Why Enterprise Resource Planning Systems Work
April 17, 2017
Topicsenterprise, enterprise resource planning, Leadership
Enterprise resource planning (ERP) is a billion dollar business for good reason. This business process management software makes it easier to manage a complex business because integrated applications help automate a number of back office functions and coordinate all operations. An ERP management information system integrates areas such as planning, purchasing, inventory, sales, marketing, finance and human resource.
In fact, buying and implementing ERP has become a top priority for firms in highly competitive industries. Firms that design products and services of the highest quality and deliver them on time usually end up winning the lion's share of the market. Without ERP, it can be a huge challenge to keep on top of sales, production, and distribution.
Since ERP deals with complex business systems, it can be complicated for the uninitiated, and for this reason ERP vendors play an essential role in decision-making.
The World of ERP Vendors
Since ERP does so much, ERP vendors play a huge role in guiding organizations on their ERP selection. Once purchased, the software has to be implemented and the staff needs to be trained on how to use this powerful change management tool. Today, there are literally hundreds of different ERP vendors who serve as specialists for different niches in diverse industries. A Tier I vendor can provide guidance to a complex, global organization on how to use solutions like Microsoft Dynamics, Oracle, or SAP.
Meanwhile, a Tier II vendor can assist mid-sized corporations with far less complexity.
Finally, a Tier III vendor can assist mid-sized to small organizations that have far simpler organizational needs. Then there are vendors who are experienced with Cloud ERP products like Intact Corporation or Acumatica.
3 Benefits of ERP Software
ERP positively impacts numerous aspects of a business, so let’s take a look at three remarkable benefits it provides:
The larger and more complicated a business, the easier it is to lose track of what is happening throughout an organization. Different departments across the business are preoccupied with their own specialization, which makes it difficult for company leaders to get a sense of perspective on how the business as a whole is doing. Moreover, departments also need to access each other’s data to be able to play their own role more effectively. ERP makes it possible to give perspective because accurate data from each department is consistently shared in real time. For instance, the sales team knows the production department’s numbers, which makes it easier for them to be credible when negotiating with clients because they are well-informed.
The root cause of inefficiency in any organization is inaccurate data tracking from the start to the completion of a project. Without timely, accurate data, it can be difficult to design, build, and deliver goods and services to a client as promised. Should problems arise in the production of goods or services, ERP systems help identify causes quickly so that swift, corrective action can be taken. Optimum efficiency is a result of keeping tabs on all business processes as they occur in real time, and ERP systems help businesses do just that.
The success of a business is based on winning customers over. As a result, a business gets more orders, higher referrals, and become increasingly profitable over time. While getting perspective on all phases of operations and becoming highly efficient will go a long way towards improving a business, there are two other significant factors that play a role. These factors are cost reduction and improved collaboration. When a business runs more efficiently, there is less waste, which results in cost efficiency; and when everybody in a business is on the same page, sharing accurate information on their respective projects, then improved collaboration naturally arises. Businesses that use an ERP system provide their employees with consistent, real-time data so that they can always be on the same page and work toward maximum efficiency.
A business that uses ERP can do remarkable things with the software’s advanced features and functionality. They can, in effect, improve almost every aspect of their operations. The result is a vastly superior business; one that is more efficient, has lower costs, generates higher sales, and increases profitability.
An excellent article that really gets to the depths of why resource planning systems truly work. I will be using some of what you write with my clients