With the word ERP appearing in most conversations about business, companies not using it are forced to ask the questions: “What is ERP, and How Can It Help?” With the market becoming increasingly competitive by the day, companies must discover ways to excel or face falling behind. It’s here that ERP solutions help companies adapt, scale, and utilize finances efficiently.
This blog covers ERP software and guides businesses on how to select and utilize it efficiently to amplify business operations and management.
An ERP isn’t actually a single application; it’s a collection of them. An ERP merges numerous apps or modules so they work together in one system.
ERP stands for Enterprise Resource Planning, a tool used to deploy the vision of Enterprise Resource Management (ERM).
This collection of applications working under one system helps companies manage operations efficiently. It brings together all critical business components, enabling business heads to access data together and make better decisions.
Typically, ERP solutions connect the critical areas of a business like Finance, Marketing, Human Resources, Procurement, Sales, Compliance, and more. However, modern-day enterprises can stretch their ERP to contain between 30 and 40 submodules.
Businesses looking to facilitate faster, smarter, data-driven decision-making will look to unify core business functions under a unified platform.
Understanding the presence of each component is essential for creating an effective platform that aids decision-making, facilitates collaboration, and delivers real-time data for insightful actions.
This financial module is central to most departments, making it the first module to be added to a new ERP system. This enables business heads to unify finance and accounting data and track finance inflows and outflows.
The CRM module is tasked with storing the history of every interaction between the company and current or potential customers. It makes various data, such as contact information, support queries, and purchase history, available to business departments such as sales and marketing.
The SCM component details information related to activities in inventory tracking, procurement, and delivery. This module allows management to have insight into the passage of manufactured products and raw materials.
The manufacturing and logistics modules will cover all areas of developing goods based on market and demand monitoring. It enables planning through predictive analytics that pick up trends before their effects become evident.
The role of inventory in enterprise resource management and the broader ERP system is to track stock levels across locations and their movement throughout the supply chain. For product-based companies, the presence of the inventory module in ERP will ensure the availability of adequate stock and lower holding costs through expert forecasting.
Incorporation of the human resources component will unify all workforce data. This includes data about the workforce, attendance, recruitment, performance reviews, and payroll, reducing reliance on paper-based management or assorted spreadsheets.
The purpose of an ERP is to facilitate decision-making and ensure enhanced operational efficiency. The best way to achieve this is by pooling data into a unified dashboard where various departments can access and utilize. ERP solutions also aid in ensuring the accuracy of data by, in most cases, automating the tedious tasks that would manually lead to errors.
Ideally, companies would select the modules most valuable to their business before connecting them to a unified database of data from each module. All data and metrics collected can be compared from various sources, making it possible to generate reports quickly and extract insights easily before proceeding with particular decisions.
Companies of all sizes utilize enterprise planning software to aid in business management and growth. Here’s a closer look at the specific perks of using ERP and why your business should be using it.
By collecting data from all business departments, leaders can make adjustments that lead to higher cost savings. The unified data can be used to cut wastage and improve efficiency, making it possible to save money in almost every area.
The unification of platforms to centralize data will give businesses a single, trustworthy data source. It brings data directly from trusted business applications straight to the ERP, allowing decision-making to directly connect to accounting, inventory, marketing, or manufacturing.
Easy access to data facilitates the generation of reports that facilitate adherence to compliance and audit requirements. Modern ERP software is capable of alerting businesses to irregularities that point to fraud. These solutions come with active transparency features, such as access controls, to mitigate everyday risks.
Businesses are more capable of scaling when they have an ERP, as it ensures a faster and less complicated process. Also, more insight is available to back scaling when accurate, well-organized data is available.
Businesses with an ERP generally perform better and make it easier for individuals in managerial positions to make informed decisions that benefit the company.
There are various types of enterprise resource planning systems, which can be divided based on their size and deployment type. We’ll cover them based on size and deployment types, exploring the subtypes.
Any business seeking enterprise planning software can opt for one based on its business size. Based on this, there are three ERP options available as follows:
The top-level ERP solutions cater to companies with a valuation in the billions and employ thousands of staff.
Enterprise ERP is among the most complex business software systems, which has various modules and is customized to facilitate operations management.
The intermediary midmarket definition varies, but it is generally used to describe companies settling between enterprise and small-scale businesses. These companies employ hundreds of employees and earn a cumulative revenue between a billion and tens of millions.
These solutions offer customization, enabling mid-sized companies to create a suitable base for their operations.
These smaller companies require an entry-level ERP that covers the basics. It’s ideal for startups that are growing and want to move away from paper-based or spreadsheet data recording.
ERP deployment is possible using three main types of deployment: cloud-based, on-premises, or hybrid.
This ERP system is connected to an external cloud maintained by a vendor who offers the ERP as a service. Businesses can access the ERP system conveniently using the internet and any web browser. Cloud-based ERPs aren’t just cost-efficient; they are flexible and lack the need for multiple connectors.
The on-premises ERP deployment option witnesses hosting of the ERP on the organization’s resources. The company must accommodate the stringent requirements needed to power a self-hosted ERP. Higher setup and maintenance costs accompany this deployment type, but it affords the company greater control and security.
Fusing elements from cloud and on-premises deployment, the hybrid ERP is an intermediary between the two deployment models. Sensitive elements are kept on-premises, while less necessary functions are controlled in the cloud. Companies may prefer this option because it gives them control over their sensitive data while also giving them the flexibility of the cloud.
There are many subtle signs that your business could be growing increasingly eligible for ERP software. Acknowledging these signs is crucial to putting your business on a better path to efficiency and compliance. Some of the noticeable signs showing the need for an advanced solution like an ERP are:
These points signal that a change is necessary to avoid errors and inefficiencies.
Enterprise resource planning systems are not just essential for large businesses. They are also crucial for small to medium companies operating in specialized sectors such as those listed below.
Before making a selection and proceeding to ERP system integration, businesses must ensure they have the best features. If you’re new to ERP software and don’t know what this looks like, here are some features to take note of.
With the number of ERP software expanding every year, companies find themselves in a dilemma when it comes time to select one. Guiding steps like the ones below will help you identify what your business needs and how to back your ERP selection.
Understanding the potential challenges a company could face during implementation is vital. Having this foresight gives companies the insight to address the issues before they prove damaging.
Are you ready to do away with multiple spreadsheets to connect all your applications to one database?
1. What is ERP, and what is its function?
It’s a unified system that creates a database wherein various modules direct their data. This unified platform facilitates cross-departmental collaboration, which stores accurate and easily accessible company data.
2. How much time is required to implement an ERP?
Although this time frame varies based on the planning, ERP solution, and the company’s approach, a few months is usually adequate. In some cases, ERP system implementation is complicated and takes more time, even surpassing a year!
3. Is it possible to customize an ERP system?
The varying needs of businesses in various industries mean almost every ERP is customizable based on your specific needs.
