Partner Article

What Is ERP and Why Do I Need It?

Today’s society is frantic and fast paced. Apparently it’s so fast paced that we no longer take to writing (writing? Who am I kidding – TYPING!) full words anymore. Yes it’s true, we live in a world of acronyms, even in the business world. For the purpose of this conversation, I am going to focus on ERP for the purpose of providing a little clarity.

ERP, or Enterprise Resource Planning is software. Its process or resource management software to be precise. It enables a business to manage many processes from a central point; their financials, operations, reporting, HR and supply chain.

Many small businesses feel that they don’t yet have the need for such software, hat their operations can be run using some simple spreadsheets. Or perhaps like in my case – the business owner is a control freak, and no one can run things as smoothly as you can, right? WRONG. We could ALL benefit from the efficiency and automation that ERP software provides. Below, find some of the compelling reasons why your business might from ERP software.

Increased Customer Satisfaction

We are now living in the age of transparency and instant gratification. Customer want to be provided with accurate information, and ERP software gives you increased visibility across your business – enabling you provide this level of accuracy. This is particularly helpful when it comes to delivery or installation times, returns tracking, invoice issuing and accurate provisioning for discounting. The automation element of this type of software means that you can save time which in turn benefits the customer.

Combining ERP software with a CRM system means that all communication can be stored in a central place. All employees can be kept up to date with all customer correspondence and the ERP software enables you to report and analyse business progress in this area.

More Accurate Records

The uniformity of recorded data that this type of software instils means that all records kept are more accurate. It also reduces the risk of human error as initial data only needs to be entered once. Accurate recording leads to accurate reporting!

Improved Visibility

ERP software allows you instant visibility right across the business. To stock inventory for fulfilling urgent orders to key performance metrics – you are provided with the insights that will aid improved decision making in every department in the business whilst also ensuring the resources are properly aligned.

Process Best Practice

Often, implementing an ERP system highlights any improvements that can be made in current processes. Before implementation takes place, many businesses undertake a process improvement and mapping exercise to ensure the workflows and automation the software provides supports the business needs. This often means that outdated processes gives way to new, more efficient ways of working and when combined with ERP software, the deeper insight provides the opportunity for further improvements.

The reporting methods mean that the processes can be reviewed periodically and subsequently adjusted to ensure you are operating at your most efficient and productive and the system is the most functional option available.

Real-time Information

We are in a connected world, and ERP systems take advantage of that. Previously, data runs were carried out once a day, usually out of business hours. An ERP system bring both unstructured and structured data together in real time, business critical for making key decisions in such a fast paced world.

The wrong information can skew figures. Having accurately information delivered at regular intervals throughout the working day allows you profile staff, track marketing activities, sales and inventory accurately and implement strategies that give you a competitive edge.

Collecting, analysing and processing the data, it is even possible to see the opportunities where your offerings can be expanded. Particularly in an increasingly connected world.

“Ultimately, gathering the most data possible to inform a decision or solve a problem—in the window of time that best suits your need—is more important than having instantaneous data access. And to do that, you need to start with how you’re going to use the data. What do you want to accomplish? What business problem are you trying to solve?” Paul Dunay, Networked Insights.

Managed Costs

Consider all of the costs associated with a business; staff wages, utilities, loans, organisational fees, taxes and operating fees. The lost is seemingly endless.

The chances are that you already have this under some sort of control, but they should be finely managed. In some cases, there isn’t a simple solution for missing a payment especially where taxes are concerned, businesses often find themselves with a fines or additional interest.

ERP Systems track payments, operating fees and can incorporate these into your cost of doing business, again increasing accuracy, efficiency and financial compliance.

Reduced Lead Times

ERP systems use electronic data interchange, which means that business information is traded electronically between departments and trading partners. This reduces the number of people that ‘touch’ the data – reducing the margin for errors to be made, also reduces the amount of paper used, improving green credentials.

Taking control of leads times is important for inventory, purchasing from suppliers, stock control and also customer satisfaction.

The automation that ERP software can provide means that’s once an order is written, the software can check the stock levels, produce an invoice and add the item to a reorder list. Processes such as these reduce ‘cycle time’. Orders are delivered or services installed quickly and seamlessly, stock levels remain manageable – meaning less deterioration and obsolescence.

In Depth Reporting

The accuracy of the data that is updated in real time means that the level of the reporting is significantly enhanced. The software can provide provides on a number of areas within a business. Allowing for the identification of areas of the business that are weak or underperforming and areas of opportunity. In depth reporting leads to the decision making process becoming more timely, and better informed.

“ERP software improves reporting capabilities by bringing often fragmented information together into a single reportable application. Ready access to key reports with the option to drill down allows users to make informed decisions on all aspects of the business such as how much stock to hold, when and how much to produce, when and how much to pay, what does this cost me etc. ERP software significantly improves reporting capabilities by providing an up to date and trustworthy source of data that doesn’t rely on significant manual intervention from users to provide an answer.” Simon Fovargue, Business Development Manager at DMC Software

If you are looking to become a more efficient, data driven business then an ERP system should be seriously considered. Running from a central system increases transparency whilst enabling a business to become more agile and responsive. It doesn’t negate the need for human interaction and involvement though. Consider staff training; new employees only tend to retain 80% of the information being given to them. This can mean that they don’t fully understand and engage with a system such as ERP, so underpin your chosen system with consistent system training on a yearly basis would be considered best practice. There are plenty to choose from, so take your time with a provider, and clearly communicate your business needs, value and process to make sure that you have the right system for the business!

This was posted in Bdaily's Members' News section by Rebecca Moore .