In this blog post we get back to basics with a look at what an ERP is and why your company might need one soon.
What is an ERP?
An Enterprise Resource Planning (ERP) system brings together all processes, systems and activities within an organisation into a single application. Functions which use an ERP within a company might include:
- Budgeting & Planning
- Sales Opportunity Management
- Sales Forecasting
- Warehouse & Inventory Management
- Manufacturing: Discrete/Process
- MRP: Production & Purchasing
- Project Accounting
- POS & Retail Management
- Financial Reporting
- Financial Consolidation
- Analysis: Tactical & Strategic
- Document Management
- Workflow: Alerts & Approvals
- Sales Quotations & Order Management
- Sales Fulfillment
- Billing & Aging
- Cash Flow Management
A centralised database is used to unite each process flow where necessary and can include external systems too. One unified and user-friendly interface can be accessed by all staff members to perform daily tasks within the organisation and security access can be customised according to the needs of the company.
What does an ERP look like?
An ERP such as SAP Business One looks like any other desktop application you have on your PC (and also has a mobile application for Smartphones). For most employees in an organisation, it is the only application they use during their working day as it integrates with most other systems you need such as the Microsoft Office suite for emails, word documents and spreadsheets.
Sample view of SAP Business One’s inventory management module:
[Image courtesy SAP AG]
Do I need an ERP?
Some companies acknowledge that ERP is the logical next step for their organisation but some companies hold off from the investment because their returns cannot always be seen immediately.
If your company is experiencing some, or all of these issues, it might be a good time to speak with an ERP specialist:
- Your company’s inability to forecast accurately means your inventory levels are a mystery
[learn more about inventory innovation]
- You have no way of tracking orders from the point of sale through to delivery (or the current process is not working effectively)
[learn more about retail management]
- You have no clear visibility of cash flow and the profitability of specific projects or your overall business
[learn more about reliable reporting]
- Your warehouse is full of items no one will buy or empty due to inaccurate warehouse data
[learn more about warehouse management]
- Customers are unhappy and do not return
[learn more about innovative customer service]
- Employees are frustrated and disengaged because they do not have the tools to carry out their tasks properly
[learn more about effective HR systems]
Do I need an ERP?
A 2010 survey conducted by the Aberdeen Group asked companies (mainly small and medium sized enterprises – SMEs) what their driving factors were for choosing to implement an ERP. 45% of respondents believed that they would be able to significantly reduce costs, followed closely by 38% citing improved customer service would help their business. Other reasons included bridging geographical gaps between location, preparing for growth and innovation.
The benefits of an ERP can be far reaching:
- Reduces costs by improving inefficiencies and decision-making.
- Provides a top down view into the workings of the company and allows users to cross-reference business functions (i.e. sales can view certain data from operations to provide a focussed campaign).
- Gain competitive advantage (i.e. offer your customers a safe online payment option).
- Customise and configure the system to your company’s needs.
[Read a success story]
Do I need an ERP?
Your company probably needs an ERP before you realise it, and probably when it is too late.
Smaller companies often assume they do not need an ERP until they have offices in multiple locations and employ over 200 staff; but this assumption can be costly and cause more problems in the future.
Read a success story about a Blue Ocean Systems client who adopted SAP Business One from an early stage.
The benefits of an ERP can be far reaching
- Streamline processes from an early stage so they can be developed as you grow (trying to add a process among chaos when the company has already grown is cumbersome)
- Engage employees by enabling them to keep track of work activities and resources
- Thinking globally – integrating an ERP, even on a small scale, will mean you can withstand rapid expansion across various countries
[read our post on subsidiaries]
- Decision making – visibility across all entities and departments ensures quick and accurate decisions can be made confidently (such an important factor for growing companies)
- Be prepared for growth and investment – stand ahead of competitors with a sophisticated system in place which employees can already use
[read our post about being investor ready]
- Allow your brand to become known for the right reasons – efficiency, use of latest technology, customer engagement etc