how enterprise resource planning platforms work
erp has evolved over the years from traditional software models that made use of physical client servers and manual entry systems to cloud based software with remote web based access the platform is generally maintained by the company that created it with client companies renting services provided by the platform businesses select the applications they want to use then the hosting company loads the applications onto the server the client is renting and both parties begin working to integrate the client s processes and data into the platform once all departments are tied into the system all data is collected on the server and becomes instantly available to those with permission to use it reports can be generated with metrics graphs or other visuals and aids a client might need to determine how the business and its departments are performing a company could experience cost overruns if its erp system is not implemented carefully types of erp systemsthere s a number of different erp solutions that can meet a variety of business needs this list is not meant to list every single type of erp though the list is pretty comprehensive any business considering implementing an erp system should be able to find value in some of these types of systems and multiple systems may be relevant in any given situation on premises erp systems involve purchasing the software licenses and installing the erp system directly onto a company s own servers companies have full control over the system and data as it resides within their premises customization and integration with existing systems can be more extensive and this type of erp usually requires dedicated it resources for maintenance updates and security cloud erp systems are hosted on remote servers and accessed through the internet cloud erps like saas products offer better scalability allowing businesses to easily adjust resources and features as needed without significant upfront investment in hardware cloud erp systems typically have a subscription based pricing model and updates maintenance are managed by the erp provider not the company itself industry specific erp systems are tailored to meet the unique needs and requirements of particular industries these systems often include industry specific modules functionalities and best practices to address the complexities of the industry for example consider a manufacturing firm that is heavily reliant on inventory supply chain management and distribution of goods that type of erp will be vastly different than a client based erp such as a financial institution s erp an open source erp system or any open source software for that matter provides users with access to the source code this means a company can customize modify or redistribute the erp to better meet the company s needs implementing and maintaining open source erp systems may require more technical expertise and resources compared to commercial erp solutions on the other hand small business erp systems are designed specifically for the needs of small and medium sized businesses smbs these types of erp systems try to offer balance between being slightly niche while offering essential functionalities at a more affordable price point because they are less robust small business erp solutions are often easier to implement and require less customization compared to enterprise level erp systems tiered erp systems offer different levels of functionality and scalability to cater to businesses of varying sizes and complexity companies can choose the tier that best matches their current needs and budget with the option to upgrade or customize as their requirements evolve this would entail adding on modules as they become relevant i e a company that is scaling to international operations may wait to implement foreign current modules benefits of erpbusinesses employ enterprise resource planning erp for various reasons such as expanding reducing costs and improving operations the benefits sought and realized between companies may differ however some are worth noting integrating and automating business processes eliminates redundancies and improves accuracy and productivity in addition departments with interconnected processes can synchronize work to achieve faster and better outcomes some businesses benefit from enhanced real time data reporting from a single source system accurate and complete reporting help companies adequately plan budget forecast and communicate the state of operations to the organization and interested parties such as shareholders erps allow businesses to quickly access needed information for clients vendors and business partners this contributes to improved customer and employee satisfaction quicker response rates and increased accuracy rates in addition associated costs often decrease as the company operates more efficiently erp software also provides total visibility allowing management to access real time data for decision making departments are better able to collaborate and share knowledge a newly synergized workforce can improve productivity and employee satisfaction as employees are better able to see how each functional group contributes to the mission and vision of the company also menial and manual tasks are eliminated allowing employees to allocate their time to more meaningful work erp weaknessesan erp system doesn t always eliminate inefficiencies within a business or improve everything the company might need to rethink how it s organized or risk ending up with incompatible technology erp systems usually fail to achieve the objectives that influenced their installation because of a company s reluctance to abandon old working processes some companies may also be reluctant to let go of old software that worked well in the past the key is to prevent erp projects from being split into smaller projects which can result in cost overruns employing change management principles throughout the erp life cycle can prevent or reduce failures that compromise full implementation erp vs crmerp and customer relationship management crm platforms are two different types of software systems used in business at their core erp focuses on internal business processes and operations while crm is centered around managing interactions with customers and prospects erp systems are designed to integrate and automate core business functions in contrast crm systems are dedicated to managing customer relationships and interactions this can range from things like sales leads marketing campaigns customer service inquiries and contact management while the goal of erps is to streamline processes the goal of crms is to enhance customer engagement satisfaction and loyalty despite their distinct focus areas erp and crm systems often overlap in certain areas many modern erp systems include crm functionalities this integration enables businesses to synchronize customer information such as contact details purchase history and communication logs between erp and crm systems for example a crm would traditionally host a customer s purchase history by looping that into a broader erp system a company can predict when the customer will re order make sure it has sufficient quantity on hand at a specific time and make sure it has enough personnel on hand at a specific time to fulfill the potential order erp solutions providerssome familiar names are leaders in erp software oracle corp orcl originally supplied a relational database that integrated with erp software developed by sap sap before entering the broader enterprise market in a big way in the early 2000s 1 microsoft msft has long been an industry leader with many customers using multiple software applications from the company 2as cloud based solutions have grown in popularity in recent years the traditional erp industry leaders have seen challenges from upstarts such as bizowie and workwise 34erp examplesmen s grooming product maker fulton roark successfully implemented enterprise resource planning to better track inventory and financial data like many other businesses the north carolina company used spreadsheets to track inventory and accounting software to record financial data 5as the company grew its processes lagged their antiquated inventory tracking system did not account for changing costs and the accounting software could not record the metrics needed for key financial statements these breakdowns created manual processes which further compromised time and resources 5to eliminate unnecessary processes and centralize work they chose the oracle netsuite erp system immediately fulton rourk was better able to identify accounting errors related to inventory eliminate costs from employing third parties to evaluate their financial records and better report financial positions 6cadbury a global confectioner and maker of the popular chocolate cadbury egg also successfully implemented an erp system the company had thousands of systems but could not keep pace with its rapid growth and used ineffective warehouse management systems 7it implemented a system that integrated its thousands of applications standardized processes and restructured warehouse management systems breaking down silos for seamless integrated coordination of work 8tips for choosing an erp system