“ERP” is an acronym for Enterprise Resource Planning, which let’s face it, doesn’t really shed much light on what ERP is or what it does.
To summarise what ERP is at a basic level, it is software that:
- Integrates the various processes of each department of an organisation into a single system. The departments can include accounting, order management, inventory, customer relationship management “CRM” and human resources “HR”.
- Helps automate core and bespoke business processes.
- Enables better customer service.
- Reduces risk by establishing financial compliance with regulatory standards.
Due to the high uptake of cloud computing and the low entry costs to the Software-as-a-Service “SaaS” model in the last 8 years, ERP is no longer just used by large corporations. We’re seeing more businesses that slot into the Small-To-Medium Enterprise “SME” space that are investing in ERP systems.
Implementing an ERP system typically starts from around $20,000 for a five user site. To some, this may seem like a daunting investment at first. However, when looking at the value-add it provides, it starts to paint a clear picture on how costs can be decreased in other areas of your business. Ultimately saving you time, money and your sanity!
Some of the (positive) cost-saving side-effects of implementing a new ERP:
Reduction in administrative costs
Reduce licenses fees and user licenses across different software subscriptions.
Prevents disruptions and delays
Departments are not reliant on others to lookup information and management have real-time access to reports.
Gain an Unfair Competitive Edge
A well implemented and designed ERP system allows for the making of faster, more educated business decisions. Going by “gut-feeling” alone just doesn’t work anymore when you’re up against software with increasing use of artificial intelligence “AI”.
Easier to collect, share and analyze data
Having employees maintain separate databases or spreadsheets to manually update and merge, in order to provide reports is time consuming and carries a high risk of data inaccuracies.
A common issue that is a byproduct of this type of management of data is that the knowledge on how the data is collected and managed generally is known only by one user. When that user goes on holidays or leaves your business – getting those same reports generated can be a nightmare.
By having the data centralized and consistent, ERP systems allow for meaningful reporting and sharing of data. ERP also empowering users to make educated decisions faster.
Be proactive, not reactive
Many ERP systems now come with powerful, built-in business intelligence “BI” capabilities. They allow you to perform financial forecasting, operational metrics tracking and to analyze historical financial data to predict future revenues and industry trends.
As famous ice hockey player Wayne Gretzky once said, “skate to where the puck is going to be, not to where it has been.”.
Artificial intelligence and machine learning
ERP vendors have been investing a lot of money into bringing artificial intelligence into their software. It has already shown some subtle, yet impressive results.
It is because of the addition of new, game-changing technologies, that a business should always be reviewing their current ERP system. If you’re not prepared to disrupt your industry, I’d guarantee that your competitors are!
A recent blog article posted by Sam Daynes talks about some interesting trends to look out for in 2019 – specifically, check out the AI section. https://ardento.com.au/ardento/business-software-trends-for-2019
Improve Productivity and Efficiencies
Integrate and automate
Most ERP’s now come with the ability for software developers to securely connect and push data in or fetch data out of the software. This allows for a business to connect any number of their systems together and automatically create transactions in the relevant areas of the software.
When doing this for our customers, custom developed integration software is typically designed to run in an autonomous fashion, not requiring any user intervention to run.
For instance, have sales orders automatically flowing into the ERP system from a web store, without any manual re-keying. Updating stock on hand levels from the ERP system, into a web store for accurate, real-time stock on hand figures for your online customers.
What isn’t an ERP?
So after all that, what isn’t an ERP system?
I’m going to pick Xero and QuickBooks as an example. These are quite well known (and great) products commonly used in Australian businesses. However, they are not ERP systems. These are bookkeeping systems and do not provide the same functionality or flexibility to ERP.
Primarily when investing in ERP software you are investing in flexibility and the ability to extend, to customise and to integrate.
Small Business systems such as Xero and the like, provide very little flexibility outside of their core functions.