What are ERPs and why your business needs them.
What are ERPs?
ERPs, in full Enterprise Resource Planning, refer to systems and software packages used by businesses to manage day-to-day activities.
These business management software streamline and automate some of the aforementioned day-to-day activities, leading to a more streamlined and efficient workflows.
These day-to-day activities could include business activities like accounting, project management, sales, procurement, and distribution logistics.
How they work
Stripped down to the basics, an ERP software is designed to bring all parts of your business activities, the activities listed in the above section, under one platform.
This allows you to have one single streamlined platform from which you can share information across all departments of your business. This way, employees from different departments can share, contribute and work on the same set of data and pull relevant information from the same platform, enabling them to work more efficiently.
Here is what I mean in practicality:
Your accountant can pull the records and have a view of the spending in the different departments as they go about their business. At the same time, they can also make changes to the budget allocated to each department. With an ERP system in use, the next time your sales person logs in to the system, the new disposable budget will be the one recently updated by the accountant. After a trip to see a client, the salesperson will update the amount used and that will be the new figure that appears in the system when the accountant is doing the bookkeeping at close of business.
ERPs eliminate the need to enter the same data into multiple systems or spreadsheets providing your entire team with one single focal point for all records.
Without an ERP, all the changes in the case scenario above would have to be manually updated in the sales system/spreadsheet and in the accounting system as well, which is a lot of tedious unnecessary work.
Integrating all your business functions into an ERP allows for easier management and makes collaboration between departments a lot easier.
What ERPs offer you and your business
- Improved collaboration between departments
Everything about ERPs speak to collaboration across all your departments. Having an ERP system brings all your business data from across all departments under one system, offering visibility to what other departments are looking at.
Teams and departments no longer work as an island in the sense that only they have access to their department system and whenever a member of another department needs some of their data, they have to go through them.
Visibility into what other team are looking at makes it easier to collaborate between teams/departments, and also makes it easier to proactively reach out when there is an opportunity to help a member of another team.
Such collaboration will bring about enormous benefits to your business as a whole and can help eliminate loopholes like duplicate work because data is the same across all departments.
- Improved data security
Integrating an ERP system will have all your data under one system. The data will of course have varying ranges of access and security with regard to authorized personnel. This limits who can access, view and edit the data. This essentially means that employees can only look at and/or edit what they need to, and nothing more.
Having your data in one secure system, that has varying levels of access and security increases the level of data protection over having your data spread across different systems within the business.
ERP operate via the cloud, which means your data will be secure in multiple remote servers vis a vis having spreadsheets being spread via email across the various departments within your business.
The concept of multiple servers brings about an extra layer of security, as it eliminates the issue of having a single point of failure.
- Centralized data
ERPs basically bring together all the information across an organization’s department into one place. Lack thereof means data is often spread across so many departmental systems, which makes it a lot harder for an employee to track down data that they need.
This decentralized approach will also bring about minor issues and inconveniences like data formats and sometimes duplicate work as data is not shared across departments.
An ERP will standardize everything for you: under one system, same data, same format, eliminating issues in generating reports and analytics because of data format issues.
- Increases productivity
Aside from promoting collaboration across your departments, there are some other ways ERP can lead to increased productivity in your workplace.
One such way is how they automate a lot of repetitive, trivial tasks, freeing up your employees to work on more important and productive matters.
ERPs will also allow for faster completion of tasks as they make processes much more straightforward. This is with regard to all the time it saves them searching for the information needed to solve whatever they need to. Since ERPs give them visibility to all the information they need across the organization, tasks are completed much faster overall.
This will ultimately lead to maximum productivity and utilization of your work force, and at no point will you have to hire extra help.
- Scalability
On matters of scalability, you can implement ERPs only for the modules you need, while leaving room for expansion in the future when you need more modules of the system. An ERP system is capable of growing and evolving with your business.
You can add more users and teams as your organization grows. A cloud ERP will best implement this, as the remote servers will grant you the extra resources with no hassle.
Such scalability eliminates the need to constantly hire IT teams to upgrade and upscale your different departmental systems as your organization grows and evolves.
- Saves costs
Implementing ERPs is an investment, ergo it does deter some organizations from making the active decision to set them up. The return on investment is however really great and easily outweighs the setting up cost.
All things considered, they greatly bring down operational costs and overheads that come with running fragmentation software solutions.
One such example is the scalability bit explained above. Without an ERP, the cost of constantly having to bring in IT experts to upscale or modify numerous departmental systems is considerably high.
Some key areas your organization may benefit from with ERPs
ERPs are usually AI-powered and driven, which means they have the capability to effectively cover so many aspects or areas of your organization. They connect the dots between all your departments and teams, leading to one cohesive unit and workflow: one team, one goal.
Some of these key aspects include:
- Supply: Supply chain typically involves tracking inventory, which is mostly done by hand on a notebook. This may not be 100% efficient nor foolproof.However, modern ERP dashboards and business intelligence technology can help increase the speed and accuracy of inventory management.
- Human resources: ERPs can be incorporated into some trivial HR management tasks like payroll management and hiring. This way, you are in a better position when it comes to retaining and hiring employees, as tracking employee performance and identifying HR issues is much easier.
- Finance: Modern ERPs are AI driven and as such are able to offer on-point data-driven insights into all matters, including finances. You will always have a clear picture of your financial position, which can be tapped into at any time.
Tips to choosing the right ERP for your business
- Consider your business needs in terms of functionality
The first step towards choosing the right ERP for your organization is taking into account what your organization requires from the system in terms of functionality.
In other words, what are your business needs? And what do you require from the system?
Have a look at your options and take note of those that offer modules in line with your business requirements. Modules refer to what the particular ERP offers, and they include services like: Supply chain management, project management, CRMs, Finance management, Sales and Marketing among many others.
Ask yourself if the ERP you are considering offers all the modules you require for your organization, then make the decision.
- Assess the system’s scalability and flexibility
Another tip is considering if the ERP you choose is flexible enough to be tweaked towards your specific business requirements.
Ask yourself, is the system customizable enough to tailor it to your unique business processes, workflows, and reporting needs? It should be relatively easy to do so as well as integrate the system into your daily workings.
For scalability, you will require an ERP that has the capabilities to grow and evolve as your organization grows, effectively meaning you have more teams, more departments and will potentially need more modules.
- Consider the total cost of ownership
What to consider in this case is essentially how much it will cost you to get up and running with the system in comparison to your budget for ERP integration.
This comprises not just the licence or subscription payments, but also the costs of implementation, custom deliverables, maintenance, and continuing support from your ERP vendor.
Examine the ERPs potential return on investment and weigh it against your organization’s budget and the overall benefits it brings your organization.
- Assess the ERP’s ease of use
Another tip is having a look at how user-friendly the system is for your employees. It should not be that difficult to learn the inner workings of it.
You want an ERP software that is easy to use and navigate, even for non-technical users. It’s essential to choose an ERP software that has a clean and intuitive user interface.
