises the importance of internal governance. Frequent updates need clear ownership of security roles and reporting standards.

3. Two-tier or hybrid ERP

Companies traditionally deployed one ERP system for their entire organization, from headquarters to regional offices and subsidiaries. This could be a costly and difficult approach to implement. Certain subsidiaries had special requirements and didn't need the full corporate suite, but the system could not be varied. This one-size-fits-all approach doesn't work for many modern enterprises. Two-tier ERP and hybrid ERP allow for more variance.

Two-tier ERP usually follows one of two patterns.

In the headquarters-and-subsidiary pattern, a parent company runs a tier-one ERP for consolidated financials. Subsidiaries, regional units, or newly acquired brands run a lighter tier-two system suited to their size and market.

In the legacy-and-cloud pattern, the business keeps its existing on-premises ERP for core functions (like finance). Newer business units adopt a cloud-based ERP that can be deployed in months. The organization prioritizes moving data safely between the two tiers. Some modern cloud solutions now have built-in integrations to work with older corporate ERP systems.

Hybrid ERP describes the broader mix of on-premises and cloud components within one architecture. Mordor Intelligence estimated cloud models held 55.11% of the ERP market in 2025. Hybrid models were projected to grow at a 15.48% compound annual growth rate (CAGR) through 2031.

Two key benefits of a two-tiered system are:

• More affordable than configuring a corporate ERP system to work for all units<
• Easier to implement cloud-based tier-two solutions

How to choose the right ERP system

If you're in the market for a new ERP system, selecting the right product and vendor depends on understanding your organization's needs and evaluating competing systems side by side.

Here's what to consider when choosing an ERP system.

• Assess ERP-readiness
• Set objectives and business requirements
• Measure return on investment (ROI)
• Script the demo around real workflows
• Check references
• Calculate total cost
• Determine vendor viability

1. Assess ERP-readiness

Implementing an ERP system takes time and money. It's also not necessarily the best solution for every retail business. While there's no single trigger that tells an organization it needs an ERP, the list below covers common operational symptoms that may indicate an ERP is the way to go.

You may be ready for an ERP if:

• Finance reconciles order and inventory data manually at every close
• Inventory counts differ between the warehouse system, the storefront, and the ledger
• Adding a sales channel or entity means adding another spreadsheet or point solution
• Leadership can't get a current view of stock, cash, or margin without asking several teams

If these criteria describe your business operations, it may be time to consider an ERP solution.

2. Set objectives and business requirements

Why exactly are you interested in ERP implementation? What problem are you trying to solve?

Outlining specific objectives will help you identify the requirements ERP software must meet to be purchased. To avoid being influenced by vendor marketing, you might consider listing your requirements before you begin researching options.

Use every resource available to create your requirements. Talk to purchasing managers and suppliers. Chat with executive management and accounting teams.

Have each group create a list of things they feel the ERP system must have. This could be specific integrations or ERP modules, such as workflow automations or mass updates and CSV imports for data management.

Have teams break their list down into need-to-haves and nice-to-haves. Make the need-to-haves top priority. This will help you deploy an ERP system that meets everyone's most urgent requirements.

When identifying your needs, remember to balance them with your employee policy on mobile devices. While mobile ERP isn't new, the trend is and should be considered when balancing the advantages of using ERP on the go while ensuring data is secure.

3. Measure ROI

When you begin researching ERP options you may encounter warnings regarding how difficult it is to measure an ERP’s return on investment. Fortunately, if you’ve already taken the step of articulating specific goals, this will help.

An ROI calculation requires three inputs: total cost of ownership (TCO), the length of the ERP implementation process, and the operating outcomes once the system is live. Set a baseline for each before the project starts, or there will be nothing to measure against.

Panorama Consulting Group's 2026 ERP Report covered organizations with $200.5 million in median annual revenue. The median project timeline was nine months. Of those, 30% reported projects over budget and 22.3% reported projects over schedule.

You might measure ERP performance by:

• Increasing employee productivity by X% in Y months
• Reducing inventory by X%, resulting in Y accounting improvement
• Improving accuracy of manufacturing cost quotes by X% in Y months
• Closing the monthly books X days faster after go-live

4. Script the demo around real workflows

At this point in the process, you'll probably be ready to see software demonstrations.

Provide a demo script built from your own transactions, not the vendor's sample data. For an enterprise commerce business, the script should cover the flows that break most often, like:

• An online order that ships from a store, then is partially returned to a different store
• A B2B order with account-specific pricing, payment terms, and an approval step
• A stock transfer between warehouses while both locations are selling the same SKU
• A month-end close that pulls payouts from the commerce platform into the ledger

Ask the vendor to run each flow end to end and show where the data lands in the ERP. If a step relies on a connector or middleware, ask which one, who maintains it, and what it costs. An ERP that needs custom integration work for your order flow can have additional costs.

The demo you receive, as well as how readily and efficiently they respond to specific inquiries and follow-ups, can be extremely revealing in terms of what kind of partner the vendor will be over the long haul.

5. Check references

Realizing you're not likely to call or get cooperation from a direct competitor, it may be helpful to speak with a reference that has similar goals to yours and can answer questions like:

• Which promises were kept?
• Which (if any) promises were broken?
• What surprised you about the vendor/product?
• What doesn't the product do that you were told it would?
• Are you paying for modules/tools you don't need?
• Which deadlines were met and which weren't?
• Were there additional or surprise costs?
• What mistakes did you make or what do you wish you knew about prior?

6. Calculate total cost

License or subscription fees are the visible line item. But total cost of ownership (TCO )covers everything else the project will consume over its life:

• Implementation resources: Systems integrator fees, internal staff time, and backfill for the people pulled onto the project
• Customization: Custom code and configuration, plus the cost of retesting it at every upgrade
• Integration: Connectors and middleware subscriptions, plus the development work to link the ERP with the commerce platform and warehouse
• Support and maintenance: Vendor support tiers and managed service contracts. For on-premises systems, add hardware and infrastructure upkeep
• Training and change management: Initial training plus the productivity dip while teams adapt to new processes

Having a thorough discussion about price can prevent future surprises and disappointment. It can also help you shape a contract both parties can be happy with.

Customization is crucial in squeezing every bit of value from ERP software. However, too much can result in major cost overruns and delayed implementation. Over customization can also result in higher upgrade costs. Unless a specific customization provides a competitive advantage or measurable benefit, consider saving the extra time and money custom coding often requires.

7. Determine vendor viability

As the enterprise software space consolidates, companies may not wish to support all of the products they acquire in perpetuity. Acquirers may choose to sunset a specific product or notify customers it will no longer support a product after a certain date. This is a risk to anyone considering ERP software.

It's important then to try to understand a vendor's strategic vision:

• Was the product created to be attractive to a potential acquirer?
• Who controls the company and are they looking to sell it?
• Do the founders have a history of selling software companies?
• If so, what's the time horizon, and who are they trying to sell to?
• Does the ERP vendor have investors?
• If so, what type of track record do they have?
• Does the product target a specific niche or solve a unique problem that larger vendors haven't targeted or solved?

Security posture belongs in the same conversation. Ask each vendor how its controls map to a recognized framework such as the NIST Cybersecurity Framework 2.0. The framework organizes outcomes across six functions, from governance through to recovery.

A vendor that can walk through that mapping has thought about security governance. One that can't is asking you to take it on trust, which is a red flag.

For ERP providers that don’t appear to be acquisition targets, it's important to see their balance sheets too, so you can assess their financial strength and whether they're likely to be around for the long haul.

ERP software examples for commerce operations

Enterprise resource planning systems can be separated into tiers by the size of business they serve. Determining which tier is suited to your business can be a useful step in narrowing down the best ERP for your purposes.

In the tier for the largest enterprises are global suites such as SAP S/4HANA, Oracle Fusion Cloud, and Workday, built for large multinationals with complex entity structures. The middle tier serves midmarket businesses with products such as Microsoft Dynamics 365, NetSuite, Acumatica, and Sage. Below that sits a long tail of smaller vendors and industry-specific point solutions. Note these tiers represent size only, and are not meant to rank platforms according to quality.

In addition to looking at scale, it can be useful to consider which ERP systems integrate cleanly with your commerce platform. Shopify is not an ERP and doesn't appear in the list below as one; it runs the customer-facing commerce layer including storefronts, checkout, point of sale (POS), and order-capture. An ERP can be integrated with Shopify to serve as the system of record for finance and inventory.

Just below we explain how that integration works on Shopify. We follow that with a look at ERP platforms with certified Shopify integrations.

Shopify’s Global ERP Program

The Global ERP Program is how Shopify connects with some of the most popular ERPs. Selected ERP vendors build and maintain their own apps in the Shopify App Store, so inventory, product, order, and customer data sync between Shopify and the ERP without a third-party integration layer. The program currently includes five certified apps: Oracle NetSuite, Microsoft Dynamics 365 Business Central, Brightpearl by Sage, Acumatica, and Infor.

With fewer requirements to run business operations, you can implement automations that make those operations more efficient.

Brightpearl

Brightpearl by Sage is a business management software for online retailers. Brightpearl has a native Shopify integration built and maintained in-house.

This integration allows Shopify retailers to better manage post-purchase operations from real-time inventory updates to automated order management processes, multi-location warehouse management, CRM, integrated financial reporting, and more.

Oracle NetSuite

Oracle NetSuite has a suite of cloud-based ERP applications, from financials to HR, inventory management, and omnichannel ecommerce functionality.

NetSuite is a mature platform and can likely provide everything you need. It's fully customizable and has an open API so you can connect with third-party applications easily. 

Acumatica

Acumatica is software as a service designed to help organizations scale their financial and enterprise resource planning. It has on-premises or cloud deployment with a browser-based app that makes it easy to use on mobile devices.

Acumatica's pricing structure is based on resources instead of per-seat numbers, which is different from traditional ERP vendors. All applications are integrated into your system, and more can be added any time. You only buy what you need.

Microsoft Dynamics 365 Business Central

Microsoft Dynamics 365 Business Central is an all-in-one business management solution for small- to medium-size organizations. It's ideal for brands that encompass multiple industries and business units, offering features for finance, operations, sales, and customer service.

ERP risks

If you've been researching ERPs for a while, you may have come across some ERP failure stories. For example, Dow Chemical spent $1 billion on an ERP system that took eight years to implement. Fleet-management company LeasePlan abandoned their core leasing system in 2019, writing off around $100 million in the process.

The IT resources required for an ERP implementation will impact your cost and duration. That applies whether you're integrating a new ERP with existing software or replacing a legacy ERP with a cloud system. The vendor may implement the software itself, partner with a consultant, or leave it to you.

Common ERP challenges include:

• Going over budget: In Panorama's 2026 ERP report, the most common reason for exceeding budget was an unexpected need for additional technology. If you discover a fit gap late, it has to be patched with extra tooling or custom builds.
• Integration difficulty: Every system the ERP has to talk to represents a separate project with its own field-mapping and sync schedule. Commerce integrations often surface a lot of data conflicts, because orders and inventory change constantly.
• Legacy compatibility: Older systems may lack modern application programming interfaces (APIs), or hold years of records that need cleansing before migration. The data migration risks are the same ones that surface in any replatforming project.
• Implementation ownership: Projects stall when the vendor, the systems integrator, and the internal team each assume someone else owns a decision. Panorama found organizational issues, including governance and resistance to process change, were the most common cause of schedule overruns.
• Security governance: Much of your most sensitive data exists in your ERP system. IBM and Ponemon Institute's 2026 ‘Cost of a Data Breach Report’ put the global average cost of a data breach at $4.99 million. Cloud ERP shifts infrastructure security to the vendor. Role design, access reviews, and change control remain the customer's job.
• Employee training: To take full advantage of ERP, employees must use it, which could require training that reduces productivity and increases costs.
• Reliance on a lone vendor: The vendor you select will be responsible for upgrades and customizations and must remain in business for years for you to reap the full benefit of an ERP system.

To start on budget and schedule, you'll need to:

• Identify exactly what your objectives are by implementing ERP
• Evaluate the IT and infrastructure necessary to integrate and maintain the system
• Map out exactly how you'll track and measure success.

Understanding these items well in advance will not only help you select the right vendor but also contain costs and improve the odds implementation won't drag out for years to come.

Choose and integrate your ERP system

ERP selection is a systems decision. It takes more than just selecting software from a shortlist. 

The ERP will sit at the center of finance and operations for a decade or more. Every other system in the business will be affected by how it connects.

For enterprise commerce teams, the test is straightforward: Does the ERP setup connect inventory, product, order, customer, and financial data with the commerce platform? The ERP holds the records; the commerce platform sells from them.

If those two systems disagree about what's in stock, everything downstream breaks.

Sea Bags, a manufacturer and retailer of recycled sailcloth bags, originally ran retail on Clover POS and ecommerce on Salesforce Commerce Cloud. NetSuite was their ERP. Data sat in silos and marketing stalled on unreliable customer records.

The company kept NetSuite and unified retail and ecommerce on Shopify. NetSuite Connector now handles real-time inventory sync, order flow, and financial reporting. Platform fees fell 20%, worth $70,000 in the first year. Shopify POS captures an average of 1,200 customer email addresses per week at checkout.