Enterprise-grade apps are vital parts of modern corporations which invest billions of dollars annually to get advantages over their competitors. An average ERP system is one of the most expensive purchases a company can ever make, both in terms of software prices and the cost of error. That’s why entrepreneurs tend to work with a few well-known and trusted vendors of financial ERP software. Moreover, this is a reason for the relatively low share of new players on the market of enterprise apps.
You may ask now: wait but what about trends? How this industry can evolve if it’s already mature? Here’s the catch. ERP sector grows continually and may reach $47 billion with a 7% CAGR by 2022, according to Reuters. And there are several game-changing factors that drive this evolution. Aside from new technologies like IoT and AI-based automation or prediction, ERP developers can count on other trends. Further in this article, we’re going to reveal major expected changes in 2021. We know that it’s March already. But it’s never too late, huh?
Getting to know ERP financial systems
Without a clear understanding of ERP ideas and operation principles. If the following info is already familiar to you, feel free to skip this section and proceed to the next one where we cover trends of financial ERP software.
Well, let’s begin with the basics. Different companies have their own definitions of ERP, so you can explore insights from NetSuite or Oracle. The community of users and developers understands ERP as both a strategic approach focused on optimized management of core business tasks and applications or applications designed for this main objective. Usually, ERP solutions serve for collecting, keeping, managing, and processing essential data from various brands’ branches or departments. Thus, managerial apps are the most efficient for middle-to-large brands which have to work with big data arrays.
While vendors may present various sets of features included in their products, traditional ERP apps consist of several core modules: databases, dashboards, accounting tools, HR tools, solutions for order processing and logistics united in SCM, and CRM platforms. Currently, developers often provide so-called ERP II systems which expand traditional tasks of resource control and allow enterprises to cooperate with other companies as well as with end users.
Among the main advantages of innovative ERP financial systems, we’d focus on these ones:
- Better data transparency and accessibility.
- Less human errors related to data processing.
- Sales forecasts and optimized warehouse management.
- A full history of all transactions and orders.
- End-to-end revenue tracking.
- Advanced security with several layers in a single system.
Combined, advantages allow you to cut time and money expenses significantly.
Overall, the first question every CEO or manager should ask himself and related stakeholders is: «Do we really need an ERP app?». The thing is that the development and deployment of such solutions are difficult and costly processes which not always guarantee high ROI. Without a clear vision of the company’s tasks and the potential usefulness of ERP in these tasks, you have little chance to benefit from the software.
Key trends of ERP financial management for 2021
2021 is going to set new records in the software development and distribution industry. While we can’t expect a lot of new players on the field of traditional apps, teams like Oracle and SAP should be aware of new disruptive tech like AI, IoT, and, mainly, blockchain. Decentralized systems independent of governments and market whales can introduce brand new solutions with top-notch security, transparency, and speed.
Thus, a shortened disruption cycle is the main trend for 2021, as we see it. Competitors will fight for clients’ attention, implement new ideas, and force old firms to evolve, too. Respectively, vendors will try to deliver unique offers while customers will look for better personalization and more functions. Finally, a new vision of cloud-based and SaaS ERP financial management will appear.
So, let’s find out how the mentioned trends can enhance or destroy businesses.
1. New technologies emerge
Obviously, development is strongly linked with progress. In 2021 and further, ERP vendors will focus on these innovations:
- Blockchain. Powers decentralized encrypted storages with high security, instant access to data, and trusted digital identification.
- AI. Delivers high-end predictions and strong automation of both minor and major processes. As well, cuts expenses on salaries and long manual work.
- RPA. Robotic process automation also focuses on speeding up processes when AI remains too expensive to implement. Helps in accounting, HR, and sales.
Moreover, companies will continue to digitize their processes. All the common features of ERP financial systems are here to stay because they are valuable for various industries. Say, well-known big data with more elaborate analysis potential or tools for e-commerce are already essential parts of modern ERP apps. However, Panorama in its 2018 study reveals that 92% of businesses got from 0% to 80% of the projected advantages after ERP launch. This means, it’s crucial to get a solid plan and stick to it, so you will squeeze the maximum out of an app.
2. Flexibility importance increases
One thing leads to another and the rise of new tech creates favorable conditions for startups. Daring developers introduce new products like blockchain-based financial ERP software which forces old players to rethink their strategies. As a result, the whole disruption cycle shortens, enables a waterfall effect, and makes the evolving ability extremely important. Here, custom development leads the game because clients can get regularly updated software that will be constantly adapted to changing conditions.
Also, it’s important to maintain agility everywhere, not only in software features. This means both employees and customers should be flexible in their approaches if they want to use new solutions and benefit from ERP financial management. For this, comprehensive guidelines for ERP system users are required including both papers for internal use and FAQs or manuals for clients. Plus, a company should optimize onboarding processes to teach new staff members and deepen knowledge of existing employees.
3. Customers focus on functionality
Functions and modules always were definitive things for ERP selection. But with the emergence of clouds, more managers started focusing on ease of use or low prices of software. Now, things return to their traditional state because researchers report that nearly half of the entrepreneurs (surveyed ones, of course) prioritize functionality over other features. Only 4.5% consider price as the main selection criteria while 7% think about ease of use.
There’s another minor trend related to this bigger one. According to G2 Crowd, somewhat 30% of new ERP installations will be related to two-tier systems. Fresh companies and mastodons of the market consider launching specialized software which doesn’t necessarily include each and every feature. Implementation and maintenance of several systems maybe not as beneficial as having one solution but businesses tend to get two and more apps for different purposes so far as single products don’t meet their needs.
4. Vendors pay attention to personalization
In accordance with other trends, the market will experience higher demand for personalized solutions instead of ready-made alternatives similar to each client. Both entrepreneurs and end-users realize the benefits of tailored software as it gets rid of costly modifications in the future and delivers more relevant offers. We slowly move towards the era of bespoke applications packed with valuable advantages over competitors.
5. Apps move to clouds
With the rise of SMBs, businessmen will look at simpler and cheaper solutions packed with all the essential features. The cloud-based approach is known for several years but further, it will become more popular, most likely. Forbes analysts mark that the global cloud software market will reach $411 billion by 2020 while MarketsandMarkets group reports that ERP solutions will be responsible for almost $30 billion by 2021.
You may be wondered how this trend can exist on a par with the increasing importance of functionality. Really, cloud ERP apps are typically less powerful and less tailored to needs than stand-alone ones but they still can satisfy the requirements of small-to-medium traditional companies and startups. At the same time, large and unique enterprises will require more personalization, so they will choose customized solutions.
For the last section, we’ve prepared a traditional breakdown of primary questions about ERP apps, their functions, benefits, and usage. Some insights appear as brief conclusions of this article while others are derived from other studies.
What is a ERP in financial management?
Firstly, let’s differentiate ERP finance modules and the role of ERP in financial management. The former stands for an application or a set of software functions focused on financial data gathering and reporting. However, the latter covers all benefits of ERP apps when it comes to maintaining money flows and reducing expenses.
Which types of ERP for financial services exist?
There are several classifications. For example, we can differ apps by the development, so there will be ready-made and custom apps. Another major approach relates to industries, e.g. banking ERP, tools for manufacturing, ERP in operations management, etc. Finally, there are free and paid apps as well as cloud-based and stand-alone solutions.
How enterprise software boosts businesses?
Usually, entrepreneurs install ERP programs to streamline in-house processes regardless of their type. Applications can optimize data-keeping and exchanging, connect remote branches, automate simple tasks, and so on. As a result, you get faster and more efficient work, more creative employees, and, of course, reduced expenses.
Which ERP financial management system to choose?
The answer depends on your needs. Firstly, you should define the goals of the running business, plans for future expansion, and potential risks. This stuff varies among markets, so, let’s say, ERP for banking industry will include other modules than a system for e-commerce. But globally, we’d suggest ordering a custom product which will suit any business.
Financial ERP software is essential for various brands. Well, all companies work with money. Regardless of size and industry, your accountants will appreciate a comprehensive solution for cash/digital assets management. In 2021, the world is likely to see more promising innovations including technologies like blockchain or AI, higher attention to functionality and personalization, more clouds, and aggressive startups disrupting existing markets. Probably, now is the best time to consider ERP implementation.
It the end, we want to remind one of the essentials: always know the brand’s goals and strategies. A lot of SMBs can exist and grow without ERP. If your corporation doesn’t face data management problems or issues with communication between departments, wait a bit. Probably, a smaller and cheaper CRM will be enough to boost sales. Maybe, a simple accounting tool or users’ catalog will optimize processes better. Our team of keen developers is ready to help with any software creation, business analysis, or consultation. Feel free to ask!