Imagine enterprise resource planning (aka ERP) as a slice of pizza. Each piece represents a set of modules for a particular company department. ERP software is popular because it can be used in multiple fields. Vendors also offer ERP that is tailored for specific operations and industries.
The guide includes information on ERPs, their history, benefits, features, and deployment options. It also covers industry trends and cost considerations.
What is ERP?
ERP systems consist of modules and functions for multiple company departments or focus on a single area. The departments include accounting, manufacturing, customer relationship, and supply chain management. ERP is an acronym for enterprise resource management.
There's another part to this definition of ERP. ERP integrates with other software solutions to keep your data in a central location. The system automates routine tasks so that you can concentrate on your most important responsibilities.
Enterprise resource planning systems are applications that integrate management, automation, and connectivity for crucial business processes.
It is elaborated on the centralization of ERP that-
"In addition to the comments you made about utilizing a central database to simplify processes and reduce manual work, it's important to remember that a central database allows for consistency and reliability of business operations, as well as reliable service levels to clients."
The History of ERP in Brief
Since the 1960s, enterprise resource planning (ERP) software has been available. This is a timeline that shows the evolution of ERP from its earliest stages up to today.
- The 60s: ERP methods evolved to automated ERP systems that began popping up in the 1960s to respond to the expanding factory industry.
- In 1972: SAP launched its first real-time processing solution. Technology improved in the following two decades, and ERP increased in popularity.
- The 1990s: As ERP adoption increased into the 21st century. Vendors were forced to adjust due to the rise of the Internet, and cloud ERP systems came about.
- Cloud computing is the dominant delivery model for enterprise resource planning today. Users can leverage the system's capabilities while on the go with mobile apps.
What is ERP?
Enterprise resource planning systems use a central database to streamline existing workflows and reduce the amount of manual work. A typical ERP contains dashboards allowing users to review data from all company areas in real-time. This will enable them to assess productivity and profitability.
SCM solutions can, for example, receive an order from a client and send it automatically to the distributor so that they can fulfill the order quickly. You may have noticed this technology's results if you've seen that the return address on your vendor packages differs every time.
The ERP solution you choose may consider inventory, shipping times, and many others to determine which distribution centers can fulfill an order quickly and efficiently.
Without ERP, data from departments are isolated, and company-wide accessibility problems occur. A centrally located enterprise resource management system allows multiple departments to visualize and share business data.
The wealth of data and the simplification of tasks can help achieve business goals.
It is emphasized:
It is crucial to know how ERP works. One of the key benefits of ERP is that it provides a single, unified source of truth or information. One of the main reasons clients choose to upgrade to ERP systems is that they don't have to deal with disparate data sets. Instead, an ERP system unites all users on one source.
ERP Benefits
There are many advantages and drawbacks to enterprise resource planning. The following are a few benefits of having an ERP system.
- Improves Business Reporting: Creates several reports and files required to manage orders and KPIs.
- Improves Customer Relationships: Use standalone CRM software or modules equipped with it to track client satisfaction levels, retention rates, and other information to enhance the relationship between current and potential consumers.
- Savings: Automating repetitive tasks, as mentioned above, allows you to focus more on your other work. The new focus increases productivity, revenue and saves time and money.
- Cloud Security and Real-time Data: Get real-time information on KPIs and inventory. When you choose cloud software, vendors offer a variety of security measures to protect your information. These include multi-factor authentication and user access level, encryption, etc.
- Productivity Boost: Improve efficiency by automating tasks and real-time information to identify and resolve workflow bottlenecks.
- Increases Collaboration: Use an enterprise resource management system to improve internal communication with stakeholders, leaders, and teammates.
- Compliances: Keep up with local and international industry standards and regulations, such as FDA, ISO, and others, to prevent immediate shutdowns of businesses or lawsuits.
Who Uses ERP?
Software providers tailor ERPs to meet specific industry needs. The software providers customize ERPs for particular industries. Some of the most common sectors are:
- Buy it Now
- Manufacturers
- Pharmaceutical
- Distribution
- The Technology
- Hotel Accommodation
- The Construction of the Building
- Aerospace and Defense
You can customize or configure the software to fit your needs, depending on who you are buying it from. Many pharmaceutical companies use ERP to monitor legal regulations. They can then update their workflow.
A platform that includes tools for distribution and manufacturing is another example of ERP tools tailored to specific industries. These functionalities require less customization or configuration to run the system.
We've already learned about ERP, including its origin, benefits, and how it functions. We'll now get more technical and introduce ERP features.
Why You Need ERP
While ERP software was initially developed for enterprises, as the name implies, today's cloud-based software-as-a-service (SaaS) ERP products have lowered entry barriers and enabled countless emerging and midsize businesses to boost their productivity, visibility, and, ultimately, profitability.
These tips will help you decide if an ERP system is right for your business:
- Ask yourself: Does our current technology help us or hinder us? Suppose outdated systems cause inefficiencies or muddle data or can't accommodate the changes the company wants. In that case, it is time to find a better solution.
- A new or first ERP system is needed if your data are inaccurate. You can only rely on the data you have if it's reliable. This is a significant problem.
- Do you have a pattern of errors, such as sending the wrong products to customers or not matching your purchase orders with demand? Unified systems can help you organize and streamline your processes, reducing these barriers.
- Another sign that you require ERP is a heavy reliance on spreadsheets and email to collect and share important information. Because spreadsheets are updated manually and frequently, they often need to be updated. Emailing sensitive information can be a security risk and make locating what you are looking for hard.
- A lack of integration between systems can also indicate that you are ready for ERP. By pulling data from critical functions, the system eliminates manual information transfers and erratic connections.
You can expect a rapid return on your investment, even though ERP software is expensive. There's also help for anyone looking to create a business plan.
The Key Features
ERP is a system that offers a wide range of features. The central idea of ERPs is how these modules work together to provide actionable insight and perform various business functions. It's essential to check if the vendor offers the features you need to optimize your business.
Modules can be added to your existing enterprise resource planning software. Add-ons help you determine whether you require a brand-new system or need additional functionality for specific business requirements. Some vendors offer modular applications, so you don't have to select a plan with "core" features you do not need. Employees brought up the issue of modularity.
The modularity of the software and its ability to be configured allows small companies to gradually integrate ERP while still allowing them to scale up to meet their needs.
ERP standard features include everything from HR and automation to CRM and accounting.
Accounting
You are reducing the time your accountants spend doing tedious tasks such as manually entering receipt information into expense reports. You can send automatic invoices with an integrated and automated accounting system to customers with outstanding debts. The system uses the customer's history to retrieve the contact details and amount due before billing the client.
The module can also forecast revenue potential by analyzing operating costs. Your ERP can be integrated with payroll software to manage employee payments.
Human Resources
The best HR software allows you to manage candidate applications, PTO, bonuses, and other tasks.
Integrating your HR system into your accounting software is a great way to automate the reimbursement of employees at the end of the year for any PTO that was left over. The function automatically looks at the excess PTO for all employees in your company. It calculates how much you owe and uses employee bank information to make payments.
CRM
CRM software helps you to improve customer relations and provide a seamless experience. The module analyzes the customer's browsing history and purchases to deliver targeted advertisements for products that they find appealing. This module can keep the customer informed about their order status.
Imagine the Domino's screen showing you where your food is cooking. Buyers appreciate updates on their purchase status as they indicate legitimacy and good customer service.
Integration
Your company already has software that it uses in daily operations. ERP integration allows your company to holistically integrate your existing software and your new ERP.
If you are looking for ERP integration options, look at the products offered by potential vendors. Customizable options allow for specific features and capabilities to be added to the code. Software personalization is possible without any coding.
It is more difficult to customize than it is to implement configurations. You may choose a customized solution or a configurable one depending on the IT resources you have.
Integrations in ERP often fail because of a lack of planning, budgeting, and a strategy for IT resource allocation. Create goals to help you achieve successful integrations. Also, use foresight in analyzing the solution options.
Ask yourself: "Can I afford to buy the enterprise resource planning base system with all the features I require?" If you can't, consider lower-cost alternatives, additional modules, or delays in ERP implementation.
Automation
Automating repetitive tasks can save time and money while increasing productivity.
You could, for example, own a bakery that delivers on demand. You can use your ERP to track inventory, orders, and recipes. The system will also perform bank reconciliations, allocate invoices and ensure that transactions are accurate.
Data Analysis
You can monitor all performance metrics and KPIs in real-time using business intelligence tools (BI) or business analytics tools (BA). If you're interested in knowing the current delivery rate for your bakery, then reports and dashboards are available. You can monitor obstacles in your supply chain, production floor, or inventory to rectify them quickly.
Reporting
You can create various documents, such as profit and loss statements, turnover rates for employees, projected and actual budgets, and more, by investing in reporting software.
This module offers several outstanding features.
- Tables
- Infographics
- Formatting
- Live Updates
- Themes
- Invoices
- Metric Reports
Sales and Marketing
Maintaining a sales department or marketing department is a challenging task. It takes work to maintain a sales or marketing department. Also, you want to tell if your advertising is reaching the correct audience. Marketing automation software (MA) is a way to monitor these strategies and others.
The following are some outstanding features to search for:
- Landing pages
- Lead Management
- Campaign Management
- Lead Scoring
- Email Marking
- The CRM Integration
Supply Chain Management
SCM allows you to monitor every facet of your supply chain. Vendors can be rated to see if they fit your business best. Imagine you are running a bakery and notice that some of your products need to reach customers promptly or you need certain goods along specific routes. You can use supply chain analysis to determine if distributors are stealing from you.
Consider the following when purchasing this accessory:
- Warehouse Management
- Transport Management
- Collaboration
- Order processing
- Inventory Management
We'll now explain ERP deployment. When selecting an ERP, you must also consider the deployment method.
Read More: Steps to follow before implementing ERP system in your organization
The Deployment of ERP
You can choose between on-premises, hybrid, or cloud deployment of your Enterprise Resource Planning system. Many vendors are moving to only cloud-based solutions. The shift in ERP is a response to the ever-increasing need for SaaS and cloud ERP.
On-premise ERP
This deployment method can be installed directly on company hardware and servers. You must also host your ERP and perform updates and maintenance if necessary. On-premise is the best choice if you only have one or two locations.
Cloud ERP
This deployment method is hosted on third-party servers by vendors, allowing you to access any time via an internet connection. A cloud-based provider is typically responsible for updating the system and handling maintenance. Cloud-based hosting and deployment options are available in a wide range.
- SaaS (software-as-a-service) ERP: A subscription-based option, meaning you pay a monthly fee depending on the number of users you have.
- Private Cloud: Hosted in your data center or by a third-party service provider.
- Public Cloud: Managed and provided by cloud service providers on the Internet.
Cloud ERP has several benefits. Users can use the cloud ERP system from any device, anywhere, anytime. It can be simple infrastructures.
The cloud vendors regularly distribute maintenance and updates so that the system remains current. Cloud ERP systems are easy to use and save users time and money.
Hybrid ERP
The combination of on-premise and cloud deployments allows you to customize your ERP experience. You can choose the best option for your business, whether you need to be able to access your data from anywhere using your smartphone or tablet or if you prefer the HQ server.
ERP Trends
Many people need help to invest in the latest technological developments. Some people fear that they must learn how to understand specific trends or that the equipment doesn't match their needs. Don't invest in new technologies. Not all technologies will fit your needs, such as an ERP system. Find mechanisms that are in line with your business practices.
Personalization
Since its inception, ERP has evolved. ERP was initially used by the manufacturing sector with software for material requirements planning. The solution then evolved into a platform that can be used for all industries, with modules such as accounting, CRM, and distribution.
The all-in-one model is ideal for large enterprises. Still, it could be more suitable for smaller companies or those catering to specific industries. Vendors began offering various solutions, which you could customize to meet your needs. You want to be able to customize your solution.
Artificial Intelligence
AI is a part of our daily lives, whether we like it or not. AI is listening when you ask Google or Alexa for the weather, order pizza, or give directions to your nearest grocery store.
Why not use AI to improve your business or ERP? Accounting and manufacturing are already dominated by this trend, which automates routine tasks such as sending invoices or balancing ledgers. ReportLinker predicts that the AI market will reach $341.4 Billion in 2027.
Mobility
You can access your ERP from phones, tablets, and other mobile devices to stay up-to-date on production, profit, KPIs, and issues. You can access your ERP on any device as long as it has a good internet connection.
3D printing
Finally, 3D printing allows manufacturers to produce exclusive items or pieces of work in hours, days, or even minutes instead of months. This increases productivity by a factor of ten. You can also cut down on waste.
Costs and Purchasing Considerations
The cost of an ERP is affected by many factors, including the number and type of users, deployment options, size, scope, and other considerations.
What is Your Desired Number of Users?
Who will use the enterprise resource planning system? Do you want to leave it solely to the IT staff, or will you let your department heads use it? More users mean higher prices. You can determine the total cost of ownership by defining your user range.
Are You Looking For An Upgrade Or A Brand-New System?
The answer to this question will determine whether you choose an ERP system. You can ask yourself this question: What would you do if the icemaker in your fridge stopped working and you could not fix it? Would you buy a brand new ice maker or replace the whole refrigerator? Depends. You can integrate PLM with an ERP system that includes manufacturing, CRM, SCM, and accounting.
Consider a new ERP system if your existing system is outdated or the vendor does not provide updates.
What Is The Size Of Your Company?
Do you run a corner store with a few locations, or are you a large global company? Do you plan to expand or downsize your business in the next 5-10 years or downsize your business?
ERPs are no longer based on a single infrastructure. Ask vendors whether their software is suitable for small and mid-sized businesses. You can find scalable solutions to grow our business as we add more staff and equipment.
What is the Best Option for You?
You can select a hybrid, on-premise, or cloud deployment. Cloud solutions usually offer subscriptions, while on-premise solutions are more expensive. Hybrid solutions can vary in price depending on who you buy them from. Your TCO can be positively affected by knowing your deployment.
What is Your Budget?
What is your budget for an ERP? A new ERP is like buying a car or appliance. It may be necessary to make a significant investment, but the return will pay off in time. Some solutions cost $100 to several hundred, depending on vendor, modules, and implementation.
ERP Software Selection Guide
You'll find a variety of methods and steps for ensuring a smooth selection process if you search ERP software tips on Google. There may be 12 or five steps here, as well as 100 mistakes to avoid when selecting the suitable ERP.
Lean Selection is a nine-step method. This method helps you to understand that selecting software is an analytical, collaborative process.
This is a quick overview of the Lean Selection Process and how to use it to help your business find the best ERP solution.
- Determine: Question yourself as to why you require a solution. Do you need to meet productivity targets? Do repetitive tasks cause you to lose production time? The first step in finding solutions is to admit your problem.
- Work together: Create a committee for software selection to understand the needs of your business in terms of functionality and deployment. Gather department leaders (accounting, marketing, CRM, etc. Colleagues, external and internal stakeholders, key users, and others. In the end, having more than one head is better.
- Define: List and rank the most important requirements with your committee. Let everyone have their say.
- Share: Comparing potential vendors to your list of requirements will help you evaluate their suitability.
- Justify: Consider: Do you want to buy a brand-new system? Or are you looking for add-ons or upgrades for your existing system?
- Prove: You can contact potential vendors to establish demonstrations, proofs-of-concept (POCs), or use cases. The POC is a simulation of a system user's experience. However, it can be more costly.
- Classify: Rate vendors according to how their software meets your requirements. You're more likely to select a vendor if you give them a higher score.
- Negotiate: After analyzing your demo score and ranking list, meet with the ideal vendor you've chosen (note that you should be able to identify at least two to three vendors you would like to work with) and review their agreements and contracts. If the contract feels sketchy, have your legal team look at it. You can repeat the process if you disagree with the contract.
- Sign: Develop an implementation plan when you have agreed on a vendor and signed the contract.
Implementation Steps
Implementations often go wrong when they exceed budgets, lack the correct team, or people have unrealistic expectations. To establish your strategy, meeting with both the vendors and the internal team is essential.
- Create a Budget: Establish a reasonable budget. Budget some extra money in case of delays or unforeseen expenses.
- Data Migration: Make sure you migrate all your important data into this solution. A mistake could lead to inaccurate information about your company's finances, inventory, etc.
- Start Training: Train your users and make sure they are familiar with the system. Vendors may offer reading materials, training guides, and helpful tips to assist your company in learning and utilizing the system. The training process can take a lot of time, but the ROI will be higher once you are accustomed to it.
- Test the System: Run system tests to ensure modules perform at their best. This is also the time to verify that your system integrations are working correctly and can be used in routine workflows.
- Perform Post-go-live Tasks: Launch and evaluate your system. Examine employee productivity, customer satisfaction levels, and other important KPIs.
Move Forward
ERP software solutions have become a popular solution for many businesses to streamline processes. Numerous customization and configuration features allow you to tailor your solution to meet your needs and to work with existing systems. Please review our detailed comparison guide for more information on ERP modules and solutions.
ERP is a system that integrates all business operations into a single, integrated management tool. Companies can plan better and better allocate their resources with a clearer view. Companies tend to work in isolation without ERP. Each department uses its system.
ERP systems encourage the flow of information and knowledge within an organization. They also integrate systems to improve productivity and efficiency and increase synergies between teams and departments. However, moving to an ERP will prove counterproductive if the organization's culture adapts to the changes and examines how its structure can support the system.
