What is ERP? How does it work and what does it do?
Enterprise resource planning or ERP as its known is a software system used to plan and manage all of the business processes within your company or organisation. To understand the power of Enterprise Resource Planning solutions and how they can transform your business we will need to go into a little more detail for you below.
How does an ERP system work?
An Enterprise Resource Planning software system processes all of the information from your internal data sources and transfers it to one centralised database. This will provide a unified view of all your vital business information that can be easily accessed and shared by all of the different departments across your organisation.
What does ERP software do?
A typical Enterprise Resource Planning system is designed to cover all the basic business processes within your organisation, some of which might include:
- Project management
- Inventory management
- Human resources
- Finance and accounting
- Supply chain management
- Customer relationship management (CRM)
Combining all of the information from these departments in one centralised repository leads to improved productivity, increased efficiency, lower costs and streamlined processes. These are just some of the advantages of implementing this type of software solution for your business.
Is it expensive?
While it is recognised in the industry that implementing such software can require a major investment, it is important to understand the benefits of such a substantial outlay and why many of your competitors both nationally and internationally continue to choose to invest in a fully integrated system.
In addition, modern Enterprise Resource Planning systems built using .NET technology offer a future-proofed solution that should last a minimum of 10-15 years. Therefore, it is important to consider the ROI over this period not just year one.
Some providers do offer a SAAS pricing model which equates to a yearly/monthly payment in perpetuity. Whilst this lowers the initial outlay some businesses feel that this pricing model will become more expensive in the long run. Alternately, CAPEX facilitates the outright purchase of the system which you can depreciate according to your own preferred depreciation terms.
How is it implemented?
Most organisations business processes are generally not the same and ultimately, ERP implementation will vary depending on your own unique requirements.
It is important that you source a systems provider who will partner with you to understand your business goals, processes and current limitations of the existing system. This consultative approach is required so that your partner can map out an implementation plan that will enable your business to operate at its best.
What are the key benefits of ERP?
While the key benefits will vary depending on your own unique set of requirements, such systems generally provide truly standardised business processes which in turn lead to increased productivity and efficiency across your organisation.
- Most of your manual processes become automated which will increase visibility and reduce errors by up to 90%.
- Effective collaboration can be achieved by allowing employees to access vital real time data and information on demand. Data is sharing makes collaboration and decision making easier.
- Visibility and transparency can be greatly enhanced by implementing an ERP system within your organisation by allowing you to monitor inventory or working capital in a precise manner and in real time. Now you can make quick and accurate decisions with confidence.
- By accessing a single data source you can access valuable data and analytics to aid with corporate planning and decision making. A unified data source means that reporting becomes much easier without the need for the intervention of IT.
- Systems provide improved data quality and improved accuracy due to the fact they largely eliminate manual input by your employees and therefore reduce errors.
- Systems usually have the same visual look and feel across the entire organisation which makes it a very easy tool to use, understand and learn.
With the rise of big data and the increase in digital supply chain operations, it’s clear that manual processing is not considered as an efficient option any longer. Organisations now see the business value of investing in modern technology solutions.
The ability to access real-time data to drive business advancement and the automation of core business processes allows your employees to become smarter, faster, reactive, efficient and collaborative. This will lower your overall operational costs and help you and your business to grow.
Our 'What is ERP software and do I really need it' comprehensive overview covers all aspects of an ERP system; from how to successfully implement it to choosing the right ERP vendor. Check it out to find out more.