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what is an erp

ERP is a big topic.  ERP is also essential to today’s Information Economy businesses.  ERP sits on top of CRM and other business software and touches every aspect of a business.

 In this blog we will cover, what the definition of ERP is, provide an overview of ERP, touch on what makes up an ERP system, highlight what parts of a business benefit from ERP, and call out the benefits of ERP. 

Definition and Overview of ERP

ERP is an acronym for enterprise resource planning. As a summary, ERP is a software platform with a common data base that allows all employees in a business to collaborate and make better and faster decisions all while having more insight.  Enterprise resource planning systems can help businesses in a variety of areas including, inventory and order management, accounting, human resources, and customer relationship management.

ERP or Enterprise resource planning software integrates all those functions into one software platform.  ERP can streamline business processes and can streamline access to business information.  The use of ERP leads to improved collaboration across an entire business.

What drives ERP systems is a shared database that supports multiple business functions and multiple groups within a business.  It is no surprise then that the early vendors of ERP were large database providers that included SAP, Microsoft, and Oracle with products like Microsoft Dynamics, Oracle Net Suite and Sage.  The adoption of ERP by enterprises started in the 1990’s and continues to this day.

Large enterprises are the biggest users for ERP, but SMB or small and mid-sized companies can also benefit.  ERP started off with on-premises monolithic deployments.  On prem however got awfully expensive and could not keep up with security requirements or technology trends.  Nowadays, virtually all ERP / enterprise resource planning systems are deployed in the cloud.

The cloud has spurred innovation and driven down costs.  It has also allowed other vendors, and vendors who are better fits for SMEs, to provide ERP solutions.  Two vendors Valenta works closely with, Salesforce and Zoho, are good examples of this. Salesforce and Zoho, providers of CRM, now also offer ERP as part of their platforms.

What makes up an ERP system?

Tying together all the different software tools used in a business is what Enterprise resource planning software provides.  The centralized software platform sits on top of CRM as well as all the other software tools used by a business.  Additional components of an ERP solution can include software for quotation, inventory management, warehouse management, shipping, supply chain management, product planning, manufacturing, project management, accounting, order processing, e-commerce, expense management, HR, payroll, and much more.

  • An ERP module for a Finance or Accounting department might include, general ledger, accounts payable and receivable, cash flow management, budgeting, bank reconciliation, multi-currency accounting, and financial analysis.
  • Manufacturing modules for enterprise resource planning software might include production scheduling, stock and order management, BOM integration batch creation, shop floor/machine/employee/overhead costing and other items.
  • Service modules for ERP can include service request processing, work estimation, work order opening and closing, service history management, work progress tracking, and project management among other tasks.
  • In a Procurement department ERP could be used for requisitions, purchases, bid analysis, purchase orders, request for quotation and any other number of things.

Besides these departments ERP modules can be used for: Asset Management, Facilities Management, Sales, Customer Support, Transportation and Logistics, and a lot more.

What parts of a business benefit from ERP?

Business of any revenue size or employee counts can benefit from ERP.  Businesses in any market vertical can benefit as well.  At Valenta many of our customers fall into the following categories: Financial Services, Accounting, Insurance, Banking, Real Estate, Property Management, Manufacturing, Telecommunications, Utilities, Medical, Healthcare, Consumer Goods, Education, Energy, Mining, plus Supply and Logistics.

All these types of businesses use ERP.  We have helped SMB customers with ERP, and CRM a subset of ERP, across all those market segments.  Not every ERP is a match for every business.  Some ERP solutions offer different capabilities for specific types of businesses.

Also, frequently some of the larger vendors of ERP are a poor fit for SMB clients.  For SMB clients a good approach is to think about what CRM and what finance, or accounting software will be used then select a good ERP to work with those tools.  Every department including Finance and Accounting, Sales and Marketing, Human Resources, Information Technology and Operations will have ERP modules that they can utilize to be more efficient.

Again, having all these different departments updating the same database and having real time access to changes in the business is the biggest benefit of enterprise resource planning systems.

What are the benefits of ERP?

The benefits of enterprise resource planning systems are numerous.  Implementation of ERP can help a business plan, streamline, and automate.  The comprehensive data that is provided by ERP platforms can be provided to executives and key stakeholders in constantly updated dashboards so that they can make decisions quickly and spot trends.

Spotting trends early is key in today’s competitive environment so that problems can be identified before they derail a business.  Trends identified early can also be business opportunities.  An ERP enabled business can have first mover advantage over their competition.  This agility and intelligence brought with ERP can not be understated.

The increase in productivity and efficiency that is brought about is another key benefit of ERP.  Using ERP can also help a business eliminate redundancies and doing the same work in multiple departments.  The effect of ERP is to break down silos and get everyone in a company focused on the same priorities, goals, and challenges.  Having the same information shared across all departments with transparency can also provide automation opportunities to link and process tasks across departments and roles automatically.

Having everyone working on the same data and working collaboratively also has one other benefit in addition to agility, productivity and efficiency … it radically reduces errors.  Errors are waste, wasted time, and wasted opportunity.  Errors sometimes can result in lost business, lost customers and increased costs.  The ability to reduce errors is just one more reason of many to implement enterprise resource planning software.

Want to learn more?

Exploring and implementing ERP can be overwhelming but it does not have to be.  Working with a good consultant to document where you are now, where you want to be in the future and then evaluating what are the best ERP options for your business is an excellent approach.

A good consultant can provide blank page best options for ERP or the best ERP options keeping in mind investments you have already made.  ERP software is the brain of a business, and it can help any business perform better.  The 24/7, in real time, 360-degree view of your business provided by ERP can make a world of difference.

ERP can also solve problems like limited visibility, disconnected or siloed departments, manual processes, limited accessibility to business data, security issues, audit and compliance challenges, insufficient reporting, plus difficulties dealing with increased business and transactions.

If you would like to learn more about ERP and discuss an ERP project, we are here for you.  Valenta is a business consulting and business software integration services provider.  We focus on serving small and midsized businesses.  We provide the same services large consulting firms offer to the Fortune 1,000 to these underserved but economically vital SMB’s.

Valenta provides offshore or near shore virtual staff in addition to consulting and software integration services and can provide virtual ERP Administrators for SMB ERP implementations.  Read more about Consulting

If you would like to get in touch on this topic or any others, please reach out here. Contact us

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