Growing businesses eventually reach a point where data records can’t be managed with spreadsheets. That’s where Enterprise Resource Planning (ERP) software is introduced in a company. ERP software collects and organises key business information that helps in efficient operations and streamlined growth, even as they expand.
Although most business professionals would be aware of the term “ERP,” they might not exactly know how ERP can eliminate the weakness of their daily operations in the long run.
ERP Meaning
ERP or Enterprise Resource Planning is a software that unifies the business process in an organisation, provides a centralised repository of business data, and keeps the updated data readily available for all the departments.
An organisation depends on free flow of information across the departments. Without this free flow of information, the work process will get obstructed every now and then. For example, if the purchasing department does not have updated information about inventory, it can’t do its job perfectly. Again, if the marketing department and sales department have different data about the same customer, it can lead to all sorts of misunderstanding. Above all, it is extremely important that the finance department stays updated about anything that has financial implications on the company, which can only be possible if every transaction – sales, purchase, refund etc – is recorded in an organised manner. An ERP makes all of this possible. It helps the organisation to remain disciplined as far as handling business data is concerned.
Overall –
● An ERP software ensures free flow of data.
● It automates the data updation process.
● The ERP system acts as the centralised repository of data – a single source of truth.
The value of modern ERP systems does not just end here. Today, ERP is great at analysing business data and coming up with intelligent insights which enable businesses to make data driven decisions to stay ahead of the competition.
The Role of ERP in Your Business
ERP technology is getting upgraded daily, ERP making all business processes integrated for easier and clearer visibility.
Here are three ways how your business can benefit from ERP:
- Optimal Business Performance: ERP solutions can give you access to data insights that could enhance your decision-making and reveal ways to enhance operational performance. When various departments in an organisation work seamlessly, the decision-making becomes faster, data remains organised, and bottlenecks are prevented.
- Accelerate Team Response: ERP connects processes and data, giving employees more flexibility and visibility and helping them take quicker actions and deliver more business value. So, for example, after a sales transaction, the inventory gets an auto-update. And since the data is accessible from every department, the person responsible for purchasing can check the updated inventory level and create a purchase order to forward to the vendors. In fact, most of the renowned ERP software provides an intelligent dashboard that automatically notifies the admin if the inventory level falls below a certain level.
- Improve Business Agility: ERP solutions are designed to adapt to your business needs and growth. It proactively helps in preparing and responding to any market change or operational disruption. Here’s an example, SAP Business ByDesign – one of the most popular ERP solutions providers in India – has the option of generating an ‘inventory ageing’ report that helps businesses to find out the slow-moving items in their warehouse. This enables them to know which products are falling out of popularity.
ERP Automates the Flow of Information Across the Organisation
The business process of an organisation depends on the information about the business, the customers and the data generated from the sales and purchasing. And ultimately, all this data is needed to monitor the financial posture of the organisation.
However, as a business starts its journey, the data gets larger and larger. The flow of data becomes constrained. For example, very often, it is seen that in the event of a change of phone number or address of a customer, the marketing might have the updated data while the sales team keeps working with the old data, leading to a disruption in communication.
Unmonitored cash flow is a challenge often faced by small businesses. There is no centralised data that reports how much money is lying outside the business. This problem, too, stems from the lack of the free flow of data.
An ERP Software effectively solves all the data flow issues. The ERP acts as the single source of truth. This single source of truth is then shared across the organisation. Every time any part of the data is updated, it is updated centrally, which ensures that every department has access to centralised data. This essentially means that the data updation process can happen automatically across the entire organisation.
Components of an ERP Software
Human Resources (HR)
HR is a component of ERP software that handles employee management comprising onboarding, offboarding, benefits administration, and timekeeping features. It can also automate payments like tax and benefits deductions.
From presenting useful information on day one to curating training material and asking new hires to complete the training, from completing paperwork to filling up personal information – ERPs can handle the a to z of onboarding, offboarding, training and cross-boarding – and most of these tasks can be automated. What’s more, the HR executive can track the progress of each of the new hires in the completion of these tasks.
Customer Relationship Management (CRM)
Managing your customers and leads is among the top priorities that need to be addressed. The CRM component of ERP enables you to track all of your customers and lead data within your ERP software. The insights gained could help optimise your sales and marketing efforts.
Here’s a specific example of how the CRM works in the entry-level yet powerful ERP – SAP Business One. This ERP software allows marketers to create and plan for marketing campaigns from the system itself. In fact, you can send email bursts right from the CRM module of SAP Business One.
Again, tasks like logging the plan for calling the customers, sending reminder emails, assigning people to complete these tasks, and tracking the progress becomes easier with this centrally managed CRM module in SAP Business One.
However, the biggest benefit of the CRM module in any reputed ERP software is that you can see the customers’ historical purchases, pending payments, the nature of transactions, etc. This enables businesses to figure out which customers to push-sell to. Identifying extra sales opportunities is the biggest benefit of an ERP with an effective CRM module.
Business Intelligence
Business intelligence (BI) is new to the standard ERP components. It collects and analyses data to deliver actionable insights for your business processes. It also involves reporting and data visualisation to make the insights intuitive for all.
Most modern ERP software does not just provide plain and simple data visualisation. The report can be intelligent in its true sense. For example, based on historical data, the ERP system can forecast how much raw material is needed by a manufacturing company. Again, the ERP system can urge you to resolve the ageing A/R invoices, so your business does not suffer from cash flow issues.
Supply Chain Management
The supply chain management (SCM) component of ERP software helps optimise your supply chain by collecting real-time data. It allows you to find and fix issues whenever they emerge. The SCM component also helps with demand planning so that your production is accurate and doesn’t exceed it. The supply chain component in an ERP enables businesses to have a professional and healthy relationship with the vendors. In fact, the purchasing module can suggest the most suitable vendor for a particular product based on the historical purchasing data, time taken to receive the products and the money spent.
Inventory Management System
Inventory management is a collaborative ERP component. It works in tandem with SCM but also involves other processes like warehousing and sales. Its major purpose is to manage order fulfilment and warehouse stocking. The warehouse data is fully integrated with the sales and purchasing modules in any modern ERP. As a result, any sale or purchase automatically updates the inventory level.
Financial Management
This component keeps a record of your financial data, including accounts receivable, accounts payable, budgets, costs, and forecasts. It helps in revealing insights to maximise your profits while reducing costs and discovering profit trends.
Most ERP software used by reputed businesses has a fully integrated accounting module that is connected with each part of the business. Any transaction – sale or purchase automatically triggers a journal entry and updation of GL accounts.
Popular ERP Software Solutions
- Oracle ERP Cloud
- Acumatica
- BizAutomation
- SAP S/4 HANA
- SAP Business One
- SAP Business ByDesign
- NetSuite
- Dynamics 365
Hire the Best ERP Solutions Provider
Choosing the right ERP software is a battle half done. There’s another part of the battle – installing the ERP in a way that does not disrupt the normal day-to-day function of the business. Gartner and Mckinsey both agree that more than 50% of all ERP implementations have a high chance of failure.
To make the leap to ERP, organisations must follow a well-planned approach that is tailored to their unique business needs. Uneecops – the ERP vendor with a 100% successful installation rate, can help you take that “one giant leap” towards the exciting world of ERP.
