Business is everything. Nowadays, most of all organizations are private and focused on gaining revenue from selling goods or services to individual clients (B2C companies), other businesses (B2B companies), and governments (B2G companies). Even markets where customers interact directly (C2C) represent a specific type of business. Thus, proper management is crucial as it limits losses and generates more profits.
Enterprise resource planning applications are highly useful for almost all businesses because they gather data, optimize processes, automate routine tasks, nullify potential human errors, and more, and more. Various organizations from small online shops to transnational banks benefit from implementing ERP software. But who are the primary users of ERP systems and how do they adopt them?
To answer the title question, firstly, we should figure out what ERP means exactly, how such systems function, and why they may be useful. Let’s start with the first point.
What is enterprise resource planning?
Since the first idea was proposed by Gartner in the 1990s, many developers introduced their own vision of ERP. Historically, this term was considered as an extension for MRP and MRP II packed with new modules: accounting, HR, customer relations, etc. The simplest modern definition sounds like: «ERP is software to manage business processes».
We like the analogy with the human body. According to it, managerial solutions are similar to a central nervous system which collects data from all organs and makes it available for the entire organism. Hence, ERP makes corporations conscious. Usually, each department features local applications which are rarely connected with other soft. ERP links them, launches the global corporative database, and optimizes all processes.
In addition, let’s briefly look at how leading developers answer the question of what is enterprise resource planning:
- SAP: «[system which] integrates … processes into a single system».
- Oracle: «software packages used by organizations to manage day-to-day business activities».
- Microsoft: «business process management software that manages and integrates a company’s … activities»
As you see, meanings are pretty similar. We’d like to add one important note. So far as large corporations process tons of data, it’s crucial to choose the most valuable processes and integrate them into ERP systems. If you try to manage completely everything with such solutions, be ready to fail. Better analyze your business and find core activities to maintain them first of all.
How do ERP systems work?
Now, let’s focus on two points simultaneously: what is ERP and how does it work. While the general idea of global in-house connectivity is clear, there are three areas that we want to overlook.
ERP software features several classification schemes depending on the tech basement, distribution models, and clients’ complexity. Next lists include brief wrap-ups dedicated to each category. Classifications are provided by CIO and G2 Crowd.
ERP classification by tiers
- Tier 1 + Governmental tier 1. The systems are designed for global transnational private or federal corporations, so they support multiple languages, currencies, accounting schemes, and so on.
- Tier 2 + Governmental tier 2. These applications are for large enterprises without significant global reach and for state/local governments. They are mostly focused on handling complex structures with less attention to internationalization.
- Tier 3. ERP apps for middle-sized companies. Usually, can deal with several languages and currencies but support only one alphabet.
- Tier 4. Software for relatively small teams helps in accounting and maintaining the most general processes like sales and customer support.
ERP classification by distribution and features
- Best-of-breed systems. Answering the question «What is ERP and how does it work?», some developers claim that it’s a predefined set of apps which include best industry-related practices. Such systems usually come as full packages.
- Versatile suits. On the other hand, vendors sell customizable solutions with a set of switchable modules. Means, you can order the most advanced ERP or remove certain unnecessary apps to lower price.
- Custom solutions. These ones are totally unique ERP created according to the needs of each customer exclusively. Tailored applications include exactly what you need, so don’t worry about redundant costly elements.
- Specific modules. Specialized companies can order small ERP packages for industry-distinct purposes. For example, accounting organizations require only financial modules, so they can abandon all others.
ERP classification by technology
- On-premise ERP. Located on your own server with separate data storage. Requires enough resources but benefits with great flexibility and control.
- Cloud ERP. Hosted and maintained by developers who give you access to software. It’s simpler but less customizable, usually.
- Hybrid ERP. In other words, two-tier ERP which has some apps in the cloud and others on your local server.
As we know what is enterprise resource planning, let’s move to the structure. Currently, the vast majority of ERP is built similarly, with several key elements. For instance, there’s the platform that divides into the core and basic functionality features. These modules (API, code, clients’ profiles, products’ lists, etc.) are unchangeable but also they are also insufficient. That’s why developers add extra functionality:
- Management: budgeting and costing software.
- Finance: the general ledger, cash flow tools, accounts.
- HR: recruiting, training, rewarding, and other ways to interact with employees.
- Manufacturing: scheduling, workflows, control, order management.
- Supply chain: everything related to logistics and distribution.
- Data: interfaces for clients, suppliers, and workers.
Apart from these modules, you can order additional options for your industry (it’s possible when developers create custom solutions as we do). Moreover, apps can include out-system features for interacting with customers e.g. CRM or systems which are open for users e.g. CMS and personal accounts on websites. Finally, there necessarily must be connectors that provide for connection with third-party applications. They use API preferences from the core.
Why you should integrate ERP?
Here we are. Remember what our title asks? Who are the primary users of ERP systems? Long story short, they are any businesses that want to streamline in-house processes and deliver better goods/services to customers. Nevertheless, the software is the most useful for large enterprises which consist of numerous departments united in a complicated system. ERP apps connect these branches and boost the entire company’s efficiency.
First and foremost, we suggest analyzing your goals and needs to understand how useful ERP can be. If you think that the company will benefit from implementation, start looking for a software supplier. The next sections should help you evaluate the business and get the basic advantages of ERP.
To better understand what is ERP and how does it work, move through the list of benefits. Simply put, they may be concluded to three points: integration, standardizing, and automation. Exact benefits depend on software type and industry but there are some general points:
- Global connection. Good ERP integrates processes and makes data accessible for all employees to streamline the whole development and distribution.
- Real-time operations. The system tracks potential issues, so workers can fix them on-the-go without reputational losses.
- Simplified routine tasks. Most of all ERP provides for automated reports, balances, notifications, and other minor goals which are usually handled manually.
- Predictions. Modern innovative platforms use artificial intelligence to deliver valuable insights related to customers’ behavior.
It may be that you can’t figure out the real usefulness of the software for your company. You continue asking things like «Who are the primary users of ERP systems?» and can’t clearly answer that it’s you. Hence, you need some help. For example, we provide comprehensive business analysis to define the real needs of your business and potential ERP solutions suitable for it. In the case you want simpler suggestions, just look at the check-list:
- Daily activities take more and more time.
- There are a lot of unanswered business questions.
- Some processes become really hard to manage.
- Departments use multiple applications.
- There’s no time for innovations.
If you have marked at least one point as valid for the company, you definitely need ERP.
Are there any issues with ERP?
Yes, obviously. ERP applications are designed for large corporations with entangled structures, so the implementation stage may be really painful. Just imagine that you have to integrate a completely new system into an already working one. It’s like adding new detail to the rocket engine. Without experts who know how to integrate ERP, you will end up with high losses and even a ruined business. Better spend more and order integration with further maintenance then lose everything because of system failures.
Other issues are less noteworthy but remember them, as well. They include high costs of the software itself, incompatibility with old-fashioned apps, potential security breaches, etc. However, if you choose an experienced development team, everything should be fine.
Why we develop ERP?
Our company creates tailor-made ERP products for businesses of all types and sizes. We act as technology partners instead of freelance developers, so we’re responsible for the quality, relevance, and overall results. That’s why we launch MVP initially to show how the final product will work and how it can be profitable for our clients’ businesses. As ERP systems are complex and pretty costly, we try to save the customers’ money and time, so the development itself starts only after our partners are happy with MVP. As well, we don’t feature hourly rates and work with quote-based projects only. Interested clients can easily contact us and obtain an initial personalized business analysis. Wait no more and start optimizing now!