What Are ERP Systems

The business world has undergone a fundamental transformation over the last decade. The use of technology is no longer a luxury reserved for industry giants but a necessity for every business, big or small. This has opened doors for startups to challenge established brick-and-mortar companies in ways that were once thought impossible.

The increasing accessibility of technology is due to the ongoing technological revolution. What was once the exclusive domain of large corporations is now ubiquitous in all business operations. Communication, production, inventory management, and record-keeping are some areas where technology is employed.

One area in which technology has made significant inroads is planning management systems. Enterprise Resource Planning (ERP) systems, once a pipe dream for all but the largest enterprises, are now widely adopted by businesses of all sizes and shapes. This democratization of technology has made it possible for even the smallest startups to compete with industry giants on an equal footing.

What is Enterprise Resource Planning (ERP), and How Can it Revolutionize Your Business?

Enterprise Resource Planning (ERP) systems are specialized software designed to manage the day-to-day operations of a business. Rather than having separate systems for different business functions, ERP systems combine them under one roof. This includes everything from accounting functions such as receivables, payables, and cash management to compliance-related tasks like tracking product nonconformities and customer complaints. For small businesses looking to cut costs and improve their processes, ERP systems are a game-changer.

Integrating a Customer Relationship Management (CRM) software with an ERP system can optimize how businesses interact with customers. For example, with ERP software, sales departments can efficiently generate and execute proposals while significantly reducing data redundancies. One well-known example of an ERP system is Oracle, which follows a Software as a Service (SaaS) model, allowing for the management of multiple functions on remote servers. For example, if you’ve attended university recently, you may have used Oracle to manage your finances or submit complaints.

One of the most significant benefits of cloud-based ERP systems like Oracle is that data is never lost. But where did ERP systems originate? The roots of ERP can be traced back to Ford Whitman Harris’ Economic Order Quantity (EOQ) model in 1913 and Black and Decker’s MRP system in 1964, which were workflow optimization tools in manufacturing and scheduling. In the 1980s, with the advent of computers, businesses began to employ them for processes beyond manufacturing, such as finance, CRM, and procurement. Software solutions for planning and controlling these functions started to emerge, and by the late 1990s, they were given the name ERP. ERP systems have continued to evolve and improve to become the versatile tools they are today.

Who Benefits from ERP Systems?

Many assume that only large businesses can afford ERP systems due to their perceived high cost and complexity. However, this is far from the truth, and the honest answer might surprise you.

ERP systems have become a game-changer for small to medium enterprises (SMEs) in various industries. SMEs often struggle to compete with larger competitors due to their limited resources and workforce. ERP systems have proven to be a great equalizer for SMEs, providing various benefits to help them succeed.

One of the most significant advantages of using ERP systems for SMEs is that they can achieve a substantial return on investment (ROI) within two years of implementation. This is a crucial factor for small businesses that must make the most of every investment. In addition, ERP systems help SMEs automate their repetitive tasks, optimize their workflows, and improve overall efficiency, leading to cost savings and increased productivity.

Small businesses can use ERP systems to streamline their business processes, from managing finances to tracking inventory, customer orders, and production schedules. By integrating ERP software, small businesses can improve their decision-making capabilities, reduce errors, and respond to customer needs more quickly.

Furthermore, using ERP systems allows small businesses to focus on their core competencies and long-term strategy by automating tasks that are typically time-consuming and distracting. This can help small businesses become more agile and responsive to changes in the market.

In what ways can small businesses benefit the most from ERP systems, and how should they utilize this software? To answer this question, it’s essential to identify the areas where ERP systems can impact SMEs the most.

Who Needs ERP?

Businesses can enjoy numerous benefits from implementing ERP systems. But, to ensure you’re not falling too far behind, what are the clear indicators that your enterprise should immediately switch to an ERP system?

1. Your current processes are inefficient.

New businesses may struggle to maintain a consistent workflow. Shuffling between sheets, attempting to make applications interact with each other, and continuously revising schedules can be challenging. More importantly, significant communication lapses can result in a mismatch between supply and demand, resulting in shortages and surpluses.

ERP software can solve this problem by integrating existing software and creating a stable workflow that eliminates mistakes. With a system that handles it for you, gone are the days of accidental duplications or errors that create mismatches in your orders.

2. Current software is no longer adequate.

Software used by a growing business differs entirely from that used by a new one. Larger volumes necessitate more robust systems; eventually, your “reliable” entry-level software will no longer be as valuable.

ERP software can be handy with cutting-edge space-saving and storage methods. For example, SAP HANA is an ERP system that uses in-memory data storage instead of disk storage. This is especially useful for managing large volumes of data for growing businesses while keeping up processing speeds compared to traditional, obsolete software.

3. Software integration is too costly.

The pains of manually integrating software for your enterprise are familiar to any small business owner. While they may make processes more efficient in the long run, manually integrating software has a variety of costs, including staffing, training, and license fees. This isn’t even considering the time it takes to meticulously plan how they will work together and how each department will use them.

Once again, an ERP system can solve all of your integration-related issues. However, regardless of the ERP system used, the underlying benefit that governs all ERP systems is that they streamline data and decrease external costs such as training or error handling.

4. Meeting consumer demand has been challenging.

Consumers are the most crucial aspect of any business, and growing companies may need help managing their relationships with them. This could range from tasks as simple as inventory management to more complex tasks such as retrieving and analyzing consumer-specific information. This can be especially harmful when growing businesses receive more orders from consumers than their processes handle, resulting in long periods of stagnation.

CRM is at the heart of any ERP system. ERP software enables easy data collection from various functions and sources along the value chain, whether related to accounting, order management, or procurement. It also enhances data analysis by consolidating this information on a user-friendly dashboard, which saves costs and offers significant accuracy — an invaluable asset to any small business. This keeps your consumers satisfied and loyal and creates more room for entering your domain easily.

Do you believe your business relates to any of the above-mentioned indicators? If that’s the case, consider upgrading your business technology. Investing in an ERP system is a small, short-term expense that yields a variety of long-term advantages.

Why Your Growing Business Needs an ERP System

As your business grows, so do your time and resources demands. To sustainably scale your operations, you must streamline and delegate tasks without sacrificing quality or control. This is where an Enterprise Resource Planning (ERP) system comes in.

ERP systems provide a centralized platform for managing and automating core business processes, such as inventory management, accounting, customer relationship management, etc. By integrating all these functions into a single system, ERP makes it easier to track and optimize your operations, reduce costs, and improve customer satisfaction.

Furthermore, ERP systems provide greater security and efficiency by minimizing the risk of errors, redundancies, and data breaches. They also facilitate better communication and collaboration among different teams, departments, and stakeholders, both internally and externally.

So, to compete in today’s market and become a significant player in your industry, you must invest in an ERP system that can support your growth and innovation. With ERP, you can focus on your ideas and customers while leaving the operational details to the experts.