ERP (Enterprise Resources Planning) Business
Business agility and responsiveness to changing market dynamics has become a crucial factor in remaining abreast of competition and sustaining profits in the long run. To become agile, business must be able to monitor, track, and evaluate core business processes in real-time and hence make informed strategic changes.
This is where Enterprise Resource Planning (ERP) software come to fore. Currently a $30 billion industry, the ERP industry is expected to gain further momentum as organizations rely ever more on Disruptive-4 Technologies (big data, cloud, mobile, and social).
Understanding ERP — What is ERP?
Enterprise resource planning (ERP) is a type of business management software. It allows the business to collect, store, organize, and interpret data from core business activities and processes. These activities and processes range from product/service planning, manufacturing, and delivery, to inventory management, marketing and sales, and shipping.
ERP plays a crucial role in systemizing, automating, and centralizing diverse business activities on a single dashboard. Maintained by database management systems, ERP systems track resources and status of business commitment (both strategic and day-to-operations). The applications that become part of the ERP system differ from organization to organization, depending on their needs and understanding with the software vendor/developer. However, the core function of all the applications is to share data across various data–generating departments of the organization (from sales and purchasing to manufacturing and supply chain) and to display this data in insightful and actionable format.
The applications that make up the system share data across the various departments (manufacturing, purchasing, sales, accounting, etc.) that provide the data. ERP facilitates information flow between all business functions, and manages connections to outside stakeholders.
The Benefits of ERP for Business
With complete integration of ERP into the business, the business gains the following benefits:
- Enhanced Productivity — ERP automates business processes, making them faster, less prone to error, and hence more efficient. Furthermore, it frees skilled resources from performing mundane tasks.
- Improved Performance — ERP integrates diverse business processes, hence avoiding duplication and discontinuity, ensuring coherence and allowing people to work at cross purposes, across different parts of the organization.
- Strategic Reporting and Analysis — ERP leverages robust backend data management systems, bringing data from across the organization into one database. This allows C-suite executives and line managers alike to generate Quality Reports and conduct Performance Analysis.
- Establishes an integrated Supply Chain — Robust ERP systems extend integration beyond the organization, connecting customer and supplier handling systems to ensure further transparency, complete visibility, and boosting efficiency across your supply chain.
Breaking Down the Components of an ERP Implementation
How an ERP solution is implemented for a business differs from enterprise to enterprise. ERP vendors maximize chances of project success by offering variety of implementation services. These can best be understood in a breakdown of ERP implementation components.
An ERP solution must encompass as much of the business processes and allow the solution to remain scalable in the foreseeable future. However, many companies are not apt in gathering the requirements and developing the project scope for the solution. The requirements gathering process is pivotal to the success of the solution. Therefore, established vendors and Netsuite partners often take the lead and offer sophisticated GAP analysis (and similar services) to identify opportunities that can improve business processes within budget.
ERP Implementation and Configuration
An ERP solution is not simply software package that needs to be installed across the organization. Every piece of hardware where the software will become functional effectively becomes a node that needs to be configured, monitored, and managed. This requires unique system configurations to map software functionality to specific corporate processes. Hence vendors often manage user setup, define user-based permissions, and establish reporting structures by configuring common document templates.
ERP can no longer work as standalone enterprise level solutions. There is some level of system integration with existing business systems, e.g. moving sales data from eCommerce to core financial modules or integrating your customer emails to a CRM package, among others. This requires integrating the ERP’s API with the business systems.
Business to ERP Data Migration
To centralize data, it is impertinent that existing organizational data be transferred to the new software. Given that the existing data structures are likely to vary with the ERP’s, and hence become a source of data loss, migrating data becomes a time-consuming challenge. Established ERP vendors often take data structures into account during the consultation phase and leverage their understanding of their software and experience in moving databases to ensure a seamless and efficient migration.
ERP solutions are often basic, initially addressing the core functionality of the business (and hence becoming firmly embedded into the enterprise’s operations). It is only later that additional features and functionalities are added through add-ons and task specific functions.
Change Management and User Training
ERP solutions deliver a new and a highly sophisticated software solution. It is often incorporated as an enabling initiative in change management and hence requires extensive training so that the users are able to effectively leverage all its capabilities. This training differs from stakeholder to stakeholder: C-Suite executives will require a different type of training, where as managers, administrators, and others will require different ones to match their job description and level of access to the system.
Training is both mobile and on-job, offering flexibility to employees. It can incorporate a varied types of training resources, ranging from webinars, videos, online learning, hand-on job trainings and more.
In Conclusion — ERP Trends
The Enterprise Resource Planning solutions business has evolved over the decades, from the point where a hand few organizations were willing to implement it, to become an essential component for every SME and larger organizations. Over time, ERP software has been affected by new trends, primarily the following:
- Mobile ERP — With the rise of smartphones employee mobility has taken to the fore of organizational change management. Executives and employees want real-time access to information, regardless of where they are. Hence, ERP systems will become increasingly mobile, allowing personnel to access it through mobile dashboards.
- Cloud ERP — The cloud has been advancing steadily into the enterprise for some time, but many ERP users have been reluctant to place data cloud. Those reservations have been fading away with the passing time, however, as the cloud’s advantages become perceptible.
- Social ERP — Social learning is fast becoming an important consideration in increasing communication and collaboration within the organization. To increase social learning within the organization, vendors offer social packages for ERP.
- Multi-Tiered ERP — The ultimate task of ERP is considered to take care of every aspect of organizational systems. However, so far such attempts have been expensive and prone to failure. Hence, a new strategy is being adopted, of creating multi-tiered ERP systems.
The one best suited to a business will always depend on the initial assessments when organizational requirements and ERP project scopes are defined.
(Image Source: Shutterstock)
By Simon Reed