Enterprise. Resource. Planning. System. The very phrase tends to inspire nightmares of complexity, high costs, and rearranging a company and existing business processes to fit the ill-defined mandates of a piece of software. In an age where monolithic systems are anathema, what possible benefits could there be for a company to use an ERP? The answer is “a lot”.
And although ERPs are not cheap, the benefits of ERP systems and the cost savings they produce vastly outweigh the initial expenditure and pain of adoption.
At the heart of the ERP concept is data. Sharing data across functional silos such as Customer Service, Sales, Marketing, and Business Development enhances collaboration throughout a company. The other side to wide-spread data access is controlling who can see and edit the information. ERP solutions have intrinsic controls to ensure the security of your data. Another benefit of the unified data source comes from only having a single input system. Merging information from multiple systems often causes conflicts between sources. Having a single repository of information helps improve the accuracy, consistency, and security of your company’s data.
As to why binding all the systems together is worthwhile, the simple reason to do an erp implementation is to lower costs and improve efficiency. Having a unified system can greatly lower IT related expenses, including management/administration staff, support, infrastructure needs, and application licensing. The single system also reduces training requirements for end-users, as they only need to learn one system rather than interacting with numerous individual applications.
Contrary to conventional thinking, modern ERPs are not a single overwhelming application. While an ERP can include numerous functional areas such as Customer Resource Management (CRM), Financial Accounting, Human Resources Management, Supply Chain Management, and Purchasing/e-Commerce, the design of the system is to be modular, so you only use the pieces which align to your needs. At the core, an ERP is the glue which binds other systems together. Indeed, some ERPs let you integrate numerous 3rd party disparate systems into a unified whole.
Often a lower cost solution, evaluate the benefits of cloud-based ERP.
Along with reduced IT & training costs, an ERP can reduce the time and effort required by your workforce to carry out their daily activities. Properly implemented, an ERP can greatly reduce or eliminate repetitive manual processes, thus freeing up team members to focus on revenue-affecting tasks. The system likewise can aid in the adoption and enforcement of industry best-practice processes, lending familiarity to all actions across the enterprise.
Improved Reporting & Planning
By having a single source of information, an ERP system can readily generate useful reports and analytics. Standard financial reports such as income and cash flow statements generally are built-in, and custom reports can be generated by users quickly without IT intervention.
The analytic capabilities of the system aid in corporate planning. By providing detailed views into company-spanning information, ERP users can make better informed decisions based upon end-to-end trends and metrics.
Lower Inventory & Production Costs
For companies that deal with physical inventory and production, an ERP can dramatically improve profitability and reduce overages. Unified insight into sales, production, and delivery schedules permits stock levels to be optimized rather than relying upon “best guess” estimates for upcoming volumes.
Facilitated Regulatory Compliance
ERPs aid in regulatory compliance by virtue of secure and validated data combined with built-in reports. Effort levels to produce information for regulations such as the Sarbanes–Oxley Act (SOX) and Federal Information Security Management Act (FISMA) are greatly reduced.
Improved Customer Satisfaction
At the end of the day, the number one thing a business should be concerned about is customer acquisition and retention. Through the end-to-end tracking and insight offered by an ERP, you can provide better customer interaction from targeted marketing all the way through late-phase customer service.
Overall, an Enterprise Resource Planning system makes your business run more smoothly. By unifying and protecting your information, automating processes and reports, and providing easy views into trends, a company-wide ERP makes your day-to-day operations and long-term planning easier and faster.
As you evaluate the benefits of ERP systems, you likely want to start prioritizing features you need and vendors who fit your requirements. If so, start by using an ERP requirements/RFP template to save time and manage your selection effectively.
To ensure the ongoing success of your business, you must keep an eye on the future. All too often, businesses fail to plan properly and experience serious growing pains that pose serious roadblocks to whatever progress they’re enjoying. Having a system in place that can elegantly and efficiently accommodate your company’s growth is of the utmost importance, and the right ERP system makes it easy. Whether you’ve expanded your customer base, are entering new markets, are rolling out new processes, departments or products or are otherwise expanding your business, adding new functionality to an ERP platform is easy.
Improved Data Quality
When compared to manual data processes and other approaches, ERP systems’ data quality represents a drastic improvement. This is mostly because the underlying processes that are used to develop the data are drastically improved, so there are fewer errors and omissions. Indeed, ERP tools largely eliminate human input, which is where most errors occur. As a result, you can be confident in the integrity and reliability of the data that you’re using, which makes it easier to make crucial business decisions–even on the fly. This allows you to more readily take advantage of new opportunities that may slip through the cracks without prompt action.
Improved Data Accessibility
You can’t hope to operate an efficient and successful business without impeccable data control. It’s crucial for the right people to be able to access the right data at the right time, and it’s equally important to prevent certain users from accessing certain types of information. ERP systems include advance access control and user management features that allow you to manage everything down to the finest detail. At the same time, they provide for easier access when it’s needed through support for mobile devices and the cloud.
Improved Supply Chain Management
An ERP system bolsters supply chain management in a variety of ways, which results in shortened lead times, improved on-time deliveries and many other benefits that enhance the overall operation and success of your business. Through a well-designed ERP platform, your supply chain will become better and more responsive via improved demand forecasting, inventory management, procurement and the like. A streamlined supply chain also facilitates manufacturing innovations, which can help you reduce costs and develop exciting new products that give your business the competitive edge that it needs to stay ahead.
The centralized design of ERP tools facilitates transparency and visibility by allowing you to monitor inventory levels on a daily basis, including future consignments that are yet to be received and inventory that’s currently in transit. By knowing precisely where you stand regarding inventory levels, you can control your working capital on a more precise level and more easily adhere to the strategy that you’ve developed for the long-term success of your business. This also allows you to make quick decisions in confidence, as you can rest assured that you are seeing the full, complete picture at any given moment.
Standardized Business Processes
Most ERP systems are developed according to industry best practices and proven business processes. These tried-and-true processes bring major benefits to the table for organizations of all size. It also allows businesses to standardize their own processes and systems, which further enhances productivity and efficiency. These processes deliver consistent results that allow you to continually improve the way in which you operate your organization. Because processes are generally automated, transparency is greatly improved and errors are greatly reduced. As a result, there is also improved synergy among processes and between departments.
A lot of progress can be made through collaboration. However, people aren’t going to go out of their way to collaborate. An ERP platform simplifies the process of collaborating with others by providing employees with access to the data they need when they need it. Such systems allow all employees to have on-demand access to data across departments, which allows them to see the big picture. ERP software arms your employees with the tools that they need to make proactive decisions. This has the nice side benefit of making employees feel more valued, which fosters a culture of team spirit.