Enterprise Resource Planning (ERP) is a vital aspect of modern business operations, as it enables organizations to effectively manage and optimize their resources. In the past, ERP systems were mainly implemented in large, on-premise environments, but with the advent of the modern web, ERP has become more accessible and affordable for organizations of all sizes.
An ERP system is a software application that integrates all aspects of an organization’s operations, including finance, accounting, human resources, procurement, and supply chain management. The system centralizes all data and processes into a single platform, providing real-time visibility and control over the organization’s operations. This allows organizations to make informed decisions, improve efficiency, and reduce costs.
The modern web has significantly impacted the way ERP systems are designed and implemented. Cloud-based ERP systems, also known as Software as a Service (SaaS) ERP, are becoming increasingly popular. These systems are hosted on remote servers and can be accessed over the internet, eliminating the need for on-premise infrastructure. This means that organizations no longer have to invest in expensive hardware and software, and can instead pay a monthly or annual subscription fee.
Cloud-based ERP systems also offer a number of benefits over traditional, on-premise systems. They are more flexible and can be easily scaled up or down as needed. They also provide greater accessibility, as users can access the system from any location with an internet connection. Additionally, cloud-based ERP systems are typically easier to implement and maintain, as the vendor is responsible for software updates and maintenance.
Another important aspect of modern ERP systems is their ability to integrate with other systems and applications. This is made possible through the use of Application Programming Interfaces (APIs) and web services. For example, an ERP system can integrate with a customer relationship management (CRM) system to provide a more complete view of customer interactions. This enables organizations to make better-informed decisions and improve customer satisfaction.
The modern web has also enabled the development of mobile ERP systems. These systems can be accessed via mobile devices, such as smartphones and tablets, providing employees with real-time access to important information and processes while on the go. This improves productivity and allows employees to make informed decisions even when they are away from the office.
In conclusion, the modern web has significantly impacted the way ERP systems are designed and implemented. Cloud-based ERP systems, mobile ERP systems and the ability to integrate with other systems and applications have made ERP more accessible and affordable for organizations of all sizes. This has resulted in improved efficiency, reduced costs and better decision making. As technology continues to evolve, ERP systems will continue to play a vital role in modern business operations.
ERP systems provide a wide range of benefits for businesses, including cost savings, workflow visibility, advanced reporting and analytics, business intelligence, regulatory compliance and data security, risk management, collaboration, scalability, flexibility, customisation, and improved customer and partner management. By automating repetitive tasks, ERP systems can save organizations money and resources while increasing efficiency and accuracy. The all-encompassing nature of ERP systems also allows for better decision-making by providing easy access to all relevant data. Additionally, ERP systems help companies stay compliant with frequently changing regulations and provide robust security measures to protect sensitive data. With the ability to adapt to organizational changes and support unique processes, ERP systems are scalable and flexible. While most ERP systems provide extensive built-in functionality, some companies may require customization for specialized processes. Overall, ERP systems can greatly improve a business’s overall performance and customer satisfaction.
ERP systems can bring many benefits to businesses, including:
- Cost savings through automation and better resource deployment
- Workflow visibility for employees to track projects and business functions
- Reporting and analytics tools for data analysis and understanding
- Business insights and intelligence for better decision-making
- Compliance and data security through tracking transactions and adherence to regulations
- Risk management by reducing fraud and handling business disruptions
- Collaboration and information sharing among teams
- Scalability and flexibility to adapt to changing business needs
- Customization options for specialized processes
- Improved customer and partner management through insights and information exchange.
6 Disadvantages of ERP Systems:
- High initial cost of purchase, implementation and maintenance
- Training required for employees
- Additional costs for data conversion
- Complex system with multiple features
- Maintenance expenses for IT staff and service providers
- Doesn’t solve process and policy issues, but can uncover them.
ERP systems are software programs that help organizations manage and streamline their business processes. There are several key features that make an ERP system unique and useful for businesses. These include:
- Common database: An ERP system uses a single, centralized database that contains information from all departments of the organization. This eliminates the need to manually merge separate databases, and allows for a consistent, cross-functional view of the company.
- Consistent user experience: Across departments and roles, everyone uses the same user interface (UI) and has a similar user experience (UX) with an ERP. This increases the software’s adoption rate and makes it easier for staff to move between departments.
- Business process integration: An ERP system is able to support and integrate the processes that make a business successful, whether related to accounting, supply chain, or marketing.
- Automation: An ERP system is able to automate repetitive tasks like payroll, invoicing, order processing, and reporting, which saves time and minimizes errors.
- Data analysis: An ERP system breaks down information silos, allowing leaders to analyze problems and resolve them quickly by mixing and matching data from various parts of the business into insightful reports.
There are several different ways to deploy ERP, each with its own advantages and disadvantages.
On-premises ERP is when a business runs the software on servers that it owns and is responsible for maintaining. This option used to be the only choice, but it has become less popular in recent years.
Cloud-based ERP is when the software runs on remote servers managed by a third party. Users access the software through a web browser, which allows for greater flexibility. There are two types of cloud-based ERP: single-tenant and multi-tenant. Single-tenant gives the client more control over the software, but it also creates more work for the business. Multi-tenant is when multiple organizations use the same software instance and hardware. Most SaaS ERP solutions are multi-tenant and the software vendor handles all updates and upgrades.
Hybrid ERP is a combination of on-premises and cloud deployments. One approach is two-tier ERP, where a corporation keeps its on-premises ERP at headquarters but uses cloud systems for subsidiaries or certain regional offices. These cloud systems must be linked to the on-premises platform to ensure a steady flow of information.
Open-source ERP is an inexpensive alternative to traditional ERP options. These solutions can be downloaded for free, but support from the provider is minimal, and configurations and system improvements tend to fall on the client. This option is only suitable for companies with technical staff who have a deep knowledge of how to develop and configure the software.
ERP systems are designed to meet the needs of different business sizes. Small, midsize, and large companies each have their own unique requirements when it comes to ERP systems. Here’s a breakdown of what to look for based on your business size:
Small Business ERP: Small businesses should focus on finding a system that meets their specific needs and is easy to set up and use. Cloud-based ERP is often the best option for small businesses as it has lower upfront costs, a faster setup timeline, and less need for technical resources compared to on-premises or hybrid options. This allows small businesses to scale up and support new initiatives over time.
Midsize Business ERP: Midsize businesses need a platform that can support all their business functions with specialized modules. Cloud-based ERP is popular among midsize businesses as it has lower initial expenses and is user-friendly. However, some midsize businesses that require numerous customizations or must follow regulatory policies that bar them from storing information in the cloud may opt for on-premises deployments or a hybrid approach.
Enterprise ERP: Enterprises need software that can support all components of their businesses, which can quickly narrow down the list of contenders. On-premises and hybrid ERP that combines cloud and on-premises solutions are most common with enterprises, simply because they may have adopted ERP before pure cloud systems were available. However, more and more large companies are moving to cloud-based ERP to benefit from its scalability and future growth potential.
ERP systems are made up of different modules that are tailored to specific aspects of a business. Here are some of the most commonly used ERP modules:
- Finance: This is the foundation of most ERP systems and manages all financial data, including the general ledger and accounts payable/receivable. It also handles reconciliations and financial reporting.
- Procurement: This module manages purchasing, whether it be raw materials or finished goods. It can automate requests for quotes and purchase orders and, when linked to demand planning, can minimize overbuying and underbuying.
- Manufacturing: This module helps companies coordinate all the steps involved in making products. It ensures production is in line with demand and monitors the number of in-progress and finished items.
- Inventory Management: This module shows current inventory levels down to the SKU level and updates those numbers in real time. It also measures key inventory-related metrics.
- Order Management: This application monitors and prioritizes customer orders from all channels and tracks their progress through delivery. It can speed up fulfilment and delivery times and improve the customer experience.
- Warehouse Management: This module directs warehouse activities like receiving, picking, packing and shipping. It can generate time and cost savings in the warehouse by identifying more efficient ways to execute these tasks.
- Customer Relationship Management (CRM): This module tracks all communications with clients, assists with lead management and can enhance customer service and boost sales.
- Professional Services Automation (PSA): This module is used by services businesses to plan and track projects, including the time and resources spent on them. It can simplify client billing and encourage collaboration among staff members working on a project.
- Workforce Management (WFM): This module keeps track of attendance and hours worked and can also manage payroll. It can record absenteeism and productivity by department, team and individual employee.
- Human Resources Management (HRM): This module keeps employee records with detailed information, like available PTO and performance reviews, and can tease out workforce trends in various departments or demographics.
- Ecommerce: This module allows retailers and brands to manage the back- and front-ends of their online stores. They can change the site look and feel and add and update product pages with this application.
- Marketing Automation: This module manages marketing efforts across all digital channels – email, web, social – and enables organizations to optimize and personalize their messaging. A marketing automation tool can boost leads, sales and customer loyalty.
On Site Implementation
ERP (Enterprise Resource Planning) software is designed to follow established best practices. This means that the software provider creates workflows and functions based on their experience working with many customers, and encourages conformity. However, there is often flexibility to adjust processes.
Following industry-standard best practices has many benefits for businesses. Companies can improve and modernize their processes, increase efficiency, and keep up with competitors. Adhering to best practices also helps companies meet financial standards. Leading ERP vendors offer versions of their software that are tailored to specific industries, which include best practices for that sector.
Implementing ERP can be a big project that takes a lot of time and money if not properly prepared for. The length of time and cost will depend on various factors such as the deployment model, complexity of the system, size of the company and resources dedicated to it.
Here is a checklist to guide you through the process:
- Discovery and planning: Assemble a team to determine what the company needs from an ERP system. This team should identify inefficient processes and other obstacles to business growth.
- Evaluation and selection: Using the requirements document created in step one, evaluate leading ERP options and select the platform that best resolves existing issues, meets all department needs, and promotes company growth.
- Design: At this stage, the implementation team will determine if the system can support existing workflows and which processes may need to change. This is also the time to identify any required customizations.
- Development: Technical professionals will configure the software to meet your needs and begin migrating the company’s data to the new solution. Decide how to train employees on the system and schedule training sessions.
- Testing: It is crucial to make sure everything works as expected and fix any unforeseen problems. Include users from across the company when testing the platform.
- Deployment: Go live with the new system. There may be some challenges early on, so prioritize employee training to ease resistance to change. Some companies opt for a phased rollout, while others launch all modules at once.
- Support: Ensure users have everything they need to take advantage of the new system. This is an ongoing process and may include additional configurations, often with the help of the vendor or specialized consultants.
When implementing an ERP system, keep these tips in mind:
- Get support from top leaders: Make sure you have the backing of key executives in the company.
- Plan ahead: Give yourself enough time to figure out what you need from the ERP system, prioritize tasks, and evaluate different vendors.
- Communicate and work together: Keep everyone in the company informed and involved throughout the process, from the beginning to the end.
- Manage expectations: Make sure everyone knows what to expect in terms of timeline, cost, and how much time they will need to spend on the project.
- Pick the right KPIs: Work with different departments to choose the best Key Performance Indicators (KPIs) for your company that the ERP system should track. Keep your company’s overall goals in mind.
When implementing an ERP system, it’s important to consider which existing systems you have in place that could be replaced by modules of the ERP, and which must be integrated. The more information that’s fed into the ERP, the more value you get from your investment, so it’s important to avoid leaving systems to stand apart from the ERP.
When deciding whether to integrate or replace existing systems, consider the following:
- Is the existing system doing the job you need it to do? If not, consider using the relevant module offered by your ERP vendor.
- Is there a connector available from the ERP vendor or a third party to get data flowing between the ERP and your existing system? And if so, how good is it?
- Does the connector operate in real time and keep all necessary data flowing to and from each system?
Keep in mind that if you decide to integrate best-of-breed systems with your chosen ERP, it will require additional work to verify the correct functioning of connectors during every upgrade cycle. It’s important to ensure that you have the expertise, either in-house or through a partner or supplier, to keep data flowing smoothly.
The cost of an ERP system can vary greatly. It can be anywhere from less than $10,000 per year to millions of dollars annually. The cost will depend on the vendor, the modules you need, and the way you choose to deploy it.
Cloud-based ERP systems, like SaaS options, usually have lower upfront costs compared to on-premises software. With SaaS, the vendor takes care of maintenance and charges an annual fee, often based on the number of users.
When choosing an ERP system, consider the additional costs beyond licensing. These can include expenses for customization, maintenance, training, upgrades, and support. These costs will vary between providers, so it’s important to ask lots of questions to get a clear estimate of the total cost.