Enterprise Resource Planning (ERP) refers to a method of proficient utilization of hardware, software and people to simplify a company’s business processes, thus improving productivity and profit. ERP could include several software applications or complicated individual software packages which disseminates the data required by different and unique business departments.
1. What is the Need for ERP?
The need for ERP software grew with the mandate of big businesses for a centralized solution for managing all the information system requirements. An ERP could include several business modules, such as but not restricted to:
- Finance and Accounting
- Human Resources/Payroll
- Supply Chain/Partners
In a nutshell, an ERP solution enables every department of an organization to be managed centrally, and they continue to operate independently. ERP also augments the quality of decision making.
2. ERP Integrates Business Processes Across Functions
ERP software integrates several functions into a single comprehensive system for streamlining information and processes across an organization. The dominant feature of all ERP systems is a common database which supports various functions used by different departments in an organization. In practice, it means that people in different business divisions—for instance, accounting and payroll—could rely on the exact information for their business requirements.
3. ERP Standardizes Reporting and Fosters Automation
ERP also provides some degree of orchestration and standardization in reporting as well as fosters automation. Instead of pushing employees to keep separate spreadsheets and databases which have to be merged manually for the purpose of generating reports, some ERPs allow individuals to pull the reports from one system. For example, with the sales orders flowing into the financial system automatically without the need of manual intervention, the department managing the orders could process the orders at a better pace with more accuracy, and the accounts department could close the books on time.
4. Why You Might Need ERP For Your Business?
1. Your existing applications lack adaptability and agility
- Your business applications should be adaptable for you to keep pace with all the changes in your respective industry. Keeping up with these changes is crucial if you want your business to grow continuously and reach success. If your business applications don’t include functionalities which are powerful enough for working in other segments of your business and allows scaling up or down, it is the right time to replace it with ERP, a more integratable and adjustable system.
2. No real-time information
- Digging through the data for the latest information could be a time consuming task. This process could impair problem-solving capacity as well as decelerate the critical decision-making process. With all Business Intelligence competencies available in the data-driven environments, it would be critical to add the value of curation and interpretation to that data. A real-time ERP system helps you in determining which business processes are working efficiently, and the ones which aren’t making the cut.
3. Using business data for improving and reinforcing security
- Modern ERP systems provide an advanced level of user-permission settings. With advanced user-permission, you don’t have resort to unsecured Excel sheets or Google documents for your business needs. ERP applications are more robust and secure, and the user permissions setting could prevent sensitive information from getting into wrong hands. A user would be able to access only what he needs from the system.
4. Better visibility for better decision making
- Visibility is one of the USPs of ERP applications. ERP enables total access to every crucial process in a business by making the data from different department access to the management. The availability of information in the centralized location enables increased collaboration and efficient completion of tasks. This cohesive visibility offers more comprehensible workflows and enables inter-departmental processes to be tracked easily with extreme efficiency. All this allows management to make decisions with confidence, as they can rest assured that they’re seeing a complete, full picture at any point in time.
5. Expedited regulatory compliance
- Currently, one of the tedious tasks for any business is to meet its compliance requirements. Maintaining accuracy with financial records isn’t that easy, but nevertheless needs to be done on time. ERPs can assist you with regulatory compliance through validated and secured data, combined with the built-in reports. These reports could be automated for reducing the cost of concurrent audits.
5. Should You Invest in ERP?
Enterprise-oriented technologies are changing at a rapid pace. For an organization to keep up with these technological advances, one must be able to control such changes while restricting disruption. In case your business system does not integrate or utilize modern technology, and you feel that your business is finding it difficult to remain competitive, you might have to invest in an ERP system.
When deciding about the right platform for your business, it is crucial to consider both the pros and cons of the ERP system. However, the potential downfalls shouldn’t scare you away from tools which could take your organization to the next level. Experts recommend making an open and fair assessment of your business needs and problem areas and before seeking out an ERP system which would give your organization the potential to improve and succeed.
For most of the companies, the merits of an ERP system often outweigh its demerits. The potential for completely streamlined business functions combined with boosts in productivity makes the benefits of ERP systems a meaningful investment of time and resources.