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Of the many systems available, enterprise resource planning (ERP) systems are perhaps the most widely applied across different parts of a business. Stand out for improving productivity, organization and efficiency for all types of businesses. Keep reading to learn more about ERP software and see current examples of these powerful systems.
What is an ERP system?
ERP stands for "enterprise resource planning" and describes the process of analyzing business functions to increase efficiency and productivity. Companies have long sought to streamline business processes by consolidating internal data, but early versions of ERP were "stand-alone" systems that worked for only one department or component of a company. While still commonly found today, they don't tend to easily integrate with other software within the same company, nor do they provide a good platform on which to build new management technologies.
More recently, the use of workplace-centric software has revolutionized the way these goals are achieved through the integration of once-separate systems. More than ever, ERP continues to be a data-driven approach to consolidating and improving business functions. However, modern systems bring a greater degree of simplicity, organization and automation to employees and business leaders responsible for day-to-day operations.
What is an ERP software?
At the heart of any ERP system is a central database shared by many disparate elements of a business. Rather than having separate data collection and management programs for each department (one for sales, one for inventory management, one for manufacturing, etc.), an ERP system provides a single hub for everything.
Not only does this mean that data is more easily accessible, but it is also consolidated where new data is stored. This creates a "true" source of information for the entire company. This type of system clearly improves experiences for humans, but the nature of ERP systems also makes them friendly to new software that a company might want to implement in the future.
Who uses ERP systems?
ERP systems are not just for large companies, although they have become particularly essential for large and expanding organizations. Small businesses, including independent retailers and services, can also find this type of software valuable support.
ERP systems can be used by any business that strives to collect accurate data, including any business that wants to track categories such as sales, inventory or finance. ERP is especially popular in the fields of manufacturing and manufacturing, but is now used in areas as wide as healthcare, e-commerce, and non-profit work.
How ERP systems work
With a consolidated database as a foundation, ERP systems can be built to achieve a seemingly limitless variety of management and tracking functions. Doing so still requires technical expertise from an external ERP system provider or an experienced in-house team, but it is much, much easier for the enterprise as a whole than the siled management software systems of the past.
Employees usually interact with an ERP system through a centralized dashboard connected to the central database. This gives employees access to real-time information from various parts of the company whenever they need it. ERP systems can operate and store information on premises or, increasingly, in the cloud.
Benefits of an ERP system
Increased efficiency and automation
ERP systems are a boon to business efficiency on many fronts. On the one hand, the ease of navigating a centrally organized system means that accessing information is much simpler. There is no need to switch between different programs, each of which works in a unique way, and there is no need to reformat the data to make it transferable between operations.
On the other hand, ERP systems are designed to support automation features wherever possible, which means that previously time-consuming tasks like reporting and analysis can be completed with just a few clicks. A wide range of business operations become more efficient thanks to increased flexibility in applying computing power to all corners of an enterprise. It goes without saying that these efficiency gains can translate directly into reduced operating costs.
Hand in hand with the improved organization of an ERP system is the improved accuracy in data management it brings to the table. Consolidating all data management under the umbrella of a single system reduces the risk of human and technological error, minimizing reporting discrepancies between departments. While this may seem like a simple step, it can go a long way toward avoiding costly mistakes and even fixing more expensive problems.
One area where ERP systems particularly excel is in detecting duplicate items of various types, thereby also reducing the opportunities for something to go wrong. Of course, this applies to duplicates within the same department, such as duplicate communication channels with the same customer within a sales team or duplicate payments to vendors. But more importantly, ERP systems also eliminate the need for duplicate sources of the same information to be managed across different silos. There is no risk of conflicting information when one set of data has been updated more recently than another, for example, or when categorization of data is done differently by separate departments.
Better interdepartmental collaboration
ERP provides a software infrastructure to link disparate elements of a business together, but perhaps less appreciated is the connection it facilitates between the various human components of a business. Because departments share similar interfaces when interacting with an ERP system and can see each other's data, a group never needs to be completely oblivious to what's happening on the other side of the business. When managers in a sales and marketing department, for example, can see the same numbers and trends, opportunities for cross-departmental collaboration and workflow optimization are enhanced.
Enhanced data security
The wide access of ERP systems and the high degree of information sharing can raise valid questions about system security. (Intuitively, redundant and separately accessed storage systems from an isolated approach seem less vulnerable to malicious activity or other security risks.) measures.
Firewalls and other restrictions keep sensitive information and vulnerable access points limited to the right people, but are enforced in such a way that information still flows freely when needed. When unauthorized activity is detected, all necessary parts of a business can know about it immediately, rather than a red flag just going to the department or area where the breach originated.
Easier regulatory compliance
Regulatory compliance can be a huge headache for companies in many different industries. A company is not only responsible for ensuring that all of its various components are in compliance, it must also track compliance measures and report on compliance tests. ERP systems can help by automating internal compliance monitoring tasks and reporting real-time compliance status with a high degree of accuracy.
ERP systems also make it easy to implement changes when new regulations or reporting loads arise. The customizable nature gives the company great flexibility in this regard as industry standards evolve. Furthermore, when new regulations change some aspect of business procedures, a company using an ERP system has only one body of software to adapt. This contrasts with having to deal with a variety of unique systems spread across the enterprise.
Better integration with new software
One of the best qualities of an ERP system is that it was designed to be developed. Older styles of business management software are often created for one specific purpose rather than another. They are likely to have a low degree of compatibility with other software tools that mostly perform unrelated functions.
An ERP system, on the other hand, provides the foundation for a variety of other types of software, including third-party applications. An ERP system not only solves the compatibility problem but also supports and enhances new systems with its central database. In addition, it can provide a framework for expanding access to new software across the enterprise. ERP systems are commonly integrated with Material Resource Planning (MRP) systems,point of sale (POS) systems,supply chain management systems (SCM)ycustomer relationship management (CRM) systems, to name just a few examples.
Popular ERP Systems
1.Microsoft Dynamic 365
Microsoft's Dynamics 365 software suite offers a variety of ERP options aimed at a wide range of business areas. The software stands out for its use of AI to provide insights into optimizing business operations. Microsoft presents its ERP systems as a great option for companies that currently lack modern ERP software and still need to "break" an isolated approach.
Dynamics 365 integrates seamlessly with LinkedIn Sales Navigator, a big advantage for companies that are already used to this service, as they can continue to use it without the need to implement a separate ERP tool. As part of its Dynamics lineup, Microsoft also offers CRM software that easily integrates with your broader ERP systems. These features make Dynamics 365 a valuable consideration for companies that interact a lot with customers and place a high value on building customer relationships.
2. ADEQUATE SYSTEM
This ERP system is a popular choice for the manufacturing industry as it mainly stands out for its inventory and warehouse management features. It is very suitable for the high demands of working with many other automated systems in production areas. SYSPRO has decades of industry experience, significant international reach and a 98% customer retention rate.
SYSPRO ERP stands out with some cool features, one of which is its "smart manufacturing" program, based on web-connected "smart platforms" that enhance software automation specifically in a factory environment. Another is the use of bots, or what he apparently non-ironically calls "digital citizens," to help automate a company's systems with minimal disruption to existing work patterns.
Businesses of any size that deal heavily with sales and customer interactions can consider Odoo. Like Microsoft's Dynamic 365 systems, Odoo offers an integrated CRM system, which means that your customers cannot look further for third-party CRM software after using Odoo. The system also features POS and e-commerce tools that facilitate software integration for retailers and suppliers.
Odoo's software is based on an open source model, giving its suite of applications a high degree of compatibility and ensuring easy integration. This means that third-party font developments can always reach their full potential in the Odoo environment.
4. ERP Oracle Net Suite
This industry-leading ERP system calls itself the "most trusted" cloud-based ERP software in the world. NetSuite can lay claim to being the most deployed cloud ERP solution with over 32,000 enterprise customers. NetSuite has as much direct experience with cloud-based ERP software as any developer, with roots in some of the earliest examples of cloud applications and ERP systems.
Now owned by Oracle, the company has maintained its industry-leading status and solidified its popularity through integration. Its software products address virtually all ERP needs for companies in all types of industries. NetSuite ERP uses the basic core platform model (covered by an annual license fee) with optional add-on modules. While the suite as a whole aims to provide a complete solution, the à la carte options mean that users still only pay for the tools they need.
5. Brahmin Solutions
Brahmin Solutions' ERP software excels at large-scale, real-time inventory management, making it a valuable consideration for the largest retailers, wholesalers and distributors. Users rely on its ability to elegantly integrate the management of a distribution system with multiple sales channels and warehouses.
Brahmin Solutions excels at integrating an expiry date tracking feature designed for companies that handle perishable goods and other time-sensitive materials. Not only does this allow users to keep track of impending deadlines, it also supports the strategy of when to move what for maximum benefit. The software is also known for its comprehensive and detailed reporting systems.
6. SAP Business By Design
This SAP SE cloud-based ERP system is designed for small and medium-sized companies and subsidiary companies. The popularity of Business ByDesign in this area is supported by the fact that it is implemented in almost 150 countries. As a result, it has grown to support 11 languages other than English, making it a suitable choice for companies with international operations.
SAP Business ByDesign software does it all, with tools in areas as varied as lease management, vendor relationship management, and executive support. A set of "prepackaged integrations" make third-party applications exceptionally easy to build.
7. Acumática Cloud ERP
Acumatica cloud ERP software provides an accounting-focused ERP solution for companies looking for powerful financial management tools. While it offers solutions for a variety of ERP needs, it is particularly strong in its general ledger and inventory management functions.
Along with several of the examples listed here, the product is a subscription-licensed software-as-a-service application and can be deployed on-premises and via the cloud. The company's unusual pricing structure makes estimating applicable license costs more difficult than is the case with many of its peers.
8. Epicor ERP Systems
Epicor discards the one-size-fits-all theory of EPR solutions and shuns the popular model that builds optional add-ons on top of a single generic base system. Instead, the company has a menu of disparate, hyper-specific ERP systems, each offering a solution tailored to a single industry's ERP needs. The company strives to meet the needs of small, medium and global businesses.
Examples of Epicor's industry-tailored offerings include Epicor BisTrack for home improvement companies, Epicor Eagle for independent retailers, Epicor Kinetic for manufacturers, and Epicor Eclipse for electrical, HVAC, plumbing, and PVF companies. Also offered are Epicor LumberTrack, Epicor CMS Automotive, and Epicor Decor Fusion (for paint and decor retailers), among other options.
Our short list of ERP system examples is intended to show the variety of product and service models available in 2023. That said, we've barely scratched the surface. Many more options come in a variety of shapes and sizes, ensuring virtually any business can find the right fit. With all the possibilities, rare are the companies that will not benefit from an ERP system.
FAQ (Frequently asked questions drop-down menu)
Are ERP systems for small businesses?
For sure. While business management will only increase in complexity as the company grows, many smaller companies still consider ERP softwarebe essential in 2023. Even local family businesses still deal with a variety of business elements such as bookkeeping, inventory management, payroll and sales. Of any type of business, smaller ones are likely to have less bandwidth to devote to analyzing and optimizing these various elements, making them good candidates for an ERP system.
Why are ERP systems important?
ERP systems serve as "air traffic control" for business management, centralizing the data and analytics that drive a successful modern business. Without an ERP system, a company's departments tend to build separate data management structures and software systems, each addressing a different facet of business operations in what is called "siloed" or "non-integrated". Alternatively, ERP systems provide a simplified, consolidated platform through which all parts of an enterprise can easily share information and develop enterprise-wide solutions.
How to compare ERP systems?
Potential ERP system users must first decide whether they want on-premises or cloud-based software. There are also several different product frameworks to compare: a single suite offering the widest range of tools, a generic base system with a la carte add-ons, or an industry-specific system designed around specific needs anticipated. Before researching a price tag, compare pricing structures; ERP systems can be treated as a renewable subscription service, a software product with a perpetual license, or a one-time pay-as-you-go installation. Often overlooked, thesize and nature of software providercan inform how the system implementation process will be and what additional support will be provided.