Which companies need an ERP system and when




At a certain stage of development of every large company all its processes are automated, but the efficiency of activity often remains at the same level.

This is because each business process exists in isolation from the others, and employees have to perform laborious manual work to integrate all processes into a single system.

Managers also manually monitor data for repetitions in order to analyze the company’s activities. Up to a certain point, such work gives some efficiency, and it is extremely important not to miss this moment, so that all corporate mechanisms do not have to be changed urgently.

The main purpose of ERP-system can be expressed in five key problems that such a system is able to solve. Basically, cloud-based ERP systems are used for enterprise content management, supply chain management, human resources management, warehouse management, inventory management, customer relationship management, financial management, project management, manufacturing management and business intelligence. In other words, such cloud-based enterprise system – full-featured ERP – exists for cost savings on managing business operations and automating some key company operations, such as human capital management, inventory costs, risk management, and wide range of other core business processes.

Let’s also answer some other questions: how to define a need of ERP system in business? What are the reasons to companies using ERP systems?

Use of software that cannot be integrated with each other

Often, employees of companies work in programs that cannot be linked to each other. Implementing an ERP (Enterprise Resource Planning) allows you to organize data from all the software you use, bring it together, and provide easy-to-use reports on that information.

Lack of program functionality

Due to the expansion of production and other processes, there is often an increased load on the software used. The existing capabilities are insufficient for processing large volumes of information. ERP tools can cope with these problems and fail to fulfill business requirements – beyond one success story there are always a few of 

Frequent employee errors

The percentage of erroneous actions caused by the human factor decreases significantly after ERP implementation. In the course of automating some processes, these errors are eliminated altogether.

Need for fast and accurate transfer of information between departments

The information systems available today are not able to inform users that a company needs ERP (Enterprise Resource Planning) implementation at a particular moment. However, based on global experience, it is possible to identify this moment by four main signs.

Lack of baseline information for strategic decision making in business management

Every decision made in business has consequences, either in terms of profit or loss. It all depends on the source data used by the company’s management. On the basis of outdated, incomplete or incorrect information, erroneous or unbalanced decisions will be made.

The reasons for such errors are as follows:

Scattering critical data across multiple departments or employees;

lack of established rules for data collection;

haphazard data collection (by roles of performers and by time of collection).

The implementation of a suitable ERP platform will allow convenient consolidation of all source data in one place. Every authorized employee has access to the system and can populate it in real time. That is, the information displayed will always be up-to-date for everyone.

Periodic failures in the company’s activities due to insufficient mutual integration of the systems used

Each information system works with its own data format and uses its own technologies, including programming languages. Moreover, all such products were released at different times and may be incompatible with each other. Consequently, employees working in these programs may not be able to communicate effectively with each other.

In ERP class systems, the different functions of personnel are integrated and understood by all. Such suites are a kind of translators, understanding multiple programming languages to ensure harmonized collaboration.

Customer dissatisfaction

Frequent customer complaints about the quality of service may suggest a need to analyze efficiency. Problems are likely to arise due to increased demand, supply difficulties, or slow managers. Sometimes there simply isn’t enough time and other resources to take care of each customer.

Unhappy customers can be turned into loyal customers with the help of ERP implementation. This is especially relevant for medium and large businesses. By improving service, entrepreneurs achieve customer loyalty.

Using outdated software

Outdated technology is most often the main obstacle to digital business development. This was the conclusion of the Veeam 2020 Data Protection Trends Report. When a company still uses manual information entry and paper documentation, it risks being left behind in the current period of rapid digitalization.

But even the implementation of modern information systems can create disorganization in the team if these systems are not interconnected. When mutual software integration is a significant challenge, it becomes necessary to change programs to a single ERP (Enterprise Resource Planning) platform.