Getting Acquainted With an ERP in The Organization And Its Challenges

The ERP system is a centralized and integrated business process management software. Simply put, it integrates, controls, and manages business processes using interconnected modules.

The ERP software manages a company's operations, finance, supply chain, accounting, manufacturing, project management, and other activities. Alongside integrating business processes, it enables the flow of real-time information.

Moreover, it integrates different features into a complete system to update processes. The ERP software helps businesses to enhance inter-departmental communication and reliable access to entire business operations.

While providing data integrity, ERP software also helps to remove data duplication. ERP systems also enhance visibility in day-to-day operations and thus, help in decision making. In a word, the ERP system provides intelligence, analysis, and efficiency across every aspect of a company.

What are the Different Types of ERP systems?

There are three types of ERP operation in the market: cloud-based, hybrid, and On-Premise ERP. Every kind of ERP is implemented in different sectors. However, they come with distinct pros and cons.

On-Premise ERP

On-premise ERP is an ERP software that runs on in-house servers at locations under control. You can install On-premise ERP and run it at your own place. Also, you can use personal IT infrastructure to connect people, business processes, and systems.

On-premise ERP allows to customize and make changes as per business's needs. It is best for businesses that need to manage and secure ERP systems under their control. Also, it is ideal for companies requiring specialized integration with other systems for day-to-day business functions.

Reasons for Choosing an On-premise System:

• Confidential data remain secure onsite
• Full control over data processes
• Reduced long term costs
• Integration with other systems in the network
• Strong customization
• Provides an internet network that is accessible anytime

Cloud-based ERP

Cloud-based ERP is a system of ERP (Enterprise Resource Planning) software. It allows users to access ERP software over the internet. Moreover, cloud-based ERP runs on a vendor's cloud computing platform instead of an On-premise network.

Moreover, ERP vendors provide cloud ERP software to businesses as a service. It offers the same or better effectiveness as On-premise systems. But, cloud ERP eliminates most of the downsides of an On-premise system, such as upfront licensing fees.

IDC reveals that the demand for cloud ERP software is growing continuously. It is expected to reach a CAGR (Compound Annual Growth Rate) of over 17% from 2020 to 2025. Because in the cloud-based system, one can access and analyze a massive amount of data in almost real-time.

Well then, sales teams and freeing finance teams have real-time inventory insights to closely monitor the cash runway. Thus, they can respond to audits or further calls rapidly for performance data.

Read Also: Roles of ERP Systems in the Growth of Manufacturing Industry

Reasons for choosing a Cloud-based ERP system:

Increase ERP performance in line with the current business sector

Allow companies to access real-time analytics

Lower operating costs

Superior security for businesses of all sizes and types

Flexibility to access data from anywhere as long as you have internet access

Easy scalability for each stage of growth as a company

24/7 service support available

Fewer technical requirements, so no additional expenses

Hybrid ERP

A hybrid ERP system combines both an on-premise and a cloud-based ERP system. Hence, it is called a tier-two model. Since the hybrid ERP has the bimodal combination of both systems, it will bring you the best of both.

This flexible ERP application is used in modern digital enterprises. The hybrid ERP uses the On-premise system to handle corporate functions and cloud ERP to support small business entities.

What's more, hybrid ERP can easily integrate software systems like accounting, CRM, and sales. It is not possible to do only with On-premise systems. Above all, hybrid ERP makes the system more realistic and contemporary.

Reasons for choosing a Hybrid ERP system:

• Lower implementation and maintenance costs
• The reliability of On-premise system
• Better flexibility
• Allows the business to stay operating even when the system is not connected to the internet
• Easy to upgrade from On-premise network to cloud network

What does an ERP System do?

ERP system includes a centralized database that aims to improve efficiency in a business. It controls how company resources are spent. Also, it unites numerous reports and metrics across the different departments to a common database.

The user can access business data from numerous activities using common concepts, definitions, and user experience. For example, employees in planning and scheduling have access to the common data as the financial management staff.

All the data are available in real-time. It helps the employees to make a more informed business decisions. Overall, the ERP system helps personnel in all areas communicate with each other.

Benefits of Using Enterprise Resource Planning Software

ERP software indeed has similar goals to other solutions. But, how is it better than other solutions used in businesses? ERP software has some unique features that make it one of the best in the software market.

Here are a few reasons why every organization should consider the ERP system.

Enhanced Collaboration

Usually, all systems in an organization improve in the same way. Depending on the program, the features of an ERP software can vary to some extent. The centralized database is a crucial part of an ERP application.

This database provides reliability to an organization. It also minimizes the errors that may happen when you work with incorrect data. Moreover, all team members in a company have access to the company's central database.

Thus, no delay or hesitation comes in between any projects. Also, there is no need to combine information across different sources or systems. All the data in the system is compiled, stored, and shared through the same system.

As a result, anyone can get access to correct or upgrade the data. So there is no worry about data accuracy and competence.

Save Money

Buying ERP software can be a cost-saving investment. Since ERP unifies many systems, it is undoubtedly a long-term investment. It not only saves money but also saves time.

Because of the integrated systems, users utilize their time efficiently. They don't have to search for information across various systems. Again, the central database concept makes the system much easier to retrieve.

Moreover, an organization doesn't need to spend money while training its users. Thus, it saves money on training and minimizes the logistics effort involved.

Better Analytics

ERP system is an outstanding business intelligence tool. It provides a centralized database of information which helps to improve analysis and reporting. As a result, users can generate numerous reports in no time.

Improved Productivity

Generating reports, timesheet tracking, monitoring inventory levels, processing orders, etc., with traditional methods is boring. It takes hours to accomplish. If you use the right ERP solution, it can complete your tasks automatically.

Plus, redundant tasks like data entry are excluded within ERP software. It helps in performing advanced calculations within minutes. Besides, the users get more time for doing thoughtful tasks, and thus it increases ROI.

Better Inventory Monitoring

It is challenging for emergent companies to track and monitor their growing inventory levels. An ERP software makes this job easier. By utilizing serial numbers, barcodes, and RFID tags, it keeps track of inventory at every stage.

Satisfied Customers

The most challenging part of any business is to manage the customers. It has never been easy as many people are now up-to-date. They use the internet to get advice on what to buy, what to wear, what to eat, etc.

A majority of consumers trust online reviews. So you can make them satisfied by providing client-centered services. ERP software includes a customer relationship management tool that helps access data across business functions.

The users can see the order history, billing information, along with contact details. Besides, it allows the team members to keep a close eye on their customer's needs and wants.

How to Use ERP software in the Organization?

Using ERP software is not limited to installing the software and following the instruction manual. It is beyond that. Organizations that don't know how to use ERP software fail to take advantage of ERP attributes.

They waste the chances of improving their Organization's processes, data accuracy, and processing. Here is how you can take advantage of ERP attributes.

1.  Perform a process review of the business operations

While choosing the best ERP system, it is essential to review and analyze your business processes. Thus, you can know what strategies need improvement and how. Also, you get to know which process needs more attention.

Analyzing the business operations will also help you understand which ERP is best for your business. Check if you need a system with a stronger accounting solution? Or is your company required to focus on the human resources side?

• It is best to opt for a higher-priced ERP solution that covers all these.

2.  Train the employees

It is suggested to train the employees or other end-user of ERP solutions. Only the trained users can get the most out of your ERP solution. Also, they can quickly get used to updates and changes with the proper training.

Besides, a better understanding of the software helps them to make an informed business decision. However, the training should never stop.

Many organizations think initial training is sufficient, which is mistaken. ERP system advances with time. So the employees and other users should level up their knowledge.

3.  Emphasize data quality

You are managing how, why, when, and where of data flow by using an ERP system. So, the data quality has to be very precise, rich, and accessible. Invest some time in designing different data types such as data entry, data audits, etc.

4.  Customize ERP platform as per your business needs

ERP software is an all-rounder solution that suits all types of businesses. You can customize and design the solution to fit your business needs. However, you can ask your service provider to help customize the system.

They can help you hide unnecessary fields, add necessary fields, turn on/off different features, and so on. Ask your service provider about the available options to connect to other apps or execute niche widgets.

5.  The future roadmap of ERP system

Like other software niches, ERP software continues to develop with time. The software you use might look different in the coming five, ten, or twenty years. Ask the service provider about their future roadmap.

How much are they looking to invest in research and development? Will they add any additional features? A good ERP system will continue to grow and change its ecosystem.

6.  Available integration options

ERP integration will help you add different features to your toolkit. So you can increase the operational efficiency of your business. ERP software generally includes CRM, manufacturing and design, SCM, and WMS. Consider all the available integration options in the system for your business.

Leverage Mobile Apps:

Nowadays, ERP solution comes with a mobile app for iOS, Android, or other smart devices. This app comes with many benefits for the users. Through the mobile app, you can access crucial information remotely.

7. Consider the TCO (Total Cost of Ownership)

Businesses must consider the TCO while deciding what type of ERP their business need. Purchasing software costs money in internal resource use, hardware purchasing, maintenance, upgrade costs, etc. Take some to look through everything to save money and time.

8. Get the senior management on the board

Senior management plays an essential role in implementing an ERP system. It may not be compulsory to involve your senior management in the implementation process. But, doing this will help you with the proper resource planning.

9. Set up a cross-functional implementation team

Establish a team consisting of different departments to implement the system smoothly. It makes sure all the key areas of the company are addressed. Collect feedback from other teams to make the system more realistic.

10. Evaluate the lifespan of your business

ERP system provides the ROI, which helps to make a worthwhile decision for your business. The system varies over time. It is better to adjust and track your goals occasionally. A good ERP system should give you an impressive ROI and the best value for the money.

Final Words

Not all businesses can succeed using ERP software. Most of them are unaware of the capabilities and functions of the solution. Also, they don't know how to use ERP software effectively. Indeed, an ERP system is an excellent investment for a business.

So it is essential to give importance to using the software properly. In fact, it is a vital tool for the success of your business. We hope you understand the points we described above. Now you can use the ERP software to increase your business's efficiency, productivity, and ultimately profitability.