Enterprise Resource Planning (ERP) is a way to gain visibility to all of a company’s major operations. The successful use of ERP System is still largely based on expectations, as ZDNet reports, regarding a survey done by Panorama Consulting. They found that only 40 percent of the respondents were satisfied with the outcome of their ERP software. Understanding what ERP System is and how it can be used to control your small business will help you get the most from any ERP implementation, and beat that 40 percent.
What is Enterprise Resource Planning (ERP)?
ERP is a way to monitor all areas of a company, and see how each area affects the other. It gives the ability to predict future needs and profitability. AnERP System integrates the operations of business areas such as:
– Product Planning
– Human Resources
ERP came from the early days of Manufacturing Resource Planning (MRP). MRP outlined ways to coordinate the purchase of materials and supplies and the manufacturing and distribution of products. It was a way to integrate the rest of the business into a consolidated view.
The Need for ERP System
All of the above departments traditionally maintained their own systems, as Business News Daily recalls. The time and expense involved in creating a consolidated view of the company meant frequent data problems. Duplicate data, corrupted or incomplete data meant an unclear picture of how the company was doing. One of the biggest benefits of ERP software for any business is the integration of data and the visibility to all areas of the business. This allows for better planning and decision-making by the company leaders.
The Forms of ERP Software
Most ERP vendors create various components to manage different areas of the business. For instance, each of the above business areas can have their own ERP modules. A complete implementation would include a module for each business area integrated to an executive dashboard that gives overall visibility to the company’s operations.
If a business wants to streamline only a few areas, they can implement the software for those areas and integrate it back to their in-house processes and systems. For instance, implementing the NetSuite POS Software application and integrating it with your existing inventory system gives the cashier visibility of products across the enterprise. It also captures customer information for your future marketing promotions.
The implementation of total ERP systems was once only available to large corporations with the infrastructure and staff to support it. Cloud computing has allowed the creation of ERP SaaS (software as a service) in which the smallest business can take advantage of it for a monthly fee.
ERP Software Benefits and DrawbacksThe benefits of ERP software vary with the level of implementation. However, common benefits of ERP include the following: – It gives a big picture of the company to decision makers
– It shows the high and low performing areas
– It identifies problem areas early before they become critical
– It allows better predicting of business growth and direction The downside of any ERP software implementation can include: – It can be expensive to implement – It can require extensive training of staff to use it effectively – It can require extensive training of decision makers to be able to interpret the data correctly
The Houston Small Business Chronicle says employee productivity increases with the use of an ERP system. Staff need to understand how to use the software to generate good data that will be used for business decisions. Because of the time it takes to train staff, a drop in productivity is often seen during the ramp up time of any implementation.
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