What is Enterprise Resource Planning (ERP)?
Put simply, ERP takes all your core business operations such as finance, HR, customer relationship management (CRM), warehouse etc. and integrates them via one unified system. Each area of the business still uses software that meets its particular needs, but, rather than operating in a silo, ERP systems use a central database to support these various functions, while sharing data and processes across your entire organisation.
A quick history of ERP
ERP was introduced out of necessity; as enterprise businesses struggled to cope with fragmented processes and disparate data. In response, a new, centralised solution was needed. And, with the launch of robust servers and reliable networks, ERP was made possible. Traditionally only affordable to large-scale industries, the rise in Software-as-a-Service (SaaS) solutions (also referred to as cloud computing) has made ERP software accessible and affordable to SMEs.
The benefits of ERP
ERP helps businesses to work more efficiently. The result is:
Better collaboration
A silo mentality is one of the most significant barriers to business success. Where different departments or offices don’t share information, both efficiency and productivity are reduced. Furthermore, the benefits of technology and Big Data will never be fully exploited as long as business functions continue to use separate databanks. ERP delivers shared access to real-time information, and the value of this unified data cannot be overstated.
Improved productivity
ERP automates routine manual tasks and processes, helping your business save valuable time and removing instances of human error, duplication and rework. So, employees perform better and get more work done faster. Also, integrating your systems allows your staff to spend less time on repetitive work, and more on those tasks that make you money.
Faster decision making
ERP provides a real-time view of data, with easy to use reporting and analysis that empowers intelligent decision making. For example, with an ERP system, you can see which workflows are efficient, and which ones are losing you money.
Decreased costs
By streamlining processes across your business, ERP can help to improve overall efficiencies and lower operating costs. With access to business insights, where appropriate, ERP can also help you to reduce the cost of production. More specifically, ERP can benefit all your business functions.
For example:
- Finance & Accounts. ERP delivers improved control over company assets, cash flow, and accounting processes. Rather than looking at different sets of figures from various departments, you benefit from a unified approach to financial performance
- Operations. ERP helps to streamline your purchasing, manufacturing, inventory, and sales processes. Standardizing these systems can save time, increase productivity and save you money
- Project management. ERP delivers better billing and project monitoring, ensuring you have everything you need to deliver work on time and on budget
- Sales. With ERP, you can improve customer service, leading to increased cross-selling and upselling opportunities. Also, you can integrate ERP and customer relationship management (CRM) software to aid the sales and purchase processes. ERP can also be used to provide a complete at-a-glance overview of a customer order, from sale to delivery
- Marketing. Integrating ERP and CRM ensures that marketing can create intelligently targeted campaigns. Furthermore, with ERP you can better anticipate customer needs and develop products/services to match
- HR. Employees are as frustrated with unproductive working practices as you are. ERP helps to reduce the burden of “boring” work so that you can attract and retain the best people. ERP also comes with tools that help you hire, manage, and pay your team
- Legal. Delivering increased peace-of-mind, ERP systems help to improve compliance and reduce exposure to risk.
Cloud vs. on-premise ERP
One of the decisions you will have to make when investing in an ERP system is whether to go for a cloud-based or on-premise solution.
On-Premise
Installed on your business’s hardware and servers and managed by your IT staff.
Key Benefits
- You retain control over data security (particularly important in industries with strict regulations)
- Can be designed to match your exact needs
- Can be designed to incorporate your existing technology
Key Disadvantages
- Requires large upfront investment
- Can take months or years to implement
- Requires substantial ongoing investment to manage technology and employ IT staff
- Customisations limited by your existing technology
- Can be costly to upgrade
- Limited access to data when on the move
Cloud (SaaS)
Provided as part of a subscription and delivered over the internet. The ERP software is managed by the software vendor.
- Ability to get ERP system up and running quickly
- Automatic upgrades
- Reduction in hardware and software costs
- Reduction in support costs (provided by vendor)
- Reduction in maintenance costs
- Updates handled by the software vendor
- Easy to access the latest versions
- Available anytime on any internet-enabled device
- Data security reliant on your vendor (although reputable vendors have strict standards in place to keep data safe)
- Software may not support one of your essential business processes
- Migrating all your existing data to the new system can be complicated
The challenges of ERP
While ERP can be a powerful business tool, it is not without its challenges. Increased data-sharing is great if all the information is correct, but if entered wrongly, the fall-out isn’t restricted to one department. Here are some of the challenges that must be considered before implementing an ERP system.
- The cost of ERP software, planning, customisation and implementation can be too high for some organisations. Although cloud-based ERP systems do mean that this is less of an issue
- Some ERP deployments are highly time-consuming (again, the cloud helps to get around this)
- If you need a high-level of customisation, this can be tricky and can make upgrades slower and more difficult
- It can be challenging to measure the ROI of ERP, especially initially
- User participation is key to the successful implementation of ERP. So, extensive training and simple to use systems are a must if you want to ensure it is used, and human errors are reduced
- ERP implementations can be difficult to achieve in business with disparate processes and systems
- Once you have signed-up to an ERP system with a single vendor, it can be complicated to move elsewhere.
The good news is that none of these issues are insurmountable, as long as you put the right steps in place during the implementation process.
What to consider when implementing an ERP system
Do you need it?Before you make the switch to ERP, decided whether you really need it or not. Sometimes a few tweaks to your existing systems could be all you require. Likewise, you don’t have to jump in and apply ERP to your entire organisation, ERP software should be flexible enough for you to start small. For example, by installing an ERP finance module and expanding at a later date. What does success looks like?How will you know if your new ERP system is delivering if you haven’t set out what success means to you? Agree upfront what problems you are aiming to solve and establish KPI to help measure progress. Are you being realistic?Be honest with yourself about whether your goals are achievable. And what you need to do to make them happen. You should also work out how much time the project will require and how implementation will impact your day-to-day operations.
What resources will you need?
Having a good understanding of the resources you need to complete an ERP project is vital. Make sure you ERP plan is realistic, detailed, and specific.Invest some time to work out the necessary budget in full. The total cost of ownership (TOC) of any new ERP system will depend on a wide range of factors, including whether you choose a cloud or on-premise solution, and the customisations necessary.
Maintenance and running costs should also be taken into the equation. You should also figure out who is going to be involved in the ERP implementation (both internal staff and external consultants) and any knock-on effect this might have. How much of your day-to-day operation will be impacted across your various departments? Think about training time as well as any new skill sets you will have to bring into the business.
Maintenance and running costs should also be taken into the equation. You should also figure out who is going to be involved in the ERP implementation (both internal staff and external consultants) and any knock-on effect this might have. How much of your day-to-day operation will be impacted across your various departments? Think about training time as well as any new skill sets you will have to bring into the business.
Have you found the right software partner?
There are hundreds of ERP vendors to choose from. When selecting the perfect partner for you, find out about their previous projects, industry experience, and the details of any Service Level Agreements (SLAs). You should also appoint a vendor that can offer:
On and off cloud solutions according to your business needs
Systems that let you start small and scale up as required
Easy, managed, rapid implementation.
How can you ensure buy-in?
The people in your business play a crucial role in any ERP implementation. Different departments can have different priorities, and they are often reluctant to open up and invite scrutiny from elsewhere. So, regular meetings between managers is a must if you want to ensure buy-in and get everyone on-board. You should also encourage feedback during the software selection process as this gives everyone a stake in the decision-making process.
Have you assigned enough project management resource?
EPR projects need full-time, dedicated, experienced project managers, and to ensure success these must be the right people for the job. Having your MD manage an ERP implementation on top of looking after everything else just isn’t going to cut it. Of course, if you opt for a cloud-based system, your software vendor can help with this, but there should still be an active leader looking after things internally. If you are bringing in an internal consultant, hold them accountable and make sure that any knowledge they gain is transferred to internal employees.
How will you train your employees?
Don’t hurry to start using your new system without adequate training. Not being able to use the software is likely to lead to frustration and refusal to adapt. And ERP system will only work if everyone across your business is using it correctly.
Have you planned for the future?Have you planned for the future?
As with any business investment, future proofing is a must. Look at SAP, Oracle, MSCRM and Salesforce solutions that will adapt and grow with your business long term.
SAP® Business One
SAP® Business One is particularly useful for small or midsize businesses with an eye on the future. An affordable solution to manage all your business functions, SAP Business One provides a single view to help you stay in control. It is also flexible, modular and simple to use.
What can SAP Business One help you with?
| Financial Management | Sales & Customer Management | Purchasing andInventory Control | Production Planning | Business Intelligence | Analytics & Reporting |
SAP® Business One is also:
- Affordable with a lower total cost of ownership
- Comprehensive, supporting all your different business functions
- Quick and easy to implement (you can get up and running in weeks or even days)
- Tailored to your needs with extensive industry functionality
- Scalable; you can customise and extend SAP Business One to meet your evolving needs.
At the centre of today’s technology revolution, SAP is a market leader in enterprise application software; helping organisations to generate new opportunities for innovation and growth. At Genisys, we extend the availability of SAP software across on-premise installations, on-demand deployments, and mobile devices; unleashing growth and creating extra value for our customers. Find out more How will you test your new system? As well as testing your new ERP system to ensure it is working smoothly as implementation happens, you also have to make sure it meets your business needs, and that it continues to do so. Have you protected your data? Data protection is big news, especially with the introduction of the General Data Protection Regulation (GDPR). With ERP systems holding huge amounts of personal customer data, it’s vital that these are compliant with the latest legislation if you don’t want to risk hefty fines. How long does ERP implementation take? ERP systems can be implemented in as little as a few days, or take years to complete. So there is no straightforward answer to this question. However, while in the past change didn’t come quickly, SaaS-based ERP applications have made implementation must faster. This is because the software doesn’t need to be installed in the traditional on-premises manner. How much does ERP cost? When researching ERP, the costs can seem off-putting. That’s because, as well as the licensing fees, you also have to think about a wide range of additional costs when choosing an ERP system. This could include:
- Implementation
- Training
- Time away from the day job
- Customisations
- Data conversion
- Maintenance
- Upgrades
- Support.
However, designed to be affordable for small businesses, SaaS solutions like SAP Business One have a much lower total cost of ownership. Reducing hardware, software, maintenance and support costs, you get genuine enterprise technology at a fraction of the price. Furthermore, an ERP implementation also has the power to create long-lasting value for your business by eliminating waste and boosting productivity.
An industry approach to ERP
To make the most of your ERP solution, it makes sense to invest in one that meets the requirements of your industry. Not only will this make implementation more straightforward, but it will also keep costs down as you will need fewer customisations. Consider how the system will fit into your current IT infrastructure, and support the regulatory requirements of your business.
Spotlight on fashion and apparel
The challenge: With retailers often using several solutions to manage their various functions, a lack of integration can result in time-consuming data duplication and no definite information into accurate stock levels. More importantly, without the right tools, fashion and apparel retailers can lack awareness about customer demand and fail to meet current and evolving trends. In a highly competitive environment, this can have a devastating impact on a business’s bottom line. How ERP can help: Engage customers and give them access to the products, information, and personalised shopping experiences they want. Across any channel. How:
- Harness real-time customer and POS insights alongside sales forecasting data to proactively make smarter purchasing decisions that meet customer demand
- Automate business processes to reduce hours wasted on data entry and management
- Maximise visibility into profitability and margins, sales, marketing, inventory, and more
- Improve visibility of supplier information
- Integrate and streamline your business processes, leading to a reduction in errors; helping your business to save valuable time.
The solution: SAP Business One for retail.
Spotlight on manufacturing
The challenge: Manufacturers must be able to meet customer demand to remain competitive. Those that won’t be left behind. However, a legacy of disparate systems can mean that accessing real-time information is impossible, and processes are often duplicated. What’s more, an over-reliance on manual systems means that management teams are often dependent on their employees for daily reports. How ERP can help: Gain better access to information that allows manufacturers to meet customer demand and develop new revenue streams. How:
- Harness real-time customer insights with instant access to information including accounting, production, sales and marketing, and more; without the need for manual intervention
- Calculate the unit price excluding taxes and discount automatically
- Calculate the cost of production, and identify any areas to improve margins and accelerate cycle times
- Communicate lead times and production schedules with supply chain partners; making sure that products are produced and delivered on time
- Integrate and streamline your business processes, leading to a reduction in errors; helping your business to save valuable time
- Increase visibility and control of supplier information.
The solution: SAP Business One for industrial machinery and components.
Business made easier
At Genisys, we offer best-in-class enterprise resource planning and customer relationship management services that are always aligned to your organisation’s objectives. Through the use of data insights, we ensure our customers always make well-informed decisions. This leads to streamlined processes, greater business agility in the face of growth, and overall success.Our services will help you to:
- Save money. With cost-effective EPR solutions that are bespoke for your business need
- Get access, anytime. With solutions that are always available and easy to use
- Benefit from smart, ongoing support. Our hassle-free implementation and post-implementation support takes the pressure off your IT staff.
Coming up next
Should you let ERP software run your business?
Enterprise Resource Planning (ERP) takes all your core business operations such as finance, HR, customer relationship management (CRM), warehouse etc. and integrates them via one unified system. But ERP can take time and upfront costs to implement effectively, and thisRead More