ERP solutions showed fascinating development and improvement in effectiveness within last 10 years, and nowadays, we can already state that ERP systems provide fully automated management for most business processes. But what are the precise measurable aspects of improvement that can be provided by an ERP system to your business?
Key features of an ERP (Enterprise Resource Planning) software:
- Tracking and optimization for business operations. ERP systems provide effective control over most business process on operational level with an opportunity to make timely changes, while also offering features to manage business processes on strategic level. With the help of single data base, ERP program synchronizes real-time data flows from all business units. Thanks to powerful ERP performance, you can quickly identify problem areas and issues to resolve, which could barely be noticed manually.
- Automated and standartized reporting and analytics. how to improve the business performance in the most efficient way? Well, the best option is to use data-driven approach to making decision. ERP systems provide you with up-to-date reports and analytics that unite data from multiple sources to help you make management and operational efficiency decisions timely and based on relevant data rather than on emotions.
- Customers and suppliers can cooperate closer – ERP solutions allow you to transfer management and control functions, including tracking, to the customer’s or supplier’s side, which means they can track deliveries and supply chain, check out inventory stocks, geolocation of goods, and so on, which also improves customer experience.
- Simple adaptation to market demands and flexibility in terms of business management. ERP software can work with different modules, including those that stay inactive until there is a need for them. The design and functionality of each module can be customized in accordance with needs and goals of the business.
- Data security. Every one of your employees will have their own account to operate the system, and each of this accounts can be provided with a specific level of rights to meet employee’s duties. The work of every single user can be controlled, and so the data drain due to human error or malice is technically impossible.
If we continue to list the benefits of ERP systems, it will last forever, so let’s learn about key aspects of implementing the EPR system and their influence on business operations and business performance.
Total automation and optimization of business processes and operations
The first and foremost thing that ERP affects is the documentary processing of all internal enterprise procedures: planning, receiving and shipping goods, data exchange, processing customer orders, integration with the website and other services. In this regard, ERP can be mistakenly called a system for processing documents. This is partly true, but this definition is incomplete. For example, in the BAS product line, such a solution is presented as a separate product “BAS Document Management” and is positioned as a DOCFLOW system (electronic document management) for enterprises that use a large volume of document flow in their work. ERP solution, unlike DOCFLOW, penetrates and automates all levels of the enterprise and is a more broadly focused program. It provides inventory management, human resources management, employee performance tracking, employee training, customer relationships management, and so on. Successful implementation of ERP system allows you to reach business goals faster, reduce inventory turnover, improve business growth and business functions, boost customer satisfaction and employee satisfaction, grow employee productivity and get single source of data.
The ERP system programmatically supports all stages of work of both internal and external processes of the enterprise, for example, it accompanies the entire sales process: accepts orders, creates a fully automated action scenario, shows the balance in the warehouse, customer history, adds data to statistics.
ERP system as business performance improvement software
Modern ERP systems are presented as integrated information systems. This approach opens up wide opportunities in the field of enterprise management, for example, the possibility of operational international management. Modern ERP systems have mechanisms for managing multinational companies, including support for different time zones, multilingualism, multicurrency, accounting and reporting systems. This is very important for large companies and corporations, where individual structures and divisions closely interact with each other, while being located in different countries and even continents.
They are used to promptly provide the company’s management with the information necessary to make management decisions.
In fact, an ERP system allows you to use one solution that integrates all disparate solutions into itself. A single system allows you to comprehensively manage processing, logistics, distribution, inventory, delivery, invoicing, and accounting. ERP systems are aimed at maximizing the satisfaction of companies’ needs for business management tools.
Productivity improvement
The use of a fully functional unified company resource management system can provide huge benefits to an enterprise in organizing effective company management, increasing the speed of response to changes in the external environment, and improving the quality of customer service. The creation and implementation of an ERP system requires significant investments. Accordingly, there is a pressing issue of reducing labor costs and increasing efficiency.
The justification of general requirements for an ERP system should be based on an assessment of the expected economic consequences of automating management functions.
Since the goal of most businesses is to maximize profits, the main advantage of ERP systems is to increase the efficiency of sales processes and customer transactions.
For measuring productivity, you should use the following metrics:
- Return on Investment(ROI)
- Total cost of ownership (TCO)
- Cost-benefits analysis
ERP system itself can’t bring you back your investments in it, but it does help you earn money by optimizing and automating business processes, which also means increased effectiveness of these processes. So, the main goal of the system is not to earn you money on its own, but to make your business more effective and productive by using existing resources and opportunities. If you don’t use automation capabiltiies of the system or avoid optimizing current business processes, the implementation of EPR system becomes meaningless. ERP system can help you not only in optimizing current business processes, but also in implementation of new, improved business processes – but it is a duty of a company to decide what these processes should look like. The efficiency of the system depends on your strategy of using it. The system should be aimed at achieving strategic or tactical goals of the company.
As for today, ERP systems are mostly used by businesses of different niches, including manufacturing companies, educational institutions, banks, insurance companies, healthcare institutions, and so on. Developers of ERP platforms offer customization and personalized approach to meet demands of every industry and every business, including specific features, modules, and so on to meet market demand.
Conclusion
When you are choosing specific program solutions, you have to understand your real business needs and requirements, including the precise list of business process you can (and want to) automate. There are different ways to set up an ERP system. The best one is to get into it step by step, with a clear understanding of short-term strategy.