What are the Major Reasons to Undertake ERP?
ERP (Enterprise Resource Planning) software helps companies manage their daily tasks and activities such as project management, procurement, accounting, supply chain operations, and compliance and risk management. The goal of ERP software is to simplify and automate individual tasks across an organization or business.
A complete ERP package also includes company performance management, software that helps make and execute a business plan, predict, budget, and report on a company's financial outcomes.
ERP systems integrate with a massive number of business procedures and enable the flow of information between them. By assembling a company's shared transactional data from multiple resources, ERP systems exclude data duplication and offer data integrity with a respective source of facts.
Today, ERP systems are essential for managing thousands of companies of all sizes and industries. ERP is as vitally critical as the electricity that keeps the devices on to these businesses.
Why is ERP Needed?
ERP is not an independent application. It's a business software category that comprises various modules, each handling a particular business demand. For instance, product-based organizations usually have modules for inventory, accounting, customer relationship management (CRM), order management, and if they collect or produce products, manufacturing. Services companies may address project management, CRM, accounting, and professional services automation modules.
ERP systems are used for businesses interested in using resources wisely. These systems can help leaders redistribute human and financial capital or establish more efficient procedures to save money without sacrificing performance or quality. ERP serves as an asset when it comes to coordination and planning. Employees can thoroughly go through customer orders and the latest available inventory, compare them with the supplier purchase orders and predict future demands. If required, they can make adjustments to avoid problems.
ERP systems come with many advantages. With ERP software, businesses improve collaborations and communication because employees can check on the condition of other departments to lead their own decisions. As an all-inclusive source of information, an ERP system also offers a host of reports and analytics that can level up the business. Turning a broad trove of data into charts and graphs that illustrate trends and help showcase possible outcomes.
Why do Companies Undertake ERP?
ERPs today are progressively being used by smaller companies across different industries, particularly the cloud ERP.
According to the ERP Software Market 2018 Global Trends report, the ERP software market is expected to reach a projected growth of 47 billion dollars by 2022.
Although these systems may not be practicable for the smallest of businesses, many small to midsize businesses have given advent to ERP systems. Businesses choose enterprise resource planning software for various reasons. The prompt availability of ERP systems across multiple industries and niche markets is one reason.
There are various types of ERP systems on the market today. Some ERP solutions serve to particular requirements of retail stores, and the others cater to the requirements of healthcare facilities. Still, others fulfill the particularities of oil and gas manufacturers. Almost every business and industry can find a solution to meet their business requirements.
ERP software has thrived to include all types of businesses. Generally, every company will have reasons to implement an ERP solution.
Typically, businesses want to be more practical and effective, expanding profits and productivity. A best-fit ERP system with robust features contributes to higher productivity in multiple ways. Business processes can be streamlined by ERP software, manual tasks can be automated, and improvements can be revealed after analyzing the company's data around all departments. ERP's approach to accomplishing these improvements will switch from one business to another because every organization operates through its own specific set of processes.
ERP can be challenging as well. Problems of scaling are also crucial to be considered. The need for ERP in small companies will be different from larger enterprises with more complex procedures and bigger workforces. This is another reason for the rapid demand for ERP solutions customized for SMBs – especially ERP cloud computing solutions.
What are the Three Major Reasons to Undertake ERP?
According to the TEC ERP Software Facts & Stats database, companies who implement an ERP reduce process times, increase collaboration, and have access to enterprise-wide, real-time data, all of which are imperative to optimization.
Here are the three major reasons to undertake Enterprise Resource Planning Software.
1. Business Management with One System
One of the greatest perks of ERP solutions is the management of different core business areas and stages of resource planning with a single ERP system implementation. Let's think of a manufacturing ERP system. The general structure of a production ERP solutions comprise of these major functional categories:
- Human resources
- Inventory management
- Business operations
- Manufacturing management
- Quality management
- Purchasing management
If your business isn't deploying enterprise-wide solutions, such as an ERP system, it might be using a different app to work these functions properly. When companies manage various functions individually, many problems occur. These involve:
- Duplication of records or functions
- Data errors
- Lack of communication between different departments
- Lack of visibility into the company overall
An important characteristic of ERP solutions is the incorporation of all these business functions into one system and lets them communicate with each other. Thus, if your company has a single system of record to handle its data and processes, then all the functional areas can ground their actions and decisions on the same set of information.
Technology changes in a blink of an eye, which means legacy enterprise systems can no more support business growth. Furthermore, the cost of upgrading the programming of an older system usually scales up rapidly. At some point, businesses find that they can’t maintain an old system. Rather, it’s financially sound and practical to shift to a newer integrated solution.
ERP solutions cater to adaptability, flexibility, and scalability for growth. More vitally, one of the perks of an ERP system is that it gives you leverage in dealing with your clients, suppliers, and partners.
For instance, by using the e-commerce module of an ERP system, your clients can relish a smothers experience with features like one-click ordering. You can use TEC to compare top ERP systems for your business. Filter results according to reviews, price, features, and industry.
3. Streamline Business Approach
While choosing and implementing an ERP system, businesses are compelled to consider their business procedures and workflows. It's the best opportunity to evaluate what works fine, what makes sense, what's essential, and what can be amended.
With the ERP system that supports best practices of the current industry, your company can get accuracy, efficiency, and speed in its business functions. One of the perks of using ERP is increasing productivity through integration and automation and recusing labor costs and time.
You meet the requirements of your external stakeholders and business partners, and it can also keep your workers happy by sparing them from repetitive, mundane tasks.
What's more, according to JustFoodERP, 95% of companies saw an improvement in their processes after adopting an ERP system.
What are the Major Reasons to Undertake ERP?
If your company has been considering undertaking an ERP solution, these are the major reasons for ERP implementation in your organization:
1. Real-time data – when you don't use an ERP system, most of your decisions are based on a guess. An ERP system provides real-time information to make educated decisions.
According to a 2012 Syntax survey of nearly 250 organizations that have implemented an ERP system within the past year, 94 percent of responders said the biggest benefits realized from the implementation included: Availability of information.
2. Better visibility – an ERP system allows its clients improved visibility about the shipment of orders.
What's more, companies see an improvement in office processes by 77% and an increase in real-time data visibility by 48%, according to JustFoodERP.
3. Better efficiency – By adding an ERP system to the business, organizations can implement better practices for different industries.
4. Quickest closing of month-end – ERP systems automatically generate audit reports and process transactions. This can amend your month-end closings and can help ease up any anomalies.
5. Controlled costs – you get help controlling and calculating your costs and have a clearer picture of product costs and profits.
The Aberdeen Group reports that small manufacturing plants are seeing a reduction in operating costs by 11% by switching from a standalone solution to an ERP system.
Why do We Need a New ERP System?
A new and updated ERP system has integrated system architecture which allows a company to deploy the same system over multiple geographies. A company with a new ERP system can have a customer service center in Houston, a warehouse in Dallas, and the main office in Baltimore. SAP is an ERP system chosen by many companies looking for a cloud-based, customizable system. As such, it's a good ERP to research and use as a baseline for comparison with other leading ERPs (like SAP vs. Oracle, SAP vs. ServiceNow, or SAP vs. other leading ERPs).
These locations see and use the same data irrespective of their physical geography.
The same study from the Aberdeen Group reports that 96% of growing businesses that excel in their respective industries rely on an ERP system.
An ERP system allows a business to process orders faster, move products quicker, reconcile shipments more rapidly and invoice clients sooner. Simply ERP system implementation doesn't offer an immediate business benefit.
While implementing an ERP system, many businesses re-engineer and re-think their current business operations and methodologies. They discover their functional silos, and very little integration subsists from one department to the next.