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What is Enterprise Resource Planning?
How an ERP Solution Can Make Your Services Business More Scalable, Adaptable, and Streamlined
Enterprise Resource Planning (ERP) software solutions help companies more efficiently manage their resources – such as employees, finances, and materials. ERP systems are often referred to as Enterprise Management Systems (EMS).
The most common types of ERP solutions include Manufacturing Execution Systems (MES), Customer Relationship Management (CRM), Supply Chain Management (SCM), Human Capital Management (HCM), Financial Accounting & Reporting (FAR), Project Management, Procurement, Warehouse Management, Asset Tracking, and Inventory Management.
A typical ERP system includes multiple modules such as accounting, sales, marketing, human resources, manufacturing, procurement, finance, quality assurance, supply chain, customer relationship management, project management, and much more.
Breaking Down an ERP System’s Role in Your Business
So, what does all that mean?
Organizations that adopt an ERP system are able to automate business processes and streamline operations, enabling better decision-making based on accurate data and improving productivity across departments.
An ERP solution manages every aspect of your business, from sales and marketing to customer relations and finance. With ERP you can track everything from inventory to payroll, from purchasing to shipping. You’ll know exactly where your money goes, how much it costs, and what needs to happen next; and it allows you to integrate your entire organization, from sales and marketing, to finance, HR, and IT. When your core business processes are housed in one centralized location, you have a single source of truth for information about every department, so all employees know what they’re doing, and why.
A good ERP system will allow you to customize it to meet your unique needs. If you want to add features like mobile apps, complex reports, or analytics, you can do that too.
A Brief History of ERP
The story of enterprise resource planning is one of innovation, evolution, and change. In the early days, ERP systems focused on providing manufacturing companies with tools to manage their operations. Traditional systems were utilized by larger enterprise businesses with bigger operations – and bigger budgets – but the market has shifted such that medium and small businesses now also find incredible benefits from integrating an ERP system.
As ERP systems became more comprehensive and the industry evolved, these systems began offering solutions for businesses across industries such as retail, healthcare, and financial services.
Over the last decade, ERP systems have become even more sophisticated, allowing organizations to connect to multiple applications and integrate data from disparate sources.
Today, ERP solutions are no longer just about managing operational processes; they’re about helping companies improve customer experiences and optimize business performance.
Benefits of Enterprise Resource Planning
The benefits of ERP vary widely depending on what type of business you run, how large your company is, and whether you operate within a single location or multiple locations. For example, small businesses typically don’t benefit much from ERP because there isn’t enough volume to justify the cost. However, larger businesses often find ERP beneficial because it allows them to maximize profits while minimizing expenses.
There are many different ERP systems out there, but for the purposes of this post, we’re going to focus on the benefits of using ERP on the Salesforce platform. While many of the benefits are the same across the board, Salesforce enables additional capabilities and integrations to further connect business operations that would not otherwise be possible.
Here are 4 primary advantages of a Salesforce-managed ERP system that will help position your business for success.
Improves Accuracy and Productivity
Automating and integrating your company’s internal operations helps eliminate redundancies and improve accuracy and efficiency. Departments with connected systems can coordinate their efforts to produce faster and better results.
By automating major processes like inventory tracking or invoice generation, you can realize productivity gains across the board and place greater focus on tasks that may have otherwise fallen by the wayside.
And we can’t restate enough the incredible time savings of having a single source of truth for data across departments. Manual data entry processes that took up valuable time in the past are now handled automatically – and with greater accuracy to minimize errors and save time on revisions.
ERP can perform advanced calculations quickly, and automate tedious tasks. Your employees can place greater focus on a project, create more revenue-generating work, and use their time more efficiently and profitably.
Businesses that rely on one source for their data may be able to get better results by using an integrated solution.
Accurate and complete reports help organizations adequately plan, allocate resources, forecast future needs, and share their progress with stakeholders, including shareholders.
The benefits of ERP are well-documented. But it’s easy to overlook how much of an impact ERP can make on companies. In fact, according to Gartner, ERP implementations can increase efficiency by up to 40%. And while some organizations implement ERP systems because they want to improve processes and operations, others do it simply because it makes sense financially.
While ERP software does cost money, there are many ways to reduce costs without sacrificing functionality. For example, you can use cloud computing solutions to save money on hardware and maintenance fees. You can also minimize downtime by implementing remote monitoring tools and backup software. If your organization already uses Microsoft Office 365, consider adding Business Intelligence capabilities, such as reporting and analytics.
So often, personnel are siloed across an organization, but ERP consolidates information from all departments into a single source of truth, making it simple to share accurate data in real-time.
Now, your organization can enjoy reduced errors often caused by using incorrect or outdated data, keep projects on track that otherwise could have been stalled due to a lack of information, and merge disparate data sources so everyone has the information they need.
Be confident in the accuracy, completeness, and security of your ERP-enabled data; enabling teams to collaborate using accurate information enhances the success of your projects and ultimately brings about greater customer service.
ERP System Examples
With the advent of cloud computing, businesses are able to access their information from anywhere at any time. With this flexibility comes the ability to work from home, take meetings via conference calls, and collaborate with colleagues around the world.
ERP systems span most industries, creating a vast business landscape for ERP solutions includes. The following are examples of how ERP solutions can be applied across different businesses.
Industry-Specific ERP (or niche ERP): These traditional on-premise solutions perform all the core functions of ERP systems but have additional features, such as material requirements planning, or batch manufacturing record-keeping, to meet a business’s unique needs. Because an ERP system is designed to centralize data across an enterprise, it requires a high level of customization and continuous management to ensure information is up-to-date in the system; however, the added capabilities of industry-specific ERP systems are available without special customizations, different products from third-party vendors, or pricy add-ons.
Small Business ERP: This ERP solution allows small businesses to pick and choose the functions that work best for their operations and best meet their needs. ERP services for small businesses are typically simplified to provide only the most necessary functions at a lower cost than a traditional ERP solution.
Web-Based ERP: Remote companies or organizations with workers who are spread out or often traveling may benefit from a web-based ERP system, which simply makes the ERP system available online; accessible from anywhere, at any time, without interruption.
Cloud-Based ERP: These solutions, which are hosted on a vendor’s cloud platform, are flexible, scalable, and offer the security of the cloud. They address the shortcomings of traditional on-premise ERP systems which can be too constrained for more agile businesses that are moving quickly to keep up with advancing technology and the pace of innovation.
The flexibility and benefits are why most companies rely on ERP systems to help streamline their processes. By integrating with existing software, such as for inventory management, you gain the benefit of having everything you need in one place, rather than bouncing between different applications.
Cloud-Based ERP Systems
Among the several aforementioned ERP examples, we’re going to provide a bit more detail on cloud-based ERP systems, such as those provided by FinancialForce and enabled by Salesforce.
A cloud-based ERP system is essentially a web-based application that allows companies to access and manage important financial transactions online. Cloud-based ERP systems offer many benefits over traditional software programs, including easier setup, faster deployment, lower costs, and less maintenance.
There are several different types of cloud-based ERP systems available today. Some are hosted internally within a company while others are hosted externally on a third-party server. This article is focused on those hosted inside a company. These systems are often referred to as “on-premise.”
Other types of cloud-based applications include supply chain management (SCM), human resources (HRMS), customer relationship management (CRM), accounting (CPA), project management (PMIS), and asset tracking (APO).
Is ERP Right for My Business?
ERP software can help businesses improve processes and operations across multiple departments. In fact, according to Gartner Research, “the most successful organizations use enterprise resource planning (ERP) systems to address every aspect of their business.”
In addition to providing a single source of truth for financials, human resources, sales and marketing, customer relationship management, and supply chain management, ERP helps ensure accurate inventory levels, track production schedules and monitor employee performance.
With ERP, you’ll gain visibility into what’s happening throughout the organization, enabling executives to make smarter decisions based on real-time data rather than relying solely on historical trends. You’ll also be able to analyze data to uncover hidden issues that could negatively impact your bottom line. And because ERP provides a centralized repository for all your critical information, you won’t waste time trying to find important documents scattered among different databases.
Disadvantages of ERP Systems
ERP systems are expensive and complex, and sometimes even the best ones don’t deliver what businesses really want. But despite all the benefits they bring, there are still a couple drawbacks to consider. Here are six disadvantages of ERP systems that might affect your decision to implement one.
The price tag can vary widely depending on how much functionality is included in the software. For example, ERP systems typically include accounting, inventory management, human resources, customer relationship management (CRM), supply chain management (SCM), manufacturing execution systems (MES), production scheduling, and financial reporting.
When you add in modules such as Salesforce automation, a complete package may run into the tens of thousands of dollars, while basic ERP solutions start around $10,000.
Even if you’re familiar with technology, learning to use an ERP system takes training.
Vendors usually provide extensive online tutorials and support materials, but most people find they need help from someone who knows the product well. In addition, it’s possible that you’ll need to train employees who aren’t directly involved in running day-to-day operations, which could mean hiring outside consultants or bringing in internal experts.
Key Features of ERP Systems
ERP systems help businesses streamline operations, reduce costs and increase productivity. They do this by providing a single source of data across multiple departments, allowing companies to make better decisions about how to allocate resources, improve processes and maximize profits.
There are many different kinds of ERP solutions, each designed to meet specific needs within certain industries. In general, however, there are five main characteristics that define what constitutes an “enterprise resource planning” solution.
1. A common database.
2. Integrated modules.
3. Advanced reporting tools.
5. Scalable architecture.
ERP Best Practices
Most ERP software is built upon well-established best practices. While some vendors tout their ability to customize solutions for specific industries, others prefer to stick to tried-and-true methods, an approach that offers several benefits.
For one thing, it ensures that you don’t spend money on features that won’t help your organization succeed. Also, following industry standards allows you to take advantage of the latest advances in technology without having to reinvent the wheel. Finally, adhering to best practices makes it easier to meet compliance requirements such as Sarbanes-Oxley, Payment Card Industry Data Security Standard (PCI DSS), and General Data Protection Regulation (GDPR).
ERP System Implementation
The process of implementing an ERP solution involves several steps. While it’s important to understand that no one step is more critical than another, there are certain phases that tend to occur during every implementation:
Each phase requires different skills and resources, making it essential to take the time to develop a detailed implementation strategy.
What’s in Store for the Future of ERP?
ERP vendors are beginning to realize that customers want more than just software. They want a complete solution that includes everything from cloud computing to IoT devices.
Here are some of the key areas where ERP vendors are making improvements:
Artificial Intelligence and Machine Learning
Internet of Things
ERP Vendors Are Embracing These Technologies
Customer Experience Is Key
ERP Vendors Must Keep Up With Industry Trends
ERP Vendors Should Be Prepared To Adapt As Customers Change Their Needs And Expectations
ERP Vendoring Companies Need To Work Together
To understand what’s in store for the future of ERP, one needs to look no further than ERP today.
Innovation is no longer just the preserve of large corporations. Small businesses too are embracing the power of digital transformation. They’re implementing smart strategies that leverage emerging technologies such as artificial intelligence (AI), blockchain, augmented reality (AR), and the Internet of Things (IoT). These technologies are helping companies improve operations, increase productivity, enhance customer experience, and reduce costs.
For instance, many manufacturers now use IoT devices to monitor production lines and inventory. With this data, they can make smarter decisions and streamline workflow. Companies can also use AR to provide customers with real-time product information.
As these innovations become mainstream, small businesses must adapt their current ERP systems to take advantage of them.
Regardless of industry, modern ERP systems can fit into your operations to benefit individual roles and departments, and help improve the way your business and your employees operate. With a higher level of visibility into the functions that matter most to your business, you will be more agile, efficient, and able to deliver better experiences for your customers and your internal teams.
When used correctly, modern ERP systems can edge you ahead of the competition with a higher level of operational intelligence that allows you to perform better, be more agile, and deliver more quality customer experiences.