Enterprise resource planning (ERP) software is gaining popularity among small and large organizations due to its centralized approach to business processes. It allows various company departments to collaborate toward a common goal.

Some companies haven’t invested in ERP software because it’s unclear to them what it can do. But an ERP optimizes workflow and could just be what you need. 

What Is an Enterprise Resource Planning (ERP) System?

Enterprise resource planning definition as a system and software is interchangeable. 

The term “system” describes the complexity of business software. In comparison, “software” is the generic term for computer codes. It encompasses simple programs produced by a single developer and sophisticated systems adopted by corporations and governments.

With these definitions out of the way, let’s answer, what is an ERP system

An enterprise resource planning system is a system or software that helps streamline and automate your business processes. It collects, stores, manages, and interprets business data, automating back-office and cross-departmental procedures. 

The competitive advantage of the enterprise resource planning (ERP) system is in how it allows your departments to share a common database. This is put on one platform or ERP, meaning your accounting department can access the sales department’s data to assist in managing accounts payable. 

Enterprise Resource Planning Example

According to Vantage Market Research, the global cloud-based ERP market will generate 47760.01 million USD in revenue by 2028, growing at a 17.10 percent CAGR from 2022 to 2028. Oracle and SAP are among the key players.

Here’s a brief look at these two key players. 

  • SAP ECC ERP is a complete solution for supply chain management, product lifecycle, human capital, finances, and CRM. It can be cloud-based, on-premise, or hybrid. It also integrates with other third-party applications for extended features. 
  • Oracle Fusion Cloud ERP marries Oracle applications to form a suite designed to handle a wide range of business functions, including enterprise resource planning (ERP), customer relationship management (CRM), and human capital management (HCM).

Do You Need an Enterprise Resource Planning System?

The  ERP technology can work for any firm, but not every organization needs one. So, how can you tell?

Why enterprise resource planning is important has something to do with addressing the issues below. If you are experiencing any of the following conditions, then you need an ERP. 

  • You use software for company processes but lack scalability.

Some small businesses get by with five programs, but a growing business needs more. Software integration can be difficult without technical skills. ERP applications centralize your company’s processes and boost efficiency while reducing IT management costs by allowing once-off system updates.

  • Your data management is becoming challenging. 

Continuous data production is a concern for expanding and established businesses. A growing client base and staff members mean more data, which must be managed effectively. An ERP can simplify the flow of internal paperwork and automate most data management operations.

  • You need your departments to collaborate seamlessly.

Any company with more than two departments needs smooth communication and information exchange. Accessing data from other departments helps a company grow fast. An ERP’s established process and data help employees work faster and under less stress.

  • You need complex inventory management.

You need the best inventory management if you are selling. Clients need stock and timely shipments. All departments, locations, and employees can track inventory and submit data with an ERP software system, helping you monitor warehouses and make informed decisions.

Who Uses Enterprise Resource Planning Software?

The nature of your business and the processes you have within also help determine whether you need ERP as your business software solution

Enterprise Resource Planning System
Credit: Campaign Creators

Industries that primarily use ERP systems are the following:

  • Accounting
  • Agriculture and farms
  • Business Intelligence
  • Construction 
  • Education sector
  • And more

Meanwhile, primary business users of ERP systems can be classified according to tiers:

  • Multinational private companies or federal corporations 
  • Large enterprises without a significant global reach 
  • Local governments
  • Medium-sized businesses
  • Relatively smaller businesses that require the most basic of features, such as sales and customer support

What to Look for When Choosing an ERP System

Suppose you’ve assessed the cost-benefit of an ERP and are confident it will boost profits. Maximize your ROI by considering the following: 

  • Determine if you need an upgrade or a replacement.

Assess whether you need a new ERP system or an upgrade. ERPs are modularized so that you can add payroll to existing apps, for example. It reduces costs and interruption. If your system is ten years or older, replace it. 

  • Choose a vendor with a deployment and training service. 

On-premise ERPs need technical installation, so your vendor should provide installation and ERP deployment if you lack a tech team. Review your SLA.  SaaS ERP, meanwhile, involves activating a vendor server account. ERPs are complex and require training. Check if your vendor offers it as well. 

  • Look for robust reporting and dashboards.

Skip spreadsheets and PDFs. ERPs provide regional financial statements, while agile and ad hoc reporting provides in-system queries, smart filters, and real-time data.  Look for dashboards offering quantitative and qualitative user, job, and department data plus drill-down KPIs.

  • Make sure the ERP is easily customizable.

Your departments may have different priorities and cultures, so align ERP with workflows. Each department has its unique workflows. So, look for an ERP with customization, localized dashboards, and flexible processes that let departments design the ERP to their specifications.

  • Go for an ERP that integrates with your systems.

An ERP should integrate with business apps. Evaluate top-to-bottom integration points, including system-to-system, module-to-system, and file transfer. A versatile ERP can work with existing infrastructure, increase its functions, or replace it while assuring easy record and file migration.

Check out these related articles on the ERP Software & Solutions Blog:

How Can You Maximize Your Enterprise Resource Planning Software?

Companies are incorporating cloud ERP solutions, but complexity and costs are obstacles. How can you maximize your ERP software system?

Here are tips to maximize your resource planning systems.

  • Review business processes regularly.

Flawed processes break business systems that even the best system won’t work. Documenting corporate processes reveals misaligned technology and expectations. So, eliminate ERP-related outside-system tasks. Discuss automating, integrating, and simplifying with your partner, vendor, and users.

  • Identify likely issues with organizational change. 

If teams deem ERP a barrier, they’ll record and organize data in non-ERP databases. ERP performance is affected by employee resistance to change. Identifying and addressing such resistance improves operations. So, after assessing the organization’s problems, create a change management plan.

  • Provide targeted ERP training as needed

Without end-users, even the best system is ineffective. Turnover can leave many ERP users untrained. Create a training plan to educate employees throughout the ERP’s lifecycle. Following best practices with your ERP training plan should keep users productive.

  • Create an upgrade strategy

Examine the system. ERP providers invest heavily in updating their solutions with new functionality, service packs, and lessons learned. Regular upgrades should help your company maximize its ERP solution’s lifecycle.

  • Expand ERP functionality

Customization, add-ons, bolt-ons, and third-party interfaces can boost ERP value. Upgrades may meet business needs and capability gaps. For instance, ERP with material requirements planning (MRP) II  extends functionality.

Get Ready to Leverage an ERP 

The importance of enterprise resource planning (ERP) systems can’t be stressed enough. The Internet of Things (IoT) revolutionized today’s ERP, opening new opportunities for operational excellence and workflow automation. It lets an ERP software system collect real-time, accurate data from internet-connected devices and machines, thus bringing your efficiency. 

ERP makes sense if your company’s workflow is established but difficult to manage. Unprepared companies for ERP will have useless automated workflows based on poorly designed processes.

NexInfo has been deploying ERP systems for businesses of all sizes for over 20+ years. Our proven NCAM (NexInfo Cloud Adoption Model) methodology will ensure you get the best ERP implementation experience money can buy. Contact us today to find out how an ERP can benefit your business.