What Does ERP Software Do for a Business?

What every business should know about enterprise resource planning solutions and why they’re a necessity in today’s online commerce landscape

ERP solutions have been around since the 1960s, when the manufacturing industry developed programs to handle inventory and quality control. In the 1980s and 1990s, these programs expanded far beyond manufacturing to include other business operations such as accounting and human resources.

Nowadays, millions of businesses consider their ERP solution integral to their operations. Although manufacturers are still the largest portion of ERP users, many other industries, including distribution, service, retail, and government, have followed suit.

New businesses, however, may be unaware of what exactly ERP software can do and whether it’s even a viable option for them. Let’s take a look at some of the basic building blocks of ERP software, its benefits, and why it’s a necessity in today’s online business landscape.

What is ERP software?

ERP stands for “enterprise resource planning.” Generally speaking, businesses use ERP systems to manage their daily operations. This can include supply chain operations, accounting, project management, and much more. There are a variety of ERP systems available, some even designed for specific industries with a range of capabilities that depend on an organization’s size and needs.

An ERP is a tool that houses a common database of information to support business processes. The ability to automate and integrate these processes is what makes ERPs so universal. Simply put, they make businesses faster, smarter, and more accurate.

There are several different deployment methods for ERP systems; on-premise, cloud-based, or hybrid.

• On-premise: On-premise ERP solutions are deployed at the organization’s physical location, hosted on their servers, and maintained by their IT team. This type of solution is usually used for security or customization reasons despite the large upfront costs and need for ongoing maintenance.

• Cloud-based: Cloud-based ERP solutions, also known as SaaS (Software as a Service), are growing in popularity. These options are web-based and accessible by any device with an internet connection. Data is stored on the vendor’s servers, and all security and maintenance are taken care of by the vendor as well. Scalability and lack of maintenance are what make this option so attractive.

• Hybrid: Some vendors offer a hybrid solution to businesses that may want some aspects of their ERP in the cloud and others on location. Many using this method opt to host most ERP functionality in the cloud and some select applications and sensitive data on-site.

Benefits of ERP software

The biggest benefit to using ERP software is the database of information that acts as a common source of truth for all business processes. Working from the same real-time data with shared definitions and visualization allows departments to coordinate more efficiently.

Without such a system, each department would be forced to create their own methods of operation, which usually results in siloed data and confusion across the organization. An ERP drastically reduces, if not eliminates, the manual work employees do to verify data in this kind of manual system.

One common pool of data also enables businesses to automate core processes, like lead-to-cash, order-to-fulfillment, and procure-to-pay.

Consider a manufacturer: Sales orders are automatically sent to accounting, order processing, and shipping, which accelerates the overall time from order to receipt. The accuracy of these processes also improves by eliminating the need for manual data re-entry.

With a global, real-time view of data, companies are more readily able to visualize their goals and establish KPIs. Operational costs also lower due to automating processes, eliminating excess manual work, and reducing expenditures dedicated to correcting mistakes or inaccurate information. All these benefits transfer to the customer by making their experience fast, accurate, and efficient.

When do you need an ERP system?

If you’re a new business or just exploring the possibilities of an ERP system, you may be wondering when is the right time to commit. If any of these situations are true for you, the time is now:

• You’re seeing bottlenecks in multiple business processes
• Growth is viewed as a problem
• Multiple departments rely on separate databases and programs to store and process information
• Daily processes seem more difficult than they need to be due to manual labor and fact-checking
• It’s difficult to find accurate and up-to-date analytics
• Customer service is suffering due to inaccurate or incomplete data

While the upfront investment can be heavy for many businesses, the cost and time savings that an ERP system provides for years to come are usually well worth it.

Increase the business value of an ERP with integration

Integrations between SAP ERP backend systems and front-end systems like Salesforce are growing in popularity and necessity due to the powerful business solutions they provide. Bringing ERP data to the user application layer makes critical business data more visual and accessible to the entire organization.

Integration also increases data accuracy, enhances customer service capabilities, automates data management tasks, and gives businesses a 360-degree view of the customer. enosix’s pre-built solutions take the complexity out of integration and reduce the implementation time up to 80% compared to other methods.

If you are already using a front-facing CRM like Salesforce and considering implementing an ERP system as well, consider an integration solution like enosix to get the most out of both platforms. You can create a business infrastructure that will grow and scale with you for years to come.

Schedule a demo with us today to learn more.