What is an ERP system and how does it help?

What is an ERP system and how does it help?

What is an ERP system and how does it help? An ERP system is one of the smartest moves a business can make after web hosting to MyIP company. With this, she can manage her resources as best she can, and increase her profits. But can it help all businesses equally?

What is the ERP system and how can it help me?

Definition: ERP system / “Business Planning System” is an information system through which the company manages its resources and operations effectively. In this way it achieves maximum performance. This means:

  • Reduce costs
  • Income increase
  • Human resources management
  • Accounting
  • Many other functions

Because the internal activities of each company are many and different, each ERP comes with a multitude of applications. Each of these applications is responsible for each activity. The company can activate which it deems relevant and beneficial. In case the needs change, there is the possibility of activating or deactivating an application.

Because the various applications are part of one system (the ERP system), the biggest advantage is data integration. This means that each application can receive and deliver data to and from other applications. In this way, better information is provided to the business.

Some of the applications that usually exist as part of an ERP are

  • Commercial management
  • Financial management
  • Revenue-Expenses
  • General Accounting
  • Assets Management
  • Warehouse management
  • Human Resource Management (HRM)
  • Payroll
  • Distribution Management
  • Supply Chain Management
  • Customer Relationship Management (CRM)
  • Retail Management
  • Product Design
  • Production Management
  • Services Management
  • Financial Accounting
  • Sales
  • Marketing
  • Pricing

What do non-ERP system companies do?

An ERP system is of course optional. But many other things in a business are optional, such as advertising. But can a retail business survive without some kind of advertising?

Businesses that do not have an ERP system to hold their data, usually resort to other solutions. One of the most common solutions is to store information and tasks in Excel files or manuscripts, and install software packages where absolutely necessary, such as for commercial management.

The big problem there is that it is extremely difficult to consolidate all the information and be able to produce secure results immediately. In addition, supporting different forms of data logging has high maintenance costs to ensure that it is done correctly and in the intended manner.

In this way, the company, although it can meet some of its basic needs, in the long run bears a great cost and risk.

Do I need an ERP system ?

The short answer is YES. The needs of your business may not be so great as to implement a system that has sophisticated capabilities, but even in that case, you can choose a simpler system that suits you. What is certain is that in an environment where the competition is very high and all companies are trying to find ways to save resources, the implementation of such a system is one of the moves that can make a big difference.

Just imagine the difference in your daily life, when you will be able to have all the information immediately available. You will have a huge advantage, the moment the competitor will try with paper and pencil (and the high probability of making a mistake) to collect the information. Data has now become very valuable, and the dominant companies are those that have access to data and can export.

In addition, regardless of the immediate use of the data for business purposes, historical data is valuable. They can be used to draw important conclusions, through future analyzes.

Key advantages of an ERP system

As mentioned above, the great benefit of an ERP system is the efficient management of a business’s data. Based on this data, the general advantages they can offer to a business are:

  1. Speed ​​and reliability : The main advantage is that you will have reliable information immediately, which is crucial and irreplaceable
  2. Consolidation and rationalization of processes : the different departments of the company (Accounting, Warehouse, Sales, Human Resources) can have common benchmarks and better defined procedures.
  3. Task oversight: Management can better oversee operations and make changes to optimize efficiency.
  4. Increase productivity of human resources and reduce errors
  5. Finding weaknesses and opportunities
  6. Easier compliance with mandatory or optional standards , such as ISO
  7. Ability to power other company systems with data, such as an eshop and retail software
  8. Efficient management of stocks and orders

According to a recent survey by Paramarketing, on the implementation of ERP systems, 95% of companies saw an improvement in most or most of their most important operations. The companies in the construction industry are the ones that buy the most ERP systems, and together with the retail companies occupy the largest market share.

According to Datix research , the biggest benefits observed were

  • 23% lower operating costs
  • 22% lower management costs
  • 24% increase on timely deliveries

How to choose an ERP system

Once the first step is taken and the company decides that it needs an ERP system to improve its operations, then a research should be done on its requirements. This way, she will understand which of the many available systems that exist suits her best.

In order to achieve this, she definitely needs an experienced partner, who knows about relevant systems, in order to present her with the relevant information in order to make the right decision. Information systems consulting is a job that requires years of experience and involvement, and should not be a random choice.

Issues that will be explored during the selection phase are issues such as:

  1. Sector, size, and specifics of the company , in order to find and analyze the appropriate applications that interest the specific company
  2. Platform : Is the company capable and willing to install the ERP system on its servers, or does it prefer the cost of the infrastructure to be included in a type of monthly subscription, while the application is in the cloud?
  3. Data security and legal compliance : What are the specific needs of the company in terms of the data it manages? Are there any legal issues that need to be known before implementing the ERP system?

Summary

As we have seen an ERP system can greatly change the efficiency of our business. Once we are ready, we must turn to the right ones to choose the ERP system that suits the business. If there are the right partners and mood, the project will surely be crowned with success.

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