To succeed in today’s increasingly competitive and complex business environment, you need to put systems in place that allow you to easily streamline, automate, and scale. This resource will put you on the right track toward choosing, implementing, and managing an ERP system at your organization.
Enterprise resource planning (ERP) is the process of using technology to manage and integrate critical components of a business. Previously, businesses relied on multiple disparate technologies and manual methods to oversee their core processes. Fortunately, sophisticated ERP software solutions have now made it possible to handle all business functions from one platform.
If your organization is still managing its resources without a single source of truth, it may be time to invest in an ERP solution. But since implementing this technology requires a notable investment of time and resources, you must carefully weigh your options before committing to a service provider.
To help simplify this process, we have created this comprehensive guide to ERP systems. Learn the answer to the common question “What is ERP in business?” along with the benefits these solutions provide and how to decide when your business needs an all-in-one enterprise resource planning platform.
We’ll also provide some ERP system examples to boost your understanding of what these technologies are and what they are capable of.
An ERP system includes a variety of tools that support resource planning and management, including sales, marketing, finance, human resources, purchasing inventory, and forecasting solutions.
Enterprise resource planning solutions are vital to complex businesses, as these platforms allow decision-makers to consolidate interconnected processes into a single unified system. By combining all of this data, an ERP system ensures that employees across all departments can access the information they need to fulfill their duties.
In an organization that does not have an ERP system, the finance, sales, and marketing teams likely use separate applications to complete their assigned work. If a marketing employee needs financial data, they must request it from finance. This disjointed approach to resource planning and management hinders collaboration and productivity.
If that same organization adopts a modern ERP solution, all teams will have access to the same set of data. As a result, they can effortlessly collaborate, work together on joint projects, share information, and maximize productivity.
Adopting an enterprise resource planning system can help your organization tap into all of the data it collects. You will also unlock other significant benefits by sunsetting your antiquated software and replacing it with ERP technology:
When all of your software solutions are disconnected, data silos form. These silos negatively impact data accuracy and lead to poor collaboration between teams and departments. Bad data not only impedes decision-making but can also cause you to make the wrong moves for your business and undermine your growth.
An ERP system consolidates your data, thereby enhancing its accuracy and reliability. You can restore trust in your data and leverage it to capitalize on emerging opportunities that will support your growth goals.
Optimizing data quality with an ERP will also improve your team's productivity, as each department can readily access the information it needs to complete its assigned tasks.
One of the most notable benefits of an ERP system is that it includes robust reporting capabilities. You can tap into real-time insights and run reports to track just about anything, from daily output to quarterly expenses. You can use these reports to guide your decision-making and protect business continuity.
The real value of ERP technology lies in its forecasting capabilities. The best ERP systems don’t just tell you what has already happened; they can also predict what will likely happen in the near future, allowing you to prepare for shifts in market conditions.
In the fast-paced world of business, speed and efficiency matter. If you want to consistently deliver for your clients and build brand equity, you need to optimize operational efficiency. With the right ERP system in place, you can identify potential productivity bottlenecks and remove them so that you can get more done each day.
ERP systems further promote operational efficiency and productivity via automation tools. With the right solution in place, you can automate redundant processes and give your team more time to focus on dynamic tasks.
When each department is working from a disparate application, collaborating is hard and tedious. As a result, each department within your organization is likely to adopt a stay-in-your-lane approach that negatively impacts workplace culture and decreases productivity.
With an ERP solution, departments can freely share knowledge and collaborate on important projects. They will be able to work together to solve business challenges and meet the needs of your clients. Instead of wasting precious time tracking down files or requesting important information from another department, each team can contribute to the vision and mission of the business.
A financial management solution includes accounting tools, reporting capabilities, and other features to help your business manage its revenue and expenses. However, it won’t address other critical business functions such as HR, customer relationship management, or sales.
Conversely, an ERP system is a true all-in-one solution. It includes the modules and tools necessary to manage all core business processes, from inventory control to sales and everything in between.
Every business is unique and faces different challenges at different times, so the question is, how do you decide if and when investing in Enterprise Resource Planning is right for your business?
You should consider implementing an ERP if:
Let’s discuss each of these considerations in further detail.
When your accounting team uses one application to manage financial data and your sales and marketing staff use an entirely different set of tools, keeping everyone aligned is impossible. Disjointed technologies and processes also hamper organizational efficiency and make it difficult to hit your productivity milestones.
An ERP system allows you to connect the dots between teams, departments, and processes. You can access accurate, up-to-the-minute data from all of your staff in real-time, providing a holistic view of the company.
Have you ever wasted an entire morning looking for a specific file, spreadsheet, or document? If so, then you know how frustrating this entire process can be. No matter how organized you and your team may be, losing documents is unavoidable when you rely on manual processes and a disjointed network of applications.
Replacing your cobbled-together network of solutions with an ERP system can make lost documents a distant memory. Whenever you need to access a particular file, all you have to do is conduct a query within your ERP platform’s user-friendly interface. Within seconds, you can find precisely the information you are looking for and get back to work.
Examining the state of your accounting department is an easy way to decide whether you need to upgrade your tech stack. During times of rapid business expansion, your accounting department will be one of the first teams to experience growing pains. Naturally, they will also be one of the first to recognize the positive impacts of an ERP system.
If your accounting team is overwhelmed and morale is low, you have two options. The first approach involves hiring more accounting staff, which can be an incredibly costly proposition. The other, more pragmatic solution is to implement an ERP system complete with accounting automation tools.
If a prospective client asked what percentage of products make it through your facility without rework, could you quickly provide them with an answer? Or would you have to take a few days to crunch some numbers, potentially losing out on their business in the process? If preparing reports takes days or, worse, weeks, you have a serious problem on your hands.
An ERP system includes built-in reporting and analytics tools that provide you with real-time insights at the touch of a button. You can get granular and take a deep dive into a specific metric. Alternatively, you can obtain a holistic view of your operations at a glance.
The ability to rapidly generate detailed performance reports allows you to identify points of friction in your processes, closely monitor business health, and capitalize on growth opportunities.
Continuing to use aging legacy systems may seem like a cost-saving choice. However, antiquated software often includes hidden IT costs that can quickly cut into your revenue.
Managing multiple software licenses can be quite expensive all on its own. You must also consider the IT costs associated with maintaining, configuring, and regularly upgrading each of these disparate systems.
By adopting an ERP system, you can consolidate your tech stack and reduce the number of licenses you need to manage. You will also slash your IT costs and make life much easier for your information technology team.
When it comes to deploying enterprise resource planning technology, your organization has two primary options: on-premises or cloud-based. Let’s examine the pros and cons of each approach.
Many clients prefer the cloud-based ERP deployment model. With this implementation approach, your ERP system will look and feel like a traditional, on-premise solution. However, your data and applications will be hosted via Epicor's cloud resources. To access your ERP, simply sign into your account using any device with an internet connection.
There is one potential downside to the cloud-based approach: Some highly regulated industries may face compliance issues with storing data, especially customer information, off-premises. However, you can still configure Epicor’s platform to align with your organization’s needs and securely implement whichever modules your industry allows.
The cloud-based deployment approach is more cost-effective than an on-premises implementation. This is because you do not have to invest in hardware, servers, and other IT infrastructure.
On-premises ERP is deployed at your facility using your servers and other hardware. Your IT staff will be tasked with maintaining the ERP software and all of your new hardware. This approach gives you significant autonomy over how the platform is implemented, configured, and managed.
While this approach allows you greater control over your system, it is less cost-effective than cloud-based ERP. Your upfront investment will be higher, as you have to purchase servers and hardware to support the deployment. Additionally, any time you need more computing or storage resources, you will have to expand your network of servers.
Another consideration is that you and your in-house IT professionals will be responsible for maintaining the platform. This can lead to ongoing IT costs and may require you to expand your tech team.
Now that you know the basic ERP concepts, it’s time to learn how to choose the right solution for your organization. When it comes to ERP in business, you have many different options. To sort through all of the prospective solutions, you should consider these factors:
Most ERP systems offer user-based pricing. You will pay a monthly fee based on how many users you enroll. The fee will also depend on the amount of computing resources you consume and which modules you implement.
For instance, a company that implements three modules, enrolls 20 users, and consumes a modest amount of resources would pay less than an entity with 100 users, eight modules, and high monthly resource consumption.
The top ERP solutions include multiple modules, each designed to address specific functions like accounting, inventory management, and HR.
However, to see an optimal return on your investment, you must choose a platform that offers industry-specific tools for your vertical. You should also verify that it supports integrations with your current software solutions, such as your warehouse management platform.
Implementing any ERP can be a huge task. However, some platforms are known for being notoriously hard to deploy. Minimize your deployment headaches by choosing a vendor who offers comprehensive implementation support.
Implementing ERP systems can be a huge undertaking. Fortunately, you can set the stage for a successful transition by addressing the five key phases of the deployment process:
First, plan your deployment, build an implementation team, and explore prospective solutions for your organization. Get multiple departments involved to ensure everyone’s needs are met.
After you have picked your solution, review your existing workflows and identify how you will configure the software to improve these areas of your business. Also, begin to plan your data migration.
Next, configure the software based on the unique needs of your business. Start cleaning data so that it will be ready for import.
As you begin migrating your data, continuously test the ERP and its various functions to ensure they all work as intended. Identify and remedy any potential problems before your go-live date.
The final step is to take your program live. Make sure that you have sufficient IT resources in place to quickly resolve any last-minute problems that arise.
Since your ERP will impact every aspect of your business, measuring its performance and your total ROI can be difficult. Therefore, consider getting more granular during your analysis and examining efficiency improvements across each department.
Keep a close eye on metrics that you tracked prior to your ERP implementation, such as cost of goods sold (COGS) or average accounts receivable days. If you are making improvements across all of these important metrics, your ERP is likely yielding a good ROI.
Then, consider the big picture by calculating the total cost of ownership of your ERP and compare that figure to your cost savings and efficiency gains.
The phrase “enterprise resource planning” traces its origin to the 1990s, when the Gartner Group initially coined the term. It evolved from the concepts of material requirements planning (MRP) and manufacturing resource planning (MRP II). These systems date back to the 1960s and were created by manufacturing companies to increase operational efficiency.
The Gartner Group established the concept of ERP in the 1990s as part of its effort to apply MRP strategies to other industries. As part of its efforts, it sought to expand the capabilities of these systems to address other processes, such as accounting, HR, and sales.
Over the last several decades, the ERP framework has continued to expand. The rise of the internet and cloud-computing infrastructure has supported this expansion. Enterprise resource planning systems now include a dynamic range of business processes and functions, including e-commerce, business intelligence, and supply chain management. And many businesses are beginning to adopt even more advanced enterprise resource planning systems, cognitive ERP.
Cognitive ERP is the next generation of ERP software, leveraging artificial intelligence (AI), machine learning, and natural language processing (NLP) to more accurately analyze data sets, learn from patterns, make predictions, and automate processes.
Businesses across a broad range of industries have embraced some form of ERP software. According to LinkedIn, over 70% of large enterprises use ERP technology–whether cognitive, cloud-based, on-premises, or a hybrid deployment.
But although “enterprise” is in the name, ERP technologies are not just for enterprise-grade organizations. Businesses of all sizes can benefit from ERP systems, especially those operating in the manufacturing and distribution verticals.
As you dig deeper into the world of ERP systems, you will encounter hundreds of terms and concepts. While you don’t need to familiarize yourself with all of them, there are a few key phrases you need to know so that you can effectively navigate ERP platforms and choose the right option for your business.
Our list of must-know ERP terms and concepts includes:
An on-premise ERP is an enterprise resource planning solution that is deployed at your facility. The software and its data are stored on local servers, which your company is responsible for maintaining.
Under the cloud-based ERP deployment model, your software and data are stored on cloud servers, which are managed by the vendor.
Third-party vendors provide complementary software that is compatible with your ERP system. Leading ERP solutions like Epicor Kinetic support a wide range of integrations with third-party vendors so that you can achieve a better return on investment and condensed time to value.
Many ERP system providers offer user-based pricing, which means that the cost of your software will be determined by the total number of users you enroll. The amount of computing resources that you consume will also impact your total cost.
Software as a service (SaaS) is a cloud-based method of delivering software that allows you to reach your ERP system via the internet. Under this delivery model, you pay a monthly or annual fee for the software. The SaaS model allows you to access the latest technologies and applications without incurring significant upfront IT costs.
To deploy an ERP system on-premises, you will need to purchase a perpetual software license. In exchange for a one-time fee, you will be authorized to use the program indefinitely. You may still incur additional costs with a perpetual software license. For instance, software updates, bug fixes, and upgrades are not usually included in the initial purchase price.
The term “business architecture” refers to how an organization is structured. Larger businesses will have a more complex and expansive architecture. Conversely, small companies will usually have simpler architecture and fewer moving parts.
Now that you have explored why ERP systems are a valuable asset to growing organizations, it is time to future-proof your business with robust new software.
As you put these insights to use and begin your search for an ERP for your organization, make sure to assess each prospective solution carefully. Take advantage of any opportunities to schedule a demo, which will give you an up-close look at the ERP functions, features, and capabilities the provider offers. The Role of Cloud ERP in Digital Transformation
