To be able to compete in modern market environment middle-sized and large enterprises come to the realization that they need an ERP system that stands for enterprise resource planning. To choose a particular system, to understand whether your company needs it and what benefits you will get, you should clearly understand what an ERP is. This article introduces the main terms of ERP and provides the key ERP implementation steps.
ERP is, for the most part, a powerful marketing term. Wikipedia determines it as a company’s strategy for the production and operational processes integration. It helps manage human resources, finance and assets, and optimize enterprise resources with the help of purpose-designed software pack. This definition is perfect but it might be too far out for people who are unfamiliar with marketing terms.
So, simply put, ERP is an IT solution that allows to store and process piles of important company data. What kind of data does a typical ERP process? Here are only a few examples of data being processed by the system:
- sales department information;
- production data;
- realization of goods;
- customer support management;
- and others.
Main Components of Resource Planning Systems
No matter who is the developer of a solution for resources management, all of these have a general architecture which could be described in the following way:
Platform - basic capabilities and the environment for the components and modules operation. The code of the platform can be changed only by a developer. Users and implementation specialists have no access to this code. The platform is made of the following elements:
- Core - the programming environment.
- Basic features - a list of guidelines and functions that provide the access rights list, users lists, goods and services lists, etc.
Data management - a database including the data storage and data interpretation methods. This component includes data warehouses, database software (SQL, for instance), data interpretation and processing tools, etc.
Modules - the add-ons that are added to the system if required. These are working independently from each other. The module structure of ERP is a peculiar feature of the system. The modules are divided into the following types:
- Modules for inner use are used by company employees for inventory management, production, accounting, CRM, etc. The standard set of modules includes MRP, HR, CRM, supply control.
- Modules for outside users of the system are used to communicate with potential and existing customers, partners, consumers, supply managers and buyers. This could be an online store, personal dashboards for suppliers or buyers, and other solutions. Some companies that use ERP systems choose out-of-the-box CRM-solutions for creating online stores or websites from scratch.
- Connectors - out-of-the-box solutions for connection with outside applications. API is often used. These solutions allow integrating telephone systems, set up data interchange (EDI, CMS, CAD, BI, OLAP, etc).
Below is a chart with one of ERP system examples including the groups of possible modules and add-ons:
Key Advantages of a Module-Structured ERP
First off, we should mention the main benefit of a module-structured ERP. It is the ability to add and use any of the modules within short timeframes.
Each of the modules works independently. It could be added or turned off at any time. It can be off while other modules are on. There is no need to change the code in order to run the module.
The main objective of ERP development is to scale the system and to ensure the maximum of possibilities.
What Are ERP Systems Used For?
Let’s take a closer look at who needs ERP system implementation.
Single Database: Control, Management, Accuracy, and Efficiency
Imagine a company before and after the implementation of an ERP. Assume, an enterprise has its own production. The company is more likely to maintain accounting via Excel spreadsheets or a special software. Inventory managers use the software for inventory management. Bookkeepers use the software for accounting. Both transfer the data between the two departments in the form of paper documentation. This approach is affected by a human factor that could lead to failures and misunderstanding. More importantly, any mistake or failure leads to wastes.
An alternative to paper documentation is an ERP implementation that allows creating a single database to store and process the data that is used by the company’s departments. This step decreases the percentage of failures and mistakes. Besides, the information is transferred immediately which is very important at large enterprises. For example, once the sales specialists have entered the information about the order into the system, this information is available for their colleagues from the production.
If the company is intended to comply with a forever changing market environment, it needs quick data communication between different departments. A small company with specific orders and different procurement scopes can do without ERP systems well. It is easy to coordinate work when all employees work in a small workplace.
In case of middle-sized business, a single database is in great demand. It’s important that all information is gathered as soon as possible.
Complicated Business Processes
With a rapid growth of companies, there appear complicated business processes requiring the transfer of great volumes of data. The integration of several software systems becomes a complex, bulky, loss-making process.
What Do Enterprises Get With a Successful Launch of an ERP?
ERP is an opportunity to unite all business processes within one powerful system. Below are the most important benefits of ERP:
- Data availability
- Data consistency
- Employees work management
- Mistakes reduction
- Out-of-the-box set of interconnected tools
What You Should Know About a Successful Process Launching a New ERP
A sensible subject of ERP choice is what kind of solutions fits best your business - a SaaS or a stand-alone solution. What is different between these two offers is the set of modules and the way you pay for the solution. You buy an access or purchase an out-of-the-box software. The third option is to order a custom development of ERP. It is the best choice if your enterprise is a fast growing corporation that requires scalability and flexibility of resources.
ERP Implementation Plan: Useful Tips to Change the Manner You Manage Your Resources
- Choose the right specialists. To set up an ERP for a middle-sized or large enterprise is a daunting task requiring a professional. You must be sure you choose the right person or team for this task. They must set up a single database, integrate all components and modules, and teach you how to use a new product.
- Mind industry orientation. You should carefully follow an industry-wide approach when choosing resource planning systems. They differ slightly yet have some differences determined by the industry focus.
- Conduct an in-depth analysis of all processes. It’s very important for specialists who will implement the solution to clearly understand operational processes. Depending on what processes a specialist sets up, he must know how accounting or inventory management works.
- Budget. ERP systems cost a good deal of money, no matter what developers you choose. That's why you must plan your budget so that you have enough money for the development and for the execution as well.
Should you have any questions on how to implement ERP systems in the company, feel free to ask Diceus specialists and developers. They will do their best to offer you ERP implementation best practices. Read our blog to learn at first-hand new tendencies and tech innovations in company processes management.