Updated: Nov 18, 2018
ERP (Enterprise Resource Planning) systems are an integral part of larger corporations, but small to medium sized businesses (SMBs) are less familiar with the advantages of these systems, which are very valuable in today’s business climate.
To better explain their value, here is a short list of what you should know about ERP solutions:
1). They provide one source of all financial data
2). They are easy to access from your mobile and desktop devices
3). They are off-the-shelf and affordable
ERPs evolved from MRP systems, which were the 1960s systems used for Materials Resource Planning in the production departments of manufacturing firms. The efficiencies and cost tracking of MRPs were so beneficial, that companies wanted to expand that functionality into other departments — especially sales, maintenance, and after-sales services. Today the most prevalent ERP systems are from companies like Oracle, SAP, Microsoft, and Infor.
One Source of Financial Data
An ERP system should be the backbone of all of your financial information, from sales quotations to product costs to accounts receivables. It integrates all of your sources of data, from individual notebooks to shared databases to multiple instances of the same ERP system. Although it might require some customized work to integrate disparate systems, the reality is that once they are integrated, the ERP interfaces are very easy to use and user adoption rates are quite high. Additionally, the dashboards, reporting, and analytics are very simple and sophisticated, making it easy to visualize actual vs target numbers and to drill down and back to better understand company information. Today’s systems also make regulation reporting very straightforward.
Easy Access from Mobile and Desktop Devices
The traditional MRP systems were accessed from computers on desks or near manufacturing equipment. They were really designed for people with desk jobs, which meant everyone else would batch data and input it at day’s end. That created different kinds of challenges — losing time because of delayed system inputs, reduced operational productivity because of more frequent data entry, or delays because of input errors. Today’s ERP systems have mobile apps, and most people have their phones with them all the time. So information updates are immediate. Additionally, the interfaces are similar to those of social media, except they are tied to business information such as orders, employees, or equipment identification numbers. Users can search for whatever they want, and the system allows instant messaging between the maintenance person and the purchasing agent, for example. Voile! Your employee productivity and morale just zoomed up to a higher level!
Off-the-Shelf and Affordable
Some ERP systems are now designed for specific groupings of customer types — manufacturing, services, food & hospitality, etc. And although these systems are still customizable for your unique needs, the cost of customization is much less because the basic functionality of your business sector is already built in. And, if you want to customize the ERP yourself, instead of hiring an implementation consultant, the WYSIWYG (What You See Is What You Get) is familiar enough that you can do it in-house with a little training and focus. The other benefit of an ERP is the payment and implementation options. In the past, the ERP system was installed locally (on-premise) and you had to buy and maintain hardware and software, which was usually done as a large capital investment — unless you were using a financing program, which generally meant you were paying additional costs for interest. Today’s ERP systems are also available on a true multi-tenant cloud. So you have a choice of onsite or virtual installations, and cloud payments tend to be paid as more reasonable monthly operational expenses. These options give you some financial flexibility, which is refreshing.
A lot has changed since ERP systems were established in the 1990s. Whereas ERP systems originally provided a tracking system with basic financials for manufacturers, today’s ERPs are much more flexible and agile — serving a range of industries with a variety of capabilities. Plus the installations now come in many different packages, making them more financially attractive to organizations of all sizes .
ERPs are especially important as the world is getting smaller, and many businesses today have multiple locations and have been impacted by globalization. This means that there is a greater need for systems and workflows to be integrated, and don’t forget that there is an increasing demand for robust reporting with the rise in regulations for standardization and consumer/ employee protection.
I’m guessing that most of this is familiar to you and, if it not, then it should be. Most large corporations projected for long term viability already have ERP system installers onsite optimizing their systems. This is old news to them. They are now concerned about managing the data from their ERP systems, so that they can streamline their operations to bring in more profitable business. How are they doing this with the vast amount of data they have? Through Artificial Intelligence — but that is a story for another time!