What is ERP?

What is ERP? Why do business leaders need to invest in ERP?

Business is like a well-oiled machine. Just like a machine has many moving parts, a business has many different functions like sales, inventory, finance, production etc., with each function serving a unique purpose.  

Let’s look at an ideal scenario of a company selling laptops. Sales are made by the sales team, goods are packed by the inventory team and delivered by the shipping team. Once the orders are shipped the billing team releases the invoice to the customer. Once the invoice is released the accounting team follows up with the customer on the payment.

But the world is hardly an ideal place. There are many complexities in a business like:

• Sales team unaware of inventory level changes
• Manual exchange of documents to pick goods from the warehouse
• Accounts department not aware of the sales and does not update the accounts receivables
• Inaccurate forecast spell chaos for the inventory

Manual error-prone systems, labor-intensive processes, and lack of real-time exchange of information between different departments can be a hindrance for the company in the long run.

Thus, for an organization to succeed and its processes to function smoothly, real-time information is required to make informed decisions and gain agility. In today’s competitive world, businesses must be in line with the latest technology trends to eliminate disparate legacy systems. This is where Enterprise Resource Planning (ERP) comes into the picture.

What is Enterprise Resource Planning?

Enterprise resource planning (ERP) is an intuitive software enabling organizations across all industries manage daily business functions like finance & accounting, production, supply chain, services, procurement, HR, etc. smoothly. It is a complete suite of different modules that integrates all the business process under one platform to boost interoperability, share real-time data in a standardized format, improve operational efficiencies, and drive sales.

The robust turnkey suite is based on a modular approach designed to streamline business operations independently, provide a seamless flow of information and maintain data in a central common database for easy access across all business functions.

As the old saying goes time is money, an ERP can enable enterprises to reduce the time required in almost every business function.

According to CIO magazine survey, 85 percent of respondents agree to the fact that their ERP system is essential for the smooth running of their business and that they “could not live without the software.” Source

Enterprise Resource Planning (ERP) solutions are a fundamental asset for most large companies and SMB’s – as it has the potential to dramatically streamline projects, drive business agility, flexibility and interoperability.  Various statistics help us to understand better how businesses have benefitted from Enterprise Resource Planning

• According to 2018 ERP Report by Panorama Consulting Solutions, ERP has helped around 95% of companies to improve their overall processes. Source
• EPR reduces Operational Cost by 23% and Administration cost by 22%
• Modern ERP systems increase on-time deliveries by 24% Source:

Recommended Reading How ERP helps for Manufacturing Industry?

8 reasons why companies should invest in Enterprise Resource Planning

As per McKinsey research – Only 20 percent of companies can capture more than half of the projected benefits from ERP systems. Source

Thought leaders around the world are taking business-driven approach to ERP investments to drive success. In this post, we bring you 8 reasons, why you should invest in a robust ERP solution and how to take full advantage of this proven-change management program to ensure your business needs and ERP program are aligned properly.

• Business improvement and scalability:

Several businesses have experienced reduced operational costs and administration costs due to the implementation of ERP. Agile practices helped them mitigate risks, repetitive tasks, and challenges. The solution helped them reduce the time taken for daily activities and focus on important matters.

The business operations were done at a faster pace and with greater transparency and the real-time data helped them respond to the changing market conditions quickly with action-based insights.

ERP not only benefits your company but is also beneficial for your customers. With the Customer Relation Management module, you can easily manage the existing and potential customers details, and drive sales faster. Agile practices drive business growth and unlock the business value with transformed and scalable existing process.

• Improved financial processes:

It costs a fortune for a business to grow and thus you cannot afford to lose track of your finances. On the other hand, a multinational company has its own web of financial transactions overwhelming for manual processing.

ERP for finances has a huge scope and is not only limited to financial and accounting reporting, but also covers profitability analysis, accounts receivables, payable, foreign exchange, funds and travel management to name a few. The development of business case and accountability for ERP and business transformation implementation is a critical step.

• Regulatory compliance:

With the changing government regulations and compliance standards, it is very difficult for businesses to manage the details manually.  Regulatory compliance changes with every industry, few industries are highly regulated like healthcare, military, the financial industry. In the times where the supply chain has gone global, adhering to international regulatory compliance is as important as domestic or local regulatory compliance.

Enterprise Resource Planning have features that implement and support the various and ever-evolving regulatory compliance needed by the business.  It proactively helps in identifying and mitigating risks enabling businesses to streamline compliance changes.

• Business intelligence:

Every organization today have huge heaps of data collected from machines, customers, vendors and suppliers. Such raw data is considered as a gold mine, if correctly processed it helps in making informed and improved business decisions.

Processing of such raw data can also help in realizing unidentified sales leads, creating focused marketing strategies, predicting customer behaviour, forecasting industry trends et al.

These data can be used in the form of reports or tables and charts making it easier and efficient to analyze and make business decisions.

• Improved visibility:

With a centralized information system, ERP increases the visibility and availability of information across the enterprise.

Business leaders can access financial reports any time anywhere. A salesperson can check inventory level in real-time and close a sale with a confirmed delivery date.

With ERP it is possible to track information across the enterprise irrespective where the business or the employees are in the world fostering collaborations.

• Emerging technologies:

ERP industry has been adopting new technologies like The Internet of Things (IoT), Artificial intelligence (AI), and Machine learning (ML).

Integrating ERP with the emerging technologies help in reduce human intervention which leads to reduced error, real-time data transfer, faster transmission in turn opening opportunities for growth

As like other technologies, ERP is going Mobile too. ERP mobile apps are present dedicated to special activities like sales booking, warehouse processes. All available at the press of a button and as push notifications.

• Improved supply chain management:

The supply chain is the backbone of every manufacturing company. Enterprise Resource Planning helps in many processes apart from inventory management and procurement.  Processes like demand forecasting, production of goods, distribution of finished goods et al. This not only helps in improving the lead times and customer satisfaction but also helps in increasing employee productivity and efficiency by making their job easier.

• Integration with other IT systems:

Information Technology (I.T.) has now become an integral part of every company. As a company grows so does its IT landscape and thus it becomes imperative for all the systems to be connected to each other.  Such IT integration not only helps in data sharing but also supports global operations.

Enterprise Resource Planning are well equipped to connect to a host of different systems thus integrating data from other streams of IT.

Takeaway

As we have seen the benefits of an Enterprise Resource Planning software are straight forward. In the times where information is becoming invaluable, having the right information at the right time will only make business more competitive and ready for growth. ERP can enhance business performance putting it in a better position for growth.

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