Enterprise Resource Planning (ERP) solutions are comprehensive applications that encompass the entire enterprise from end to end, cutting costs and improving productivity.
Enterprise Resource Planning (ERP) software applications are robust technology systems that automate and optimize processes and tasks across the back office of an enterprise.
ERP systems improve productivity and reduce costs by merging best practices and proven methodologies with powerful software and hardware. ERP systems enable businesses to integrate key data and processes across critical areas such as production, finance, distribution, and more. This centralized system dramatically enhances the control, planning, management, and execution of critical operations within the enterprise.
What exactly does an ERP system encompass when it is implemented within a business?
An ERP solution suite automates and streamlines critical processes, including accounts payable/receivable, activity management, benefits administration, and billing. ERP systems also help businesses to increase the efficiency of cost tracking and cash management. Manufacturing companies can enjoy the benefits of efficient cost containment and capacity planning.
Along with these features, many ERP software suites also include extensive and powerful decision support capabilities, centralizing information into an operational data store or data warehouse so that key information is readily available to be able to make timely business decisions.
ERP systems are often built with a broad range of modules that include engineering, finance (such as general ledger and forecasting functions), and human capital management. Every ERP module built into the system is designed to improve operations, collaboration, and data sharing within and between these critical back office departments.
Manufacturing was one of the first industries to implement ERP applications over forty years ago. Since then, these companies have been using their ERP systems to enhance vital business operations such as production, while at the same time reducing costs with improved intellectual property tracking, inventory management, and input/output control. All this enables companies to implement proven best practices such as just-in-time manufacturing and kaizen techniques. ERP manufacturing modules also optimize labor usage, reduce production lag times, and enhance the effectiveness of materials management, all of which deliver benefits such as lowered costs and more efficient production.
Many leading ERP applications are designed with a robust and complete financial management system. Using these accounting modules, staff can track net cash flow, manage order-to-cash cycles, and execute purchasing agreements.
Along with streamlining financial processes, ERP systems can optimize non-financial activities, including payroll, quality control, and resource allocation. ERP software can also improve scheduling to enhance project management effectiveness, streamline purchasing and procurement procedures with supplier relationship management, and deliver more control to the human resources department with time and attendance tracking.
Because an ERP system centralizes back office processes, companies will gain the tools to maximize their usage of human and financial resources; track and manage vendor inventory, either onsite, offsite or both; and effectively plan, map, and execute vital business processes, leading to improved workflow management.
With an ERP system in place, companies can reach the zenith of cost-efficiency and productivity, achieving and maintaining a solid competitive advantage in their field.
An Enterprise Resource Planning (ERP) software system is built with robust functionality that enables businesses to improve the planning, execution, management, and control of a broad range of vital back office processes.
Many ERP software packages provide a broad array of applications and modules designed to automate and streamline activities and procedures in nearly all back office departments, including:
ERP software helps companies improve the accessibility and accuracy of critical financial data, while also saving time and eliminating the risk of error by automating and streamlining routine, repetitive accounting processes such as budget allocation, creation, and management; financial and cash flow analysis and reporting; accounts payable and receivable; capital equipment and asset management; and performance management.
ERP software packages usually include functions for cash, budget and fixed asset management; general ledger; and accounts payable and receivable.
Manufacturing modules built into an ERP system provide tools to improve design and production processes from end to end.
Manufacturing applications streamline the processes that encompass the design, the engineering, and the configuration of a product. Manufacturing modules also track and manage all product parts, automate production activity scheduling, and improve quality assurance processes.
With an ERP system and powerful manufacturing capabilities, companies are enabled to create quality products in the most cost-efficient and effective manner possible.
Project Management helps companies improve the way they plan, schedule, and execute their most important business projects. Project Management features cover billing, invoicing, costing, time and expense tracking, activity monitoring, and resource allocation.
The Project Management applications found in ERP software enhance strategic project planning and enable integrated management and communication, along with greater control, to ensure that all the tasks and activities related to a project are successfully completed.
Supply Chain Management
Supply Chain Management capabilities built into ERP software deliver features for order management, inventory management, return management, purchasing and procurement, incentive management, logistics, and supply chain planning. These functions improve the coordination and control of complex supply chain activities and workflows.
With Supply Chain Management applications, companies gain more control over supply chain processes such as sourcing, acquiring, and storing raw materials. Supply Chain Management also streamlines scheduling, warehousing, and distribution activities.
Human Capital Management/Human Resources
Human Capital Management automates the complete employee lifecycle. Human Capital Management applications support critical human resource functions such as hiring, staffing, and training. Other features include time and attendance tracking, benefits administration, and performance and compensation management.
Human Capital Management tools help minimize the administrative burden on HR teams, enabling them to focus on how to most effectively manage their workforce.
Maximize the Value of Your ERP Software
Researching and purchasing an enterprise resource planning (ERP) software system can be a complex process, especially for companies who have never before undertaken a project of such scope or scale. Provided below are some quick tips to help you find the best ERP software that will meet your business requirements, enabling you to maximize the value of your solution.
1. Create a requirements list.
The first step should be to define the objectives you hope to achieve or the issues you hope to resolve with an ERP software system. Including key stakeholders and keeping in mind their particular requirements will help you to determine which ERP software features must be present in the solution you choose.
During this initial phase, you should also define critical success factors and identify any pending business strategies that could have an impact on your back office and your ERP software environment.
2. Research vendors.
Before you can create a shortlist, you’ll have to speak with several ERP software vendors to find the one that best meets your requirements.
When speaking with a vendor, conduct a thorough interview and ask questions about their history and background. This is important for ERP companies, as many have been involved in consolidation or acquisition procedures in the past years.
Also inquire about the features and capabilities of their ERP software applications. A live demonstration will allow you to see the ERP solution in action, giving you a better idea of how the software will function once it is implemented. You can also request to speak to existing customers to get their feedback about the vendor and its software offerings.
3. Get a test drive.
Though a live demonstration can give you an idea of how the ERP software functions, a test drive of the solution in your own environment will give a truer feel for how the system will work in your particular business.
Ask the vendor to give you a trial of the ERP application for 60 to 90 days. A test drive of the solution can give you a more accurate assessment of whether the ERP system can truly meet your business requirements.
4. Don’t be afraid to negotiate.
Negotiations are a common business practice, and an ERP software purchase is no exception. Follow these tips to get the most out of your money.
- Use the standard, discounted price rather than the list price when you begin the negotiation process.
- Even as you’re negotiating with one vendor, keep your options open and continue to speak with other ERP software vendors. Also, let it be known that price will be a determining factor in your final decision.
- Don’t forgo a discount in exchange for free stuff, such as additional modules, that you don’t actually need.
- Agreeing to serve as a customer reference could garner significant savings.
- An ERP software purchase involves more than just the software itself. Remember to consider the costs of implementation, consulting, training and maintenance, and see if there are any discounts available for these services as well.
5. Create an implementation plan in advance.
Define and map existing workflows to better determine how ERP software will affect them and if you need to customize the solution.
Also, have your IT team map out your existing technology environment and how ERP applications will be integrated within it.
Deciding how to deploy the ERP solution is another important consideration. ERP software affects many back office departments and an “all at once” implementation may cause too many disruptions.
6. Get your users involved.
User adoption is crucial to the success of your ERP project. As such, departmental management and end-users should be involved in every step of the ERP selection and implementation process. By including them in the process and soliciting their feedback, you can ensure their vested interest in the project and its success.
7. Measure results.
Before you begin your ERP initiative, define measurable goals and continuously monitor results. This will ensure the success of your project by allowing you to identify and correct problems that come up along the way.
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