What Is ERP Software?
ERP software helps organise data and manage essential business processes. This guide to ERP systems will help you understand this software in more detail.
Enterprise resource planning (ERP) software may sound complex, but all types of businesses can benefit from these tools. Essentially, ERPs enable companies of all sizes to organise data and manage essential business processes.
In many cases, an ERP helps organisations manage and even automate multiple aspects of operations within a single system, in areas like finance, manufacturing, and supply chain management. ERPs can even be used to manage other functions like HR, sales, and marketing.
There may be different tools within the overall ERP suite to manage these specific functions, but altogether, the software used to plan operations and integrate business processes falls under the ERP umbrella.
“In the past, businesses had some sort of accounting, finance, or HR process but the software systems they had often worked separately and didn’t talk or work with one another,” explains Microsoft. A modern ERP system “brings all these different processes to the table to collaborate and create one fluid system.”
In this introduction to ERP, we will explain the key features and benefits of this software, as well as looking at some examples of the top ERP systems. We’ll also provide ERP recommendations in terms of figuring out when you might need a new ERP system and how you can find the right ERP software.
Key features of ERP software
One of the advantages of modern ERP systems is that you have the flexibility to choose the features and deployment that work for you. Some businesses want to manage their data all in-house, in which case an on-premise ERP might be the best fit, whereas others want to leverage a cloud ERP to work from anywhere.
At their core, ERP systems tend to have features around data collection and data analysis so that businesses can then make better operational decisions, such as to reduce costs and/or improve productivity.
More specifically, ERP systems offer features across categories such as the following:
ERP HR features
ERP vendors such as Microsoft Dynamics 365 help businesses to manage areas such as scheduling, skills administration, and benefits management. ERPs can also be used to manage functions that lie on the border between departments, such as how payroll often requires HR and finance collaboration.
ERP finance features
In addition to payroll, ERP systems can help simplify other areas related to finance. ERP vendor Sage offers a range of tools that vary in complexity depending on business size and needs, with features like bank reconciliations and dashboards that help visualise financial performance.
ERP production features
For companies that produce physical goods, ERPs that offer features in areas like manufacturing and supply chain management can be helpful. ERP companies like Epicor can provide solutions that help track production progress, manage inventory, monitor equipment performance, and more.
ERP business intelligence features
As mentioned, ERP tools tend to have advanced data analysis capabilities. The best ERP systems are the ones that can organise and analyse multiple streams of data to then provide clear business insights. For example, SAP is an ERP vendor that provides business intelligence, such as through built-in machine learning capabilities and easy-to-understand data visualisations/dashboards.
Key benefits of ERP software
The list of ERP benefits seems to grow every day as vendors provide new features and enhance automation capabilities. That said, as the name implies, ERP systems tend to provide benefits around helping companies better manage their resources and plan accordingly.
Companies can gain clear visibility into all the different areas that ERPs cover. From there, employees can work together to find solutions, such as coordinating HR areas like employee leave with manufacturing production schedules so as to avoid being short-staffed.
Overall, ERP systems typically provide benefits such as:
- Cost savings: Being able to easily track expenses and use business intelligence features to spot cost reduction opportunities can help businesses save money.
- Productivity: ERPs can often streamline and automate what might otherwise be repetitive, lengthy back-office processes, whether that’s putting together financial reports or manually counting inventory.
- Collaboration: Instead of having tons of separate systems within different departments, companies can use ERPs to allow data to flow freely across teams. That can increase collaboration among departments and lead to better business outcomes as teams get on the same page for essential business processes.
When is the right time to buy or upgrade your ERP software?
If you already have an ERP in place, or if you manage business processes in other ways, how do you know if you should implement a new ERP system?
Our ERP recommendations include looking at the following five signs of needing a new ERP:
1) Your current software no longer supports your needs
To put it simply, if you feel like you’ve outgrown your ERP, or if it feels like you’re not getting much use out of it, look to see if other ERP systems would be a better fit. Or, if you don’t have an ERP yet and are using entry-level data processing tools, for example, you might find that these tools lack efficiency the more you grow and increase your data needs. In that case, consider upgrading to an ERP that can easily organise and help you gain insights from your data.
2) Your software is too complicated to handle efficiently
Having multiple systems for each of your business processes can be too complicated to be worthwhile. Not only can this create data silos, but it can be difficult to maintain so many systems.
If you’re not keeping up with software updates, you could be creating security risks or at least be missing out on important functionality. Upgrading to an ERP system that handles multiple processes in one software suite could be easier.
3) You’re struggling to keep up with customer demand
If you can’t keep up with customer demand, that may seem like a good problem to have. But before long, customers can grow frustrated with the wait and leave for a competitor.
So, whether you’re struggling to keep up with demand due to issues like having trouble tracking inventory, managing supply chains, or struggling to find customer-specific information, an ERP could help.
4) Your employees are exhausted with operational work
There can be a fine line between keeping your employees busy and engaged vs. busy and exhausted. If your employees seem to have too much to do when it comes to managing the internal operations of your business, such as inputting data into accounting systems or managing schedules, a new ERP could provide the efficiency needed to save your employees from burnout.
5) Software integration takes too much time
Even if it feels like you can manage the different software systems you have in place, the initial software integration process might still be too time-consuming to be worth it. Especially as new business needs develop, you might not want to have to worry as much about how you will get your employees onboarded with new software and how you will integrate new software into your existing technology stack.
An ERP suite could be a simpler choice. And if you already have an ERP system that seems to not integrate well with other tools, you might want to look at other ERP solutions that now allow you to easily share data between systems, for example.
Choosing the Right ERP Software
Now that you have a better understanding of what an ERP is and how it can benefit your business, take a look at the different vendors out there (e.g. Epicor, Microsoft, Sage, SAP) to see what works for your business.
If you’re ready to explore your options to upgrade your ERP system, Software Advisory Service can help. We're a technology consultancy using procurement best practice and data insights to save companies time and money. Our goal is to make business technology procurement simple, transparent, and cost-effective. Click the button below to book a consultation at your convenience. We won’t charge you anything, and we won’t share any of your project details without your explicit approval.
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