What is ERP Software and How Does it Compare to PPM Software?

Man and a woman wearing glasses discussing work in an office. Both looking at an iPad.

Overview

The best way to understand the difference between Enterprise Resource Planning (ERP) software and Project Portfolio Management (PPM) software is to think of the latter as having evolved out of the former.

The history of Enterprise Resource Planning

Production scheduling models were first used in the US at the very beginning of the 20th century and were originally known as Economic Order Quantity (EOQ) and Economic Purchase Quantity (EPQ) systems. That evolved into Material Requirements Planning (MRP) in the 1950s, and then MRP II in the 1980s.

Once all that began to be integrated into computer systems people started referring to it as Enterprise Resource Planning, which was first used in the 1990s by the Gartner group. But over the next decade or so, companies using ERP systems saw their costs spiral, as the servers they needed to run them got bigger and bigger. So with the turn of the 21st century, ERP moved to the cloud and became part of the software-as-a-service (SaaS) world.

What is ERP software?

One of the core challenges that every organization is faced with is the natural tendency for businesses to organize themselves in silos. There, decisions get made because of the immediate goals within those units, without factoring in the strategic and tactical aims of the organization as a whole, or the departments they’re a part of.

What ERP does is to connect each of the separate areas where you organize and distribute your different sets of resources. Giving you a view into all the different elements that feed into your financial management, human resources, and manufacturing departments, and linking them all together.

This gives you that all-important visibility into your day-to-day business activities around procurement, project management, accounting, finance, and supply chain planning. That visibility means you can track the different stages of your product’s journey, through development, production, and distribution, monitoring each aspect of the logistics process.

So the goal of doing everything you can to optimize supply chain synchronization is one that can be genuinely realized. Because all the data that every stage along your supply chain produces is now being processed through the one central hub. And everyone within your organization has access to that data in a way that was never possible in the past.

PPM is ERP 2.0

Once businesses began using ERP software to track and consolidate their data, they quickly came to appreciate how useful a tool it was. But they also began to realize what some of its shortcomings were. Effectively, what ERP is so good at is in providing you with a general overview of where everything is. What’s it’s less good at is giving you a detailed, granular understanding of exactly where a project is, in relation to where it was due to be. Which is where PPM comes in.

PPM software is basically a much more flexible version of what ERP was originally. The principal difference being that PPM is much more configurable. Meaning companies that use it can mold it to suit their specific needs. This makes PPM much better at collecting, analyzing, and distributing data sets to all the people who need to have access to them. Both within the organization, and to any of the different suppliers that the business works with. (See our ERP Comparison matrix for more details)

PPM with EVM

What the best PPM software gives you is the ability to apply Earned Value Management metrics across each of your projects. So at any given moment, you can compare where a project was planned to be, with where it actually is, and how much it has cost so far. Which puts you in a much better position to take action early, and prevent any overruns in costs and schedules.

PPM software was therefore designed around being able to marry a project’s plan for its work breakdown structure (WBS) with the financial resources available. Because the Gantt charts and different graphs that PPM provides you with give you a constant stream of updates, which get updated in real-time. All of which helps you to avoid waste, minimize delays and maximize margins.

These days, most large organizations use a combination of PPM, ERP, and other software tools to help them manage their data. The big difference being, that the best PPM software can comfortably be integrated with any existing ERP software. Whereas most ERP systems make that process extremely cumbersome.

All of which explains why so many large organizations have been turning increasingly to PPM software. For, as the Project Management Institute’s conference paper, Next Generation Project Management Software, puts it:

“Organisations demand greater project collaboration capabilities to deal with more challenging projects and improved portfolio analytics to better manage portfolio risk.”

And the best way to be able to do that is to make sure you’re using the right PPM software.

Related Insights

Team of lab analysts in having a team discussion. All of them are wearing white lab coats and safety goggles.
Mar 26 2024

6 Trends for the Biopharma Industry in 2024

There are 6 trends that Deloitte identify in their series of annual surveys on biopharma, at the top of which are market competition and generative AI.

A team of people having a meeting around a table discussing. Pink and purple gradient lens graphic in the background.
Feb 21 2024

What Are OKRs, and What Are Their 3 Elements?

OKRs are used extensively by everyone from Google and LinkedIn to Adobe and Spotify, and they’re made up of 3 elements.

A large cargo ship carrying containers across the ocean. Pink and purple gradient lens in the background.
Feb 20 2024

The 3 P’s of Supply Chain Management

There are three areas that efficient supply chain management depends on: Physical resources and operations, Processes and People. 

Civil engineer on a site wearing a high visibility jacket looking at a construction site with a yellow crane. A pink and purple lens icon in the background.
Jan 25 2024

Document Management for Enterprise Organizations: 3 Crucial Areas

There are 3 areas where reliable document management is crucial for enterprise organizations, regardless of the industry.

Human and robot fingertips touch and lightbulb lights up.
Jan 10 2024

AI and Project Management

AI is transforming project management and is changing how PMs operate on three levels: automation, assistance and augmentation.

A man is conducting a meeting with his team in an office.
Jan 09 2024

Change Management: The Key to Digital Transformation

Successful digital transformation depends on two factors; the technology you invest in, and the change management program you devise for your workforce.

Man and a woman wearing glasses discussing work in an office. Both looking at an iPad.
Jan 03 2024

What is Earned Value Management (EVM) and How Does it Work?

Earned Value Management (EVM) is a project management methodology that enables you to integrate scope, cost and schedule.

4 people having a meeting in an office
Dec 06 2023

Project Controls: Deliver Projects on Time and Budget

Project Controls are a set tools that allow you to track costs and schedule to ensure your project comes in on time and on budget.