Is Enterprise resource planning software worth the investment? You need to evaluate the benefits of ERP and how they stack up against each other.
An ERP system is an excellent option for small businesses just starting to look into it. An ERP system is a central database that can provide valuable reporting and many ways to improve productivity and reduce costs within your company.
These are just a few reasons to invest in ERP. But we can help you understand the potential benefits for your business model. What new capabilities will the system offer your business intelligence? How will technology help to lower costs and promote growth? We can help you by describing the benefits ERP offers to your business functions.
No matter how big or small your company size is, cloud-based ERP systems can bring many benefits to your company. Enterprise resource planning (ERP), a flexible application suite, allows midsize businesses to integrate and manage their most essential processes. While ERP offers many benefits, it can be challenging. ERP also has its drawbacks.
What is ERP?
Enterprise Resource Planning solutions are important to the success of many businesses. ERP software vendors and procedures plan and control all aspects of an organization's supply chain management, manufacturing, project management, service, financial statements, and other manual processes.
ERP can significantly streamline an organization's operations by automating functions like accounting, procurement, customer relationship management, risk management, financial management, human capital management, tax management, compliance, and supply chain operations.
A business unit can use one ERP application. However, an ERP suite connects all aspects of the company and allows for better communication and data collection. ERP systems today enable collaboration and digital solutions that allow for effective connections with external partners, such as customers, suppliers, and financial institutions.
How ERP Systems Work
ERP software systems, in its most basic form, is a tool that consolidates company information, automates routine tasks, and simplifies business processes. This tool aims to improve operations and allow employees to focus on more natural tasks. These goals can result in increased revenue margins, efficiencies, and enhanced communication throughout the company.
ERP software is unique in that it covers many aspects of a company. It is an integrated cloud-based solution that serves all departments.
- Accounting (asset management, cash management)
- Customer Relationship Management (CRM).
- Inventory Management
- Human Resources management
- Analytics / Reporting
- Warehouse management
Next, we'll discuss some common myths regarding ERP software selection.
Myths About Software Selection
Let's look at some facts before starting your ERP selection project.
The Most Important Factor Should Be the Cost
An ERP system that meets all your needs now and in the future is the best. There may be more affordable options. The system's overall cost over time will determine your return on investment. This can be an advantage of ERP.
The IT Department Should Manage the Selection
The ERP selection team should include stakeholders from all areas of your core business processes and your IT department. It would be best if you also spoke with the person who will be using the software every day. You should pay close attention to their wants and needs. Their ability to use the software will determine if it is a success or failure. ERP is more than just for your IT department.
Consultants Should Manage The Selection
Consultants should not be considered as a replacement for the internal teams that work with your systems. Consultants will have a better understanding of the software market and your industry. Your employees are still crucial in ensuring a successful ERP project selection.
The More Functional, The Better
Streamlining operations can make many organizations more productive. premises Software with a multitude of capabilities is not the answer. Instead, focus on your business's specific needs rather than software with many capabilities.
Contacting a Vendor Ends The Research Phase
Although your ERP cloud software selection may look great on paper, you will need something else to meet your needs. Before you contact a software provider or sign any long-term agreement, it's a good idea for your company to see the software in action. Failed ERP implementations and buyer's remorse are all too standard.
Although the concept of an ERP system is basic, it integrates all departments and their information into a single system. However, the benefits can be vast. These are 15 benefits that an ERP system can offer:
Data Security: Because data is so essential to businesses, ERP Software can help protect it. This improves security by ensuring that all data is stored in a single area rather than scattered over multiple systems with varying levels of security. It replaces spreadsheets, documents, and other files stored on employees' computers and sent around via email.
A cloud ERP solution allows you to share your data over numerous servers, creating redundancy and avoiding single points of failure. This adds another layer of security. This is particularly important if you have sensitive customer information. An ERP system can also improve data security by limiting who has access to and edits data. Many systems enable employees to examine only the information they require, reducing fraud and other illicit behaviors.
Standardized/Centralized Data: ERP is an excellent tool because all information from different departments can be stored in one place. This explains a lot of the importance of ERP. If data is scattered across the organization in various spreadsheets and applications, staff will find it challenging to locate what they seek.
This approach can also lead to duplicate data and inconsistent formats, creating more problems. An ERP system can help you standardize your data. It's all in one place to run reports and analytics without any issues. Standardized information makes it easier to obtain all the insight you need to make informed decisions that will help your business save time and money.
Compliance: It is possible to reduce the amount of work required to adhere to any regulations by having accurate and up-to-date records. The software includes customisable reporting capabilities that make it simple to check compliance and make any adjustments. You are also more auditable because you have all the information an auditor may need.
Some ERP systems can support specific financial standards, such as GAAP, or regulations like Sarbanes-Oxley Act (SOX). So you can remain compliant, the best ERP systems will automatically update to reflect any new rules. ERP makes compliance more straightforward, especially for those in highly regulated industries.
Higher Productivity: An ERP system can provide a significant boost in productivity in many ways. An ERP system automates repetitive, essential tasks and frees employees up to focus on projects that add more value to the company. They can complete many tasks quicker by simplifying processes and decreasing the time spent looking for the required information. Employees have complete visibility into the company, so they don't need to search for specific data or details about certain processes.
You don't need to hire as frequently as you would without an ERP platform. This increases productivity. Employees can now focus on the tasks most relevant to their skills and expertise by removing significant work from their plates.
Visibility: Another benefit of ERP is visibility. Everyone has access to all aspects of the business requirements, which is powerful. Because managers have all the relevant context, they can make faster and more informed decisions. To avoid stock shortages or excesses, the purchasing team could see the status of any in-transit order purchase orders.
All teams and contributors can see the status of data and processes managed by other groups. This helps them do their jobs more effectively. This eliminates the need to search for this information and saves time.
Scalability: You are leading ERP systems to have the advantage of allowing you to use only the functionality you require right now while still allowing you to expand your capabilities later. The system can grow and change with your business applications. As your team grows, you can add users. You don't have to buy a new ERP system because your business decisions have changed significantly since the original one was implemented.
A cloud-based ERP system is the best option for businesses with rapid growth plans. Cloud systems are hosted on remote servers, so adding additional resources is easy to ensure the system runs smoothly. This is far more convenient than managing that task yourself. This decreases IT effort and the demand for technical professionals.
Mobility: Many employees are now more comfortable using their smartphones and tablets to accomplish many tasks. ERP cloud solutions systems today are mobile-friendly. Users can access cloud systems online to view all reports, dashboards, and other information from their mobile browsers. Many suppliers also provide mobile apps that are optimized for smaller screens. Mobility isn't just a desirable thing, and it's a necessity for some Mid - Size businesses.
Some companies have employees that travel often and may have field workers or employees who need to see the most current view of their business activity from devices other than computers. These staff may manage crucial duties such as approvals and cash flow monitoring using a mobile-friendly ERP system (AR and AP).
Cost Savings: Business owners and business leaders find the best reason to invest in an ERP system is its ability to lower overall costs. This is often a significant benefit. As we have already mentioned, automation can help reduce administrative and operational costs. This software often eliminates manual data entry and processes that require lengthy paper trails.
This software provides a wealth of information that can help you save money. You can quickly identify higher costs by monitoring the entire organization from one location. This makes it easier to cut costs. An ERP system can also improve planning, preventing over-production and rush orders that can lead to higher prices. An ERP system can help you reduce upfront costs in many ways. As a result, they frequently have a quick ROI.
Organized Workflows: It's wise to consult an expert when you're going through ERP implementation. They can assist you in evaluating your procedures and determining whether there is a better method. Work is often done in a particular way because it's what it has been done for years. Not because it's the best. An ERP can make things easier and faster by reducing steps and making improvements.
An ERP standardizes data and workflows, much like it standardizes data. One department's approach to a procedure may differ from another's. For example, two employees in the AP department might follow additional steps for making payments. An ERP system may remove these inconsistencies by ensuring that everyone follows the same best practices.
Real-time Reporting: The most significant and immediate benefit of an ERP system is reporting. You can customize reporting across all functions, including finance, inventory and orders, procurement, sales, marketing, HR, and any other position you may have in mind. An ERP solution can calculate any KPIs you need to measure or determine the most important for your company. An ERP Solution can track and compare the performance of various components of your business to see what is driving it forward and what is holding it back.
Accurate time data is essential for ensuring your reports reflect the most recent information. Waiting two weeks for revenue figures from the prior quarter is pointless. The information may need to be updated and relevant. If revenue totals are updated in real-time data with each sale, you can use them immediately to guide your decision-making. This is crucial in today's hyper-competitive, fast-paced environment.
Operational Efficiency: Because it covers every aspect of your business operations, an ERP solution can increase efficiency in your company. Utilizing ERP technologies to promote efficiency and information availability benefits everyone, from warehouse managers to recruiters to top executives. This reduces the time required for processes, which can often benefit both the organization and its customers. This can help reduce operating costs and increase profits.
Imagine a manufacturer producing ten products with a 20% average profit margin. An ERP system allows the company to quickly identify the least profitable products and then analyze the data to determine that labor costs are higher for those items.
The company learns from its employees that most of the work involved in making these items is manual and takes a lot of time. The manufacturer decides to buy machinery that automates the production of these goods. Its average profit margin rises to 25%. The ERP software saved the company hundreds of thousands each year.
Customer Service: Every business competes with others for customers. It is why customer experience is so important. A lot of it is determined by the quality of customer service a company provides. ERPs help companies improve their customer service. It stores all customer information, including contact details, order history, and support cases. This allows for faster solutions and more personal service when customers need it.
An ERP system can also improve your service level. Customers will receive the correct items almost constantly, and their orders will arrive on time. These issues can be minimized and customers will be happier, increasing their likelihood of becoming repeat customers.
Collaboration: Many of the same benefits that we have already mentioned facilitate collaboration. It's much easier for employees to see how other teams work and the information they are looking at to collaborate and to reach out to colleagues when they see an opportunity. Teams no longer operate independently and use applications they only have access to, which aren't compatible with another back-end system.
The entire company benefits when employees communicate more often and work together. They may discover duplicate work and develop better ways to manage daily tasks. An ERP solution can prevent problems arising from poor communication or ignorance of the work of others.
Flexibility: Companies of any size can use ERP platforms. Top providers have made ERP platforms flexible enough to suit all business sizes. This flexibility allows users to customize the system to suit their needs, such as unique processes or unusual metrics. ERP systems can be complicated because they can meet your exact needs. However, one cannot exist without the other.
As your business grows, flexibility is essential. Even though the most efficient workflows or KPIs might change over time, this flexibility allows the system to remain valuable for your business.
Accurate Forecasting: Your business can only prepare for the future if you know what to expect. Forecasting is a process that uses historical data, and sometimes other inputs, to forecast future demand, revenue, and other numbers. Because all the data is in one place, forecasts can be more accurate.
You can prepare for the future with more accurate forecasts. If you anticipate that sales will rise 30%, you can strategically buy more inventory or hire more people in the sales team with the needed skills. You can look for ways to reduce expenses if costs are rising faster than sales. Better forecasts can make organizations more profitable by ensuring they have all the resources necessary to meet their goals and lowering costs (by not spending too much).
Which Industries does ERP Benefit Most?
ERP's versatility allows nearly any industry to reap the benefits of ERP efficiencies. Here are some examples of top industries:
- Consumer Products
- Food & Beverage
- Life Sciences
ERP is an excellent tool for any organization involved in manufacturing. Manufacturing ERP can dramatically streamline operations, maximize resources, reduce costs, and drive measurable business development.
What Would My Organization Gain From Implementing (or upgrading) ERP?
Many ERP options available today offer enough benefits to make a compelling business case. Here are some questions to help you decide if ERP implementation or upgrade suits your company.
- Does your business need more precise data? An ERP system can provide a considerable benefit regarding the type and quantity of data you can collect, report on, and use for decision-making.
- Does your company grow? Your technology may not be up to the task. A good ERP setup can help you get to where you want.
- Are you satisfied with your customers? A modern ERP system can eliminate the pain points that make customers unhappy.
- Do your business systems integrate? A single database company-wide range solution can help you unify your team for outstanding communication and efficiency.
- Are you trying to cut costs? An ERP system can help you reduce expenses by improving inventory planning and forecasting, optimizing the shop floor, and reducing freight and purchasing costs.
Want More Information About Our Services? Talk to Our Consultants!
It is essential to weigh the pros and cons when deciding which platform is best for you. It would be best not to let potential downsides stop you from using the tools that can take your business to new heights. For help in product research, see our ERP requirements template and ERP research and reports.
ERP implementation and selection are not for the faint of heart. Arion ERP can help your company choose the best ERP system. ArionERP, a complete ERP software solution, offers many modules that can be used to assist organizations in managing their clients, employees, administration, and other business processes.
It is crucial to ensure the ERP Software Company fully understands your expectations and goals for future growth. You can improve your business performance by being specific about your goals, and what you require from the ERP system. Most ERP systems are a boon for companies. ERP Systems can streamline business processes and increase productivity in the long term, making them a worthwhile investment in time and money.