What Is an Enterprise Resource Planning System (ERP)?
ERP, at its core, is a business application that automates development process, provides insight and controls internally utilizing a central database gathered information from departments like Accounting, Manufacturing, Supply Chain Management, Sales team Marketing Human Resources (HR).
Every business requires multiple stakeholders with distinct responsibilities to complete tasks that must be accomplished.
Making decisions and carrying out internal processes efficiently becomes challenging when information is scattered among various systems; employees may have trouble accessing needed data if its spread across systems; accounting/FP&A might track expenses using separate spreadsheets that dont make the information readily accessible.
Maintaining an effective team can be daunting when so many disparate data sources exist. Collaboration becomes impossible while efficiency suffers as employees waste valuable time searching for information or duplicate work because they cannot locate one location that houses all current information on their business.
Furthermore, understanding the cause-and-impact of changes affecting your company becomes impossible.
An ERP system offers the solution. By consolidating information in one database that gives managers and staff cross-departmental access, an ERP system eliminates problems caused by disparate sources while enabling analysis, process improvements, efficiency gains and cost reduction as employees spend less time searching for information.
Consequently, employees spend less time looking for data, which leads to improved productivity as employees spend less time searching.
ERP systems tailored specifically to a company can reap huge dividends for any size business across any industry and size range.
ERP has long been used by some of the most acclaimed and successful organizations over the last 25 years. This software comes in different configurations to fit any size organizations requirements.
What Are The Importance Of ERP For Businesses?
ERP systems have become essential tools in any successful organization that wants to maximize its resources efficiently and save money without compromising quality.
Leaders can utilize ERP to reallocate funds or reduce core process inefficiencies allowing for reduced expenses with improved processes resulting in money savings without compromising quality or service levels.
ERP can aid planning and coordination by providing employees with tools to compare current inventory levels with forecasted demand, so adjustments may need to be made if there are discrepancies between demand projections and supply demands.
Collaboration and communication improve significantly thanks to ERPs, as employees can monitor department status to make more informed decisions.
ERP systems provide invaluable sources of information, but they also deliver analytical reports which could make a meaningful difference for your business.
ERPs transform large amounts of data into graphs and charts, serving as predictive tools and highlighting trends within an organizations operations.
How Does An ERP Work?
ERPs employ a standardized data structure; everyone is aligned when the information entered in one area is instantly visible to all authorized users.
For instance, theres a local chain of food distributors with several locations sharing personnel and stock; whenever quality, employee, and sales data enter an ERP system from these multiple sites simultaneously, the format will change to identify its origin site.
Real-time data will then become an integral component of all departments business workflows and processes, giving leaders insight into which locations do better at preventing spoilage than others.
Operations will align staff levels with traffic patterns for maximum effectiveness. At the same time, Finance can assess sales/rent data to see which location may outperform others for consolidation decisions.
ERP systems can be most advantageous when they feature modules covering each of their major functions and allow for timely, accurate entries.
Access by multiple people increases overall utility.
Integrations can be established so data from different systems will flow seamlessly into an ERP system, and real-time information can be made accessible across it to improve any workflow or process.
What Can ERP Improve Or Help My Business?
ERP can assist organizations to identify areas for improvement and opportunities for expansion. Users need to embrace and utilize the system fully; more people having access increases your odds of detecting issues faster; employees can then take preventive steps against any possible issues that might arise.
Executives prioritize outcomes over information. They use it to achieve objectives such as increasing efficiency, cutting costs and meeting shifting consumer or market conditions.
ERP software designed specifically for business units can automate many error-prone processes like customer billing, account reconciliation and order processing - providing teams with the information they require to work more efficiently.
ERPs greatest strength lies in its ability to give both an overview and specific insights into one process or KPI by storing, organizing and identifying data patterns; in turn, it flags any anomalies which need further investigation, something spreadsheets cannot do.
Employees now can gain access to data anytime, anyplace: No longer searching through piles of papers on a desk! Cloud-based ERP allows warehouse supervisors and salespersons to log on from mobile phones while working within stores or visiting clients sites and check inventory levels on mobile devices while away from office desks.
Information remains current: With data flowing continuously from different departments into an ERP system, updates are immediately made whenever inventory moves, payments are posted, or emails are sent - providing decision-makers with accurate, up-to-date data that inform their decisions.
Decisions Based on Similar Information: All decision-makers can access one shared database. Companies can schedule and automatically distribute dynamic reports.
Theres no duplicative data or conflicts among sources.
Want More Information About Our Services? Talk to Our Consultants!
Who Uses ERP?
Businesses of every industry and type have seen ERPs advantages. Due to its flexibility and extensive functionality, ERP meets the needs of organizations of varying types with various organizational models; furthermore, it can also be employed across numerous jobs within these organizations.
- Accounting/Finance: Accounting teams tend to be among the first users, responsible for tracking and reporting on transactions, financial data and information contained within a system, such as accounts payable (AP), receivables (AR) as well as payroll. ERP also permits financial planners (FP&A), whether part of accounting teams or standing alone, to access consolidated data sources to produce forecast reports about cash flow, revenue or expenses using reports generated using ERPs tools.
- The supply chain: Employees focused on operations (including purchasing agents, inventory planners, warehouse managers and senior leaders in the supply chain) use ERP systems to facilitate smooth flows of goods between suppliers and customer satisfaction. ERP services provide accurate and detailed data, allowing these employees to optimize inventory management practices, prioritize orders more effectively, increase on-time deliveries by eliminating supply chain interruptions, and identify ineffective processes in real time.
- Marketing and sales: An ERP system can boost team performance and results by automating lead management and tracking interactions between prospects and your company, improving lead management processes as prospects move through your funnel, with reps recording discussions as they take place, while marketing uses this information to automate outreach across channels such as display ads, social media posts, email blasts etc.; this in turn measures effectiveness as well as allocating budget.
- HR: ERPs allow HR departments to track employee information more quickly. HR representatives can quickly locate employee contact details, benefits and compensation data for every ERP employee. HR also monitors metrics like retention rates by department or job title and promotion rates to assist line of business managers in better-allocating employees within their organizations.
Why You Need ERP
ERP was initially developed with large enterprises in mind; however, cloud SaaS ERP offerings now make this software accessible and available to emerging and midsize firms looking to enhance efficiency, visibility and profitably.
These tips can assist in your assessment of an ERP system for your business:
- Ask yourself this question: does our current technology assist or hinder? If outdated systems cause inefficiencies or disinterment in data collection or cannot support changes that a business management software needs, it may be time to upgrade or find alternative solutions.
- Your data are inaccurate if they cannot be relied upon: an extremely serious situation for which an ERP system should provide solutions. This issue must be dealt with swiftly to keep operations moving smoothly and sustainably over the years.
- Are errors cropping up in your business: like sending customers the wrong products or not fulfilling demand with purchase orders? Unified systems can help organize and streamline processes to overcome barriers to your operations and break this pattern of mistakes.
- Signs that an ERP: may be beneficial include your company relying too heavily on spreadsheets and email to collect and share important data. Because spreadsheets must be manually updated frequently, they often become out-of-date quickly, while emailing sensitive material can pose security threats while making it hard for employees to find what theyre searching for quickly.
- Lack of integration among systems: may also indicate your readiness for ERP. By gathering data directly from key functions, this system eliminates manual transferences of information and disconnections among different operations.
ERP software may seem costly at first glance; however, its return can often be swift. Furthermore, assistance is available for creating business plans.
Read More: ERP and CRM Systems Use Different Approaches to Increase Profitability
Benefits And Aspects Of ERP
An ERP system might appear straightforward -- consolidating all departments information in one common database -- but its potential upsides can be immense.
Here are 15 of the major advantages that an ERP can bring:
Data Security
ERP software has made great strides toward protecting this key resource for making sound business decisions: data.
With ERP systems like Cloud ERP systems distributing your information across numerous remote servers with different levels of security, ensuring redundancy against single database source of truth points of failure while adding another level of safety for sensitive customer experience records that must remain safe from harm, you are better positioned than ever to do just this.
ERP systems can enhance data security by restricting who can view or edit it. Most systems offer easy control of permissions to ensure employees only see the data they require and prevent fraud or criminal activities from taking place.
Data Standardization/Centralization
ERPs main advantage lies in its central storage of all department data in one convenient place, rather than being dispersed across spreadsheets and applications that make finding it harder than necessary for employees.
Furthermore, such approaches often lead to duplicity of information across formats.
An ERP can assist with this by standardizing all data in one central place - this ensures no issues with reports and analytics and allows more precise decisions that save both time and money for businesses.
Compliance
One way of minimizing workload and time savings is having accurate, up-to-date records that are easily accessible.
Our softwares customizable reporting features make monitoring compliance simple - this enables you to adjust quickly based on compliance status changes if any arise. In addition, having all this data at hand increases auditability significantly.
For an easier experience staying compliant, ERP makes staying up-to-date easier - particularly for highly regulated industries like healthcare or financial management services.
Productivity Increased
ERP systems can boost productivity in many different ways. By automating repetitive, basic tasks and freeing staff up for more valuable project management, ERPs help increase productivity exponentially.
Tasks can be completed quicker by simplifying processes and decreasing time spent searching for information - employees have full visibility across their company without needing to seek specific data or details for certain processes or functions.
With increased productivity comes less need to increase headcount; employees can focus more on developing core skills by relieving themselves from administrative work burden.
Visibility
ERP can bring wide and lasting visibility benefits for every employee in a company, providing greater understanding across every aspect of business operations and helping managers make faster, smarter decisions with all relevant information at hand.
When purchasing departments know orders in transit that have yet to arrive at the warehouse, that information can be factored into orders to prevent overstock or understock of inventory.
Visualizing processes and data managed by another team and making all contributors aware of them enables everyone to perform their duties more effectively while saving time and energy spent looking for information.
Scalability
A top ERP systems most attractive feature is its scalability; you can select only those you require now while leaving room for future expansion.
As your company changes and your team expands, adding more users wont necessitate upgrading its ERP software just because business conditions have drastically shifted since the initial deployment options of your solution.
Cloud ERP solutions offer rapid growth businesses an ideal choice when expanding quickly. Being hosted remotely allows the resources required for maintaining the system to easily scale with expanding resource needs, thus relieving IT of their workload and eliminating technical teams.
Mobility
ERP systems today must be mobile-friendly as employees have become accustomed to using smartphones and tablets instead of computers for many tasks.
Users can connect cloud-based systems through the internet so that all reports, dashboards and other necessary data is readily accessible through mobile browsers; vendor apps are designed specifically to give an improved user experience when used on smaller screens.
Mobility can be essential to certain businesses. Some firms employ employees in the field or frequently on the move that need accessing an up-to-date view of their company from devices other than computers, and having mobile ERP allows these employees to accomplish important tasks such as approvals and cash flow monitoring (AR/PA).
Cost Savings
Business intelligence leaders and owners who acquire an ERP development system usually do it to reduce overall costs, often significantly.
Automation has proven invaluable at cutting administrative expenses down significantly or eliminating them, eliminating manual data entry or lengthy paper trail processes. This software could save on costs significantly by automating them all together!
ERP systems offer incredible insight that can lead to other savings, from easily identifying higher costs via monitoring from one central point through planning enhancements that enable ERPs and prevent overproduction, rush orders or over ordering that all increase expenses; all this help prevent over production planning in terms of both time and costs, making ERPs one way of quickly increasing ROI for any organization.
Organized Workflows
Consulting an ERP expert to determine whether theres a faster or simpler method of accomplishing any given task is important to maximizing productivity and simplifying processes.
People often do things the same way because that has always been how it has been done - however, this might not always be optimal! An ERP can assist by cutting steps down, improving processes further and streamlining operations to increase speed and reduce complexity.
An ERP standardizes workflows just as effectively. As with data, each department may handle processes differently; two employees from AP may take different approaches when processing payments; ERPs should eliminate such discrepancies so everyone follows identical practices.
Real-Time Reporting
An ERP system offers one of the greatest and earliest benefits: customizable reporting across all functions. By tailoring reports specifically to all departments - Finance, order fulfillment, marketing/sales, and Human resources management -, its versatility becomes endlessly customizable to fit all its constituents unique needs.
ERP solutions enable businesses to measure any KPI that matters for themselves or their business and track different departments more closely for deeper insights into business drivers.
Real-time data is critical when creating reports. Waiting two weeks to receive revenue figures from the last quarter could prove futile as information may become obsolete or irrelevant by then.
By receiving real-time updates with each transaction, this information can be immediately used for decision-making - an essential requirement in todays hypercompetitive and fast-paced environment.
Operational Efficiency
ERP solutions increase operational efficiency across your entire organization by automating processes and providing information more readily accessible - this benefits everyone from warehouse managers to senior executives while making processes more streamlined is often beneficial both to both the business as a whole as well as its customers, leading to savings and higher profits for all involved parties.
Imagine a company producing ten different products with an average profit margin of 20%. An ERP application could help identify its lowest-profitable items, analyze the data and reveal that labor costs were higher for two of these items - staff reports showed them how the majority of work involved was manual processes and time-consuming; purchasing automation equipment eventually helped this manufacturer increase to 25% profit margin and save this business thousands each year with this ERP.
Better Customer Service
Every business competes for customers, and experience shapes customer relationship management perception of business processes performance.
An ERP enhances a companys capability of offering superior service by consolidating all information about each client, such as contact details, order histories and support cases, to allow faster, more individualized responses when customers require help.
An ERP system will also enhance your service quality by providing more precise information regarding inventory and orders so customers receive their items on time, as promised, with minimal issues or returns - making your customers happier, boosting repeat purchases, and making you more competitive overall.
Collaboration
Many of the advantages weve already discussed facilitate collaboration. It becomes much simpler when teams can see how other teams operate and what information each uses.
Staff may more quickly offer help when they recognize an opportunity. Teams no longer operate isolated islands using only apps that dont integrate with any backend system.
Employees working together more closely and communicating in tandem are the true cornerstones of company success, discovering duplicate tasks that could easily be eliminated or developing better ideas to enhance daily operations.
ERP solutions help prevent issues caused by communication gaps or a lack of awareness regarding what others do in real-time visibility.
Flexible
ERPs are created to be adaptable enough for all kinds of companies, which is why leading ERP service providers offer platforms with ample wiggle room for users to customize the system according to individual metrics or processes - this makes ERPs both complex and versatile at fulfilling different requirements simultaneously.
Flexibility is paramount as your business changes over time, enabling the system to continue working for you even if your KPIs or workflows shift.
Forecast Accuracy
Your business wont thrive if it cant anticipate what lies ahead, which makes accurate forecasting essential to its survival.
Forecasting is one way of doing just this. It involves using historical data and inputs like demand analysis to predict future demand, revenues and expenses. When combined with an ERP system, your forecasts can become even more precise due to the information being more complete and precise than ever.
Accurate forecasts allow organizations to make appropriate plans for the future. You could buy more stock if sales are expected to grow 30% or hire additional employees with the required skills of your service business.
Likewise, accurate forecasts enable an organization to make more money while cutting expenses faster - better forecasts help organizations increase revenues while simultaneously cutting expense management.
Want More Information About Our Services? Talk to Our Consultants!
ERP: How To Get Started
If you are concerned that your current software solution is hindering your business growth or that the systems you have in place do not work together, then it may be time to invest in an ERP system.
Small businesses will find it especially helpful that they dont need to invest in the entire system at once. Start small, then grow as your business develops.
It is a smart thing to first consider your needs as a small company and the issues that you need the ERP to address.
You can make a list of all the features that you need and then be alert to those that you dont. This will allow you to avoid being sold a system that doesnt fit your needs. You can then get quotes, review and request demos of software to get a better idea of what is available.
It is important to remember that the implementation process of an ERP system requires staff training and testing. Its worth it if you do your research and choose the right package.
