Definition of Enterprise Resource Planning (ERP)
Enterprise Resource Planning (ERP) refers to software and systems used to plan and manage all the core supply chain, manufacturing, services, financial and other processes of an organization. An ERP application can be used to automate and simplify individual activities across a business or organization, such as accounting and procurement, project management, customer relationship management, risk management, compliance, and supply chain operations.
Individual ERP applications can offer software as a service (SaaS), while a complete suite of ERP applications forms an ERP system that can be used to effectively communicate and bring together business processes to enable a flow of data between the applications, typically through common databases either on-site/on-premise or in the cloud.
ERPs connect every aspect of an enterprise. An ERP software system allows for better performance and project management that helps plan, budget, predict, and accurately report on an organization’s financial health and processes.
There’s a lot more to growing a business than winning new clients and customers. To taste the real growth, you need to optimize, streamline, and centralize your core business processes. Then you can get the full picture of your company’s operations.
For your salespeople and customer support reps to gain the insights they need, you may need to invest in a high-quality online customer relationship management (CRM) solution. But what about all your processes that aren’t focused on sales? That’s where an enterprise resource planning (ERP) solution comes in and plays an important role in your business.
Online ERP software systems are designed to collect data from a wide variety of business processes, including HR, supply chains, manufacturing, procurement, and billing. And they make that data more accessible and usable. In fact, proper implementation of ERP systems can empower its users to eliminate information silos, which will create comprehensive insights, analyses, and reports. So, it altogether complements the sales-and-service focus of the CRM tool.
If you’re planning to adopt a cloud-based ERP solution for your business, it’s important to understand some basic concepts before you invest your company’s time and money in it.
So here are eight important tips about ERP application implementation:
Optimize for higher productivity but lower risks.
A high-quality ERP system allows for many of the most tedious and time-consuming repetitive activities such as sending email updates, generating reports, and identifying delays to be completely automated. This benefit also creates an opportunity to reduce the guesswork and uncertainty of many business operations, which reduces the impact of human error.
Your top priority should be to improve insights and reports.
Since ERP solutions provide vital information at your fingertips, they make work life easier for everyone who uses them. However, to be more effective, all of this data needs to flow to your company’s decision-makers. Moreover, you need to invest in the development of useful and supportive dashboards, standard reports, and in-depth analysis tools.
Focus on the ERP modules that you actually need.
For an ERP implementation, there is no one-size-fits-all approach. Since most ERP software is module-based, it gives thousands of possible configurations right out of the box. It’s always important that your ERP application needs to align with your company’s specific use cases. Frequently, you’ll need to ignore the bells and whistles. You may even need to remove unused functionality, in order to create a more streamlined ERP tool experience.
Understand ERP types, as well as their use cases.
Does your ERP system require full control over a devoted, on-site server? And do you have a team that is distributed geographically and that includes people working in the field? If so, a cloud-based ERP solution might make more sense and value addition to your business.
For your business identify the correct size of ERP application.
A small company has vastly different ERP needs than a midsize international business. So if your ERP system implementation partner doesn’t understand those key differences, it can create problems down the line in running your business smoothly.
Create a realistic timeline for ERP implementation.
ERP vendors can be optimistic to a fault, especially common when it comes to estimating the timeline of a successful rollout. These vendors generally tell their clients what they think they want to hear, even if it means fudging the launch dates. As an output, most ERP application initiatives take 30% – 35% longer duration to complete than their original estimates. Thus, a good ERP implementation vendor is fully transparent about the potential delays you may face along the way.
Set an actual budget.
Generally, it’s common for new ERP implementations to go way over budget. This happens when you try to cut corners on steps like user testing, only to realize late in the process (even post-launch) that a critical feature is missing. A great ERP implementation partner will be truthful and straightforward with you about the costs involved in achieving your company’s goals. This transparency will allow you to create an accurate and actual budget from the get-go.
Check for the right ERP implementation partner.
Once you have taken the final decision to adopt an online ERP software, many companies focus on the wrong things. For example, they obsess over the specific features of ERP software suites, the length of time the implementation will take, and the amount of money they can shave off the final budget.
To keep your project on track, you need an implementation partner who’s willing to invest time to understand your company’s specific requirements, challenges, and use cases to make it a success.
How Can ERP Software Solutions Help Improve and Grow a Business?
ERP software solutions are used to help businesses of all sizes overcome challenges—from small businesses to massive enterprises. Early business practices may no longer keep up with growing demand and require more efficient business tools, like ERP application, to effectively manage a business’s systems and resources.
ERP systems provide many benefits to the health and growth of a company.
The Benefits and Business Value of ERP Software Solutions
- Cost savings and higher ROI efficiency. improved productivity and efficiency as a result of the integration and automation that ERP application provides
- Improve business insight and decision making with a single aggregated source of truth and real-time data
- Manage and monitor Regulatory Compliance with regulatory standards, and even set up alerts for non-compliance
- Mitigate and lower risk; and automate core business operations, manual tasks, and reporting process. Minimize human errors, and free up employee’s resources and time
- Enhance collaboration and break down communication barriers for efficient collaboration and coordination to improve job efficiency and deliver quality service
- Improve and promote supply chain and distribution network reliability. Use demand-driven MRP to forecast supply and demand and prepare for fluxes in orders and supply chain
- Scalability. Consistent infrastructure for streamlined operations can grow as your business grows
- Optimize and improve the customer and partner management. Service, customer relationship management, as well as partner and supplier management with insight from seamless shared information
Some Steps For Successful ERP Implementation:
ERP software installation is also an opportunity to estimate your current operations and re-engineer business processes into standard operating procedures. Find out which processes to automate or keep manual and then design a blueprint of how new business practices will flow. The application developer will be responsible for installing the software and building the infrastructure, like networking facilities and data collection or display devices.
The quality guarantee test engineer is in charge of the next step: testing the system. All interfaces, functionality, and reports must work with real-life scenarios and transaction data. Users must also validate that business processes are flowing correctly between departments. It is essential the system is thoroughly tested before the go-live date. User training discussed below, is another opportunity to see if there are any mistakes in the system.
Training users requires significant time and effort, especially considering employees are expected to carry out their normal responsibilities throughout the process. How long it takes will not only depend on the size and also the complexity of the ERP solution but also on the mentality that employees have about changing the way they work.
In the beginning, you must prioritize thoroughly training the trainers. Provide opportunities for users to provide feedback and for the implementation team to act on that. Consistent, meaningful communication between users, trainers, the implementation team, and therefore vendor will decrease the likelihood of lost productivity after deployment.
For any company, an online ERP solution is one of the most important investments they will ever make. It’s a huge expenditure of time, money, and other resources. So the last thing you want to see is your ERP implementation is a completely successful activity without an issue. Remember, the most important thing is to get it right, which could involve thinking bigger than just an ERP solution. In most of the cases, it makes more sense to launch a combined online ERP/CRM platform. When you combine your cloud-based ERP and CRM installations, you’ll have complete visibility of every aspect of your company’s operations. This will help you to keep connected with your business anytime, anywhere.