Definition of enterprise resource planning (ERP)
Enterprise resource planning (ERP) refers to a type of software that organizations use to manage day-to-day business activities such as accounting, procurement, project management, risk management and compliance, and supply chain operations. A complete ERP suite also includes enterprise performance management, software that helps plan, budget, predict, and report on an organization’s financial results.
ERP systems tie together a multitude of business processes and enable the flow of data between them. By collecting an organization’s shared transactional data from multiple sources, ERP systems eliminate data duplication and provide data integrity with a single source of truth.
Today, ERP systems are critical for managing thousands of businesses of all sizes and in all industries. To these companies, ERP is as indispensable as the electricity that keeps the lights on.
ERP System Functionality and Must-Have Capabilities
The ERP templates can be used by enterprises and corporations as a universal dashboard for the following areas:
- Financial management
- Project management
- Compliance and quality control of production
- Automated data reporting and business analytics
As a rule, an ERP system can consist of modules such as:
Human Resources Module
This module can have the ability to get data from your employees, make job profiles, track work hours and schedules, and compile a visual skills diagram. Many companies also use these templates to track payroll and labor efficiency and reimbursement of courses or medical services.
Finance and Accounting Module
This module automates payroll processing and tax filing and also helps with closing accounts, tracking reservations, and delivers core financial and accounting functions. These all functions provide key insights to minimize financial risk.
Customer Relationship Management Module
Large enterprises and corporations can use the ERP system to improve sales efficiency and customer service quality. It’s possible with the help of information about:
- customers and potential audience
- tracking communication history
- information about purchases and transaction call history
- studying data about visitors’ preferences and hobbies, etc.
Supply Chain Management Module
This module allows to automate the supply chain and optimize the flow of product or service supplies from the manufacturer or supplier to end-users.
A modern company uses this module to track their product inventory, identify it, manage inventory and reports, and determine uniqueness by serial numbers in various contentious situations with customers. Almost all advanced ERP solutions have such a module.
This tool regulates sale data, collects and analyzes various requests, compiles offers, sends invoices, and verifies transactions from customers or contractors.
Purchase modules can help to automate and analyze all internal purchases that ensure the inner life of the company. It can also track and explore:
- supply of raw materials for production
- existing services on the market
- analysis of quotations
- vendor listings
- purchase orders
These analytic features became possible since an ERP system provides AI and BI support for marketing and management activities.
This module helps automate such features as production planning, tracking specifications, monitoring the production progress, and compiling and analyzing actual production.
With over a 20-year experience in enterprise software development, Digitcom Technologies offers end-to-end ERP development and support to help you get a deep visibility into business operations, streamline information flows and optimize business costs.
We analyze, design and develop custom enterprise resource planning software ERP. Our ERP software handles the management of main business processes in real-time. Our ERP applications collect, store, manage and interpret information from various business activities. We also implement SAP ERP, Oracle E-Business Suite, Microsoft Dynamics and so on for our customers.
Why Is ERP Important for Businesses?
ERP systems have become table stakes for businesses looking to use resources wisely. They can help leaders reallocate human and financial capital or build more efficient core business processes that save money without sacrificing on quality or performance.
An ERP is also an asset when it comes to planning and coordination. Employees can see current available inventory and customer orders in detail, then compare supplier purchase orders and forecasted future demand. If necessary, they can make adjustments to head off problems. ERP software improves communication and collaboration as well because workers can check on the status of other departments to guide their own decisions.
As a comprehensive source of data, an ERP system also provides a host of reports and analytics that can be difference-makers for the business. Turning a vast trove of information into charts and graphs that clearly illustrate trends and help model possible results is an ERP capability executives find invaluable.
Implementing Best Practices
It would be misleading to label any ERP implementation as simple or easy. These are projects that will require some time and effort, but some go much more smoothly than others. That’s where these implementation best practices come in — adhering to these as you begin your project can make it a better experience with fewer issues.
- Secure an executive sponsor: Such a far-reaching and critical project needs support from top leadership — ideally multiple executives who represent different business units.
- Start planning early: Leave ample time to map out ERP requirements, prioritize tasks, identify processes you want to improve and evaluate several vendors.
- Communicate and collaborate: Communication is essential throughout the project, from discovery through development, deployment and beyond. Solicit input from employees across the organization to make sure the software will help everyone in their day-to-day jobs.
- Set reasonable expectations: Establish a clear timeline for each stage of the project, along with expected costs and time required of specific employees. Make sure stakeholders understand there will be bumps along the way.
- Choose the best KPIs: Collaborate with a diverse group of business leaders to select the KPIs most valuable to the company that the system should track. Keep the organization’s big-picture goals in mind.
Choosing the Right ERP System
An ERP is a critical business system that must mesh with how each company operates, so there is no one “best” platform. Required capabilities, preferred deployment model and company size will all affect your decision when buying an ERP system. Look to established vendors with proven records of success working with companies in your vertical. Always ask for reference customers, and check out success stories.
Businesses should also consider the software provider’s roadmap for emerging technologies like IoT and blockchain.
Start with the modules foundational to your business and build from there. Companies often begin with a finance module to automate basic accounting tasks and allow leaders to easily view available cash and the flow of money into and out of the organization. Products-based companies typically want to digitize inventory and order management right away because that can generate rapid and significant savings around procurement, storage and shipping. An ecommerce application that plugs into the ERP is a priority for sellers that rely on this sales channel. Services organizations, on the other hand, may start with a PSA (professional services automation) application to simplify employee time and resource tracking and project billing.
After that, a CRM module is a prudent investment because it can improve customer communications, while supply chain management modules for manufacturing, procurement and/or warehouse management can better align purchasing and production with demand. A marketing automation solution integrated with the ERP to attract and retain customers through creative techniques may be another logical addition.
Businesses with lots of employees should add human resources management (HRMS)/human capital management (HCM) systems sooner rather than later to improve the employee experience and earn a reputation as a great workplace.