erp software, erp software for business

The pros & cons of ERP software for business

- Updated March 12, 2018

erp software, erp software for business

Why ERP software?

Enterprise resource planning (ERP) is an industry term for the broad set of activities that helps an organization manage its business. ERP software is business process management software that allows an organization to use a system of integrated applications to manage and automate business functions.

An important goal of ERP is to facilitate the flow of information so business decisions can be data-driven. ERP software suites collect and organize data from various levels of an organization. They also provide management with insights into key performance indicators (KPIs) in real-time. Due to the central repository, ERP help organizations improve the flow of information across the organization. Therefore, that’s the main reason why companies of all sizes are transitioning to cloud ERP systems. That way, they don’t have to worry about their data capacity issues and prevent additional problems with data storage.

 

How does ERP software work?

As the ERP methodology became popular, software applications emerged. Besides supporting a single business function, they now incorporate modules for CRM and business intelligence, as a unified package. The software package integrates product planning, development, manufacturing, sales and marketing into a single database, application and user interface.

ERP are built on a single, comprehensive database management system. In fact, the central feature of all ERP systems is a shared database that supports multiple functions used by different business units. In practice, this means that employees in different divisions—for example, accounting and sales—can rely on the same information for their specific needs.

An ERP System automates core business processes such as taking customer orders, scheduling operations, and keeping inventory records and financial data. As a result, ERP systems can drive huge improvements in the effectiveness of any organization. You can also integrate them with other systems (lice bar-code readers) through APIs.

ERP systems help businesses:

  • define business processes and supply chain;
  • protect business data;
  • provide well-defined business roles;
  • ensure security and limited access to data;
  • plan the workload;
  • improve customer service;
  • translate data for better decision making.

 

Benefits of ERP software

ERP systems are all about data. In ERPs, data is standardized and presented in an easy-to-read dashboard format. You can use it to make comparisons and forecasts for you decision making process. They also offer advanced user-permission settings, preventing sensitive data from ending up in the wrong hands.

Data Unification: Sharing data across functional silos such as Customer Service, Sales, Marketing, and Business Development enhances collaboration throughout the company. ERP solutions have controls to ensure who is viewing, editing data, take care of the security of data and ensure accurate merging of that data.

Data Accessibility: ERPs are all about control. The right people are able to access the right data at the right time. In addition, certain users are prevented to use certain type of data in the same time. Therefore, ERP systems allow you to manage everything down to the smallest detail.

Data Quality: Using data validation ERP systems eliminate human input and lower the errors occur. Integrity and reliability of data is improved making in more readable and easier to take business related decisions.

Mobile ERP APIs: Executives and employees want real-time access to information, regardless of where they are.  The mobile trend present in other software markets has made it “obligatory” for ERP providers to create applications for Android, iOS and Windows smart devices. These applications typically offer a pared-down dashboard that updates in real time with crucial business KPIs, like: sales, revenue, web traffics, customer acquisitions etc.

Standardized Business Processes: It allows businesses to standardize their own processes and systems, for consistent results that can continually improve work in the organization. Therefore, processes and departments work in coordination.

Collaboration and efficiency: An ERP system eliminates repetitive processes and greatly reduces the need to manually enter information. The system will also streamline business processes and makes it easier and more efficient for companies to collect data. ERP platforms allow all employees to have on-demand access to data across departments, which allows them to see the big picture. It provides employees with the data and tools that they need to make proactive decisions. Thus, employees feel more valued, which fosters a culture of team spirit.

Integrated Reporting: Instead of distributing data throughout a number of separate databases, the system puts all information on a single location. With this approach, ERP software organizes information which makes reporting easier and customized to the user needs. The company can respond to complex data requests more easily and users can also run their own reports without relying on help from IT.

Customer Service: Sales and customer service people can interact with customers better and improve relationships with them, through faster, more accurate access to customers’ information and history.

 

Drawback of ERP

  • The cost of ERP Software, planning, customization, configuration, testing, implementation, etc. is too high (especially for small businesses);
  • The participation of users is very important for successful implementation of ERP projects. The user interface has to be simple, and user training might be critical;
  • ERP deployments are time-consuming and projects may take many years until they are complete and fully functional;
  • ERP implementations are difficult to achieve in decentralized organizations with disparate business processes and systems.

 

Reads more about how to integrate your business using ERP system functionalities here.

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