03 Dec Project Management | Your Quick Guide to ERP Software and Its Benefits for Your Business
This is where a reliable Enterprise Resource Planning (ERP) software comes in handy.
ERP software can integrate various business functions, such as finance, human resources, accounting, etc., into one system, streamlining your core processes and information sharing across your company.
Data even shows that 95% of companies experienced significant workflow improvements after adopting ERP software, making ERPs crucial to boosting your business efficiencies.
In this guide, we’ll look into what ERP software is and its benefits for your company. But first…
What is ERP software and how does it work?
Enterprise Resource Planning or ERP software integrates your core business processes, including procurement, supply chain, and services into a single system.
Essentially, ERP software stores all your business process data in one database, allowing all your teams and departments to work with centralized information.
The software also lets you organize and analyze the data and generate reports, giving you more visibility and efficiency across every aspect of your business.
ERP systems are made up of various applications that “talk” to each other and share a single database, with each app or module focusing on a specific business area.
You can combine different ERP modules to meet your business’ needs, whether it’s for sales, customer relationship management, or logistics (among other things). Other apps are also specific to the industry, such as retail and manufacturing.
Additionally, ERP systems connect different technologies used by each part of your business. This helps you eliminate costly incompatible and duplicate technology and streamline your business process modeling strategies for digital transformation.
Types of ERP systems
Here are three general types of ERP systems based on the deployment method.
On-premise ERP is the standard model for deploying software that allows you to control everything.
The ERP system is installed in your data center at your preferred locations, with your IT staff handling the software’s installation and maintenance.
With cloud ERP systems, the software runs on your provider’s cloud computing platform. The provider handles the system’s maintenance instead of your company buying the software and servers, and hosting these on-site.
Cloud-based ERP software can help you avoid major upfront costs associated with buying an ERP system since you’ll be paying for monthly or yearly subscriptions, but it’s not always the cheaper option.
Weigh the pros and cons and do some research first to determine whether a cloud or on-premise ERP would be the most cost-efficient choice for your business.
Hybrid ERP systems provide a mixture of both on-premise and cloud-based software deployment methods to help meet your company’s needs.
This means that some of your data and ERP apps will be on the cloud, and others can be in your preferred data center locations.
Hybrid ERP allows more flexibility by letting you continue using existing on-premise ERP systems for corporate functions and add cloud-based ERP systems to support some of your other business units.
This allows you to reduce overall costs and help those business units move faster to meet your local needs.
Benefits of adopting ERP software
Here are several advantages of using an ERP system for your business.
ERP software unifies your fragmented systems, allowing your teams to access all the tools they need to perform their functions well from one central location.
This reduces time-consuming tasks, such as hunting down a piece of information through multiple databases, allowing your staff to work more efficiently and produce results faster.
ERP software can also save you some time and money by reducing the need to train your staff in different systems.
Plus, with all your core processes in one ERP system, you’ll only need to schedule training with one vendor instead of several different providers. This helps you cut down on the precious work hours you spend on training sessions and redirect that time to get more things done.
2. Improve your collaboration
An integral part of ERP software is its centralized database, which helps improve collaboration among your business process units and teams.
With a centralized ERP system database, your company gets a single source of truth to work from, preventing potential errors caused by using inaccurate or incorrect data. This helps streamline your workflows and reduce costly mistakes.
A central database can also cut down on any stalling or hesitation in project implementation since all your teams have easy access to necessary company data, ensuring you stay on schedule and meet your deadlines.
Also, your staff won’t need to spend time and effort on merging information across different sources and systems since all your data is stored, shared, and accessed through the ERP system.
3. Boost your productivity
Performing tasks such as monitoring inventory levels, tracking timesheets, processing orders, and generating reports can take your employees hours to accomplish when done manually.
These tedious and manual processes can lower staff morale and leave you open to potential human errors that lead to inaccurate data.
ERP systems can automate your manual tasks, such as data entry, and lets the software perform advanced calculations in minutes. This makes for more efficient workflows, allowing your team to focus on more important tasks and improve your data accuracy.
The automation functions that come with ERP software can increase your company’s productivity and, in turn, boost your profitability.
4. Simplify your compliance and risk management
It can be challenging to keep track of all applicable regulations to your operations (such as information security) and avoid potential violations and hefty penalties.
ERP systems with built-in auditing tools can help you document things such as tax provisions and chemical use, aiding you with maintaining compliance with several regulations.
ERP software can also make it quick and easy to generate reports to send over to relevant and requesting agencies.
Additionally, some ERP systems offer tools to help your business manage risks, including features to give you enhanced accuracy and reliability to improve your financial management and reduce accounting errors.
ERP forecasting tools also allow you to predict events associated with demand, budget, labor. This lets you create more reliable schedules, budgets, and product development plans.
While ERP software won’t eliminate all your business process efficiencies, it can give you the tools to streamline your workflows, boost your productivity, and help simplify some of your complex processes.
Finding the best ERP system that matches your needs can help eliminate bottlenecks in your workflows and duplicate or incompatible technology that can hinder your business’ growth.