What is ERP?
ERP stands for Enterprise Resource Planning and is a type of software that businesses can use to automate and conduct many day-to-day activities. It can also help with long-term planning. It brings together various business processes into a single system while enabling data to be easily shared between each process. An ERP system also prevents data duplication, which can be confusing when working across several software products.
ERP systems can be used in most business departments including finance, supply chain, human resources and sales. It can help with project management, to build relationships with customers and even identify new sources of revenue. An ERP system can be just as useful for small businesses or large enterprises, as it can be tailored to meet the needs and goals of the business.
There are many ERP software providers, so consider taking advantage of free trials and demonstrations that are commonly offered to select a system that best meets the needs of your business. Systems can be installed on devices, operate in the cloud, or a combination of both. Access to the system can be provided to as many employees as you need. An ERP system can also be integrated with industry-specific software and data sources.
Before choosing an ERP system, it is best to know what you may want to use it for now as well as in the future. Basing your choice on cost alone might lead to a system that can’t grow with your business. Likewise, basing your choice on future capability requirements may lead to unnecessary immediate costs. Try to find a compromise. While it is possible to change providers later, it may not be a simple process and can be time-consuming and costly.
The benefits of ERP systems
An ERP system is designed to save businesses time and money, but there are other benefits that provide extra value to employers.
Avoids frustrations
Searching through multiple systems for information can be frustrating for employees. For example, they might remember a key detail but struggle to recall where it was recorded. Or, they may need to request information from various departments and wait for answers before they can complete a report or respond to a query. Having all this information at their fingertips means employees can quickly and efficiently gain the information they need, which leads to a more comfortable and satisfying work environment for them.
Aids troubleshooting
By having various pieces of information available from one source, employees can more quickly and easily respond to problems. This can prevent problems from escalating into larger issues. Having this oversight also can help employees to identify problems or errors before they occur. For example, an employee may be able to spot that their project is unexpectedly about to run over budget. They can raise this with the client or their manager before it occurs to get a decision on whether to proceed. If this issue is not flagged, it may cost the business profit or cause it to lose an unhappy client.
Improves decision-making
Having information centrally located can help you and your employees make better decisions. With all data available and automated, important considerations need not be inadvertently overlooked. For example, deciding to proceed with a project may be affected by whether a key employee is on annual leave at the required time. An ERP system allows you to access workforce data, project viability and stock availability all in one place. This can prevent project delays or the need for an employee to change their annual leave, which can negatively impact employee satisfaction.
Examples of ERP systems
It can be useful to ask software providers for ERP system examples specific to your industry or organisation. However, the following general examples may give you an idea of what to expect.
Project management
An ERP system can help collate all information required for a project in one place. It tracks the time employees spend on the project in real time and cross-referenced it with the budget to ensure the project does not run over budget. The same information can prompt invoices to be sent when project milestones are met. Communication between the client and the employees can be recorded in the same system, which can be helpful in explaining discrepancies or extras.
Workforce management
Attendance, hours worked and salary are often stored in human resources management systems and can be linked to employee experience and job satisfaction data. However, by incorporating an ERP system, managers can check if employee numbers are appropriate to complete a project or if teams are meeting key performance indicators. An ERP system can also indicate skill gaps that may be required for upcoming projects, enabling employers to hire and onboard staff in advance.
Inventory management
Businesses can physically count stock levels and record them into an inventory system to understand when products need to be replenished or to analyse periods when a product is in high demand. However, this system relies on human input when products are sold. It also does not factor in unexpected sales surges or predict busy periods. An ERP system can analyse sales data in real time, compare it to stock levels and notify you when new stock is required to purchase. It can also alert you when stock is about to expire or become outdated.
Customer relationship management
An ERP system can record all customer details and interactions, including purchase histories and inquiries. For example, if a customer contacts the business, employees can access all information stored that is related to the client. This enables them to quickly respond appropriately, without searching through multiple systems. Additionally, an ERP system can help identify customers who might be interested in trying a new products or services.
Research and development
ERP systems can also be valuable for planning future projects and products. For example, customer feedback can be analysed to suggest improvements and potential costings can be linked to available budgets. Then, workforce availability can be analysed to determine the best time to implement the product or service, which can also be linked to the time of year when customers are more likely to want to purchase it.
Rather than being another expense, an ERP system can be an investment in business activities. The insights and increased efficiencies it provides can lead to fast returns on that investment. Given the vast number of ways an ERP system can help your business grow and maximise profits, it might be the technology solution to problems that you didn’t even know you had.
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