Companies worldwide use enterprise resource planning (ERP) software to streamline their business processes, increase ROI, and reduce costs. But how exactly tools of this type can help, and what do you need to know before implementing them?
In this article, we will go through the most significant advantages of using ERP and cover essential steps of the implementation process and factors to consider to get the solution that suits you best.Why do you need ERP?
The very nature of the ERP technology suggests that such software allows boosting critical business processes by eliminating manual labor and providing data for better decision-making and automation.
With an ERP, the company can collect all data on sales, production, warehouse, or resource planning in one place instead of multiple software solutions and Excel spreadsheets.
This automatically increases the quality of data for building reports. Thus, the management gets a 360-degree view of a company and its every business process. Instead of guessing and using intuition, managers can see all bottlenecks and points for critical metrics and KPIs' potential growth.
As a result, the business gets more money, reduces costs, and achieves higher ROI. Also, the higher the service's quality, the more loyal customers and partners are, which reduces churn.
The whole list of ERP technology advantages includes:
Effective production planning
Real-time data collection
360-Degree View of the company
Highly efficient reporting
Enhanced collaboration within the company
Better productivity = higher ROI
Savings on operational costs
Improved customer service and marketing
ERP technology has proven itself as an efficient solution for many industries, including:
Wholesale & Distribution
However, all these industries are different, and every business within the given vertical is unique. Developers tailor their ERP systems to either a specific industry or even a niche within the industry. For the end customers, this means that they have to put some work into market research and analysis to get the solution useful for them.
To get the best solution, you will have to outline your requirements and then map them to the available tools to filter those that are not a good fit.
Setting up a requirements list can be tricky. One of the most effective ways is to build it upon your current business processes to automate and make it more efficient. Simply put, if a specific ERP does not support your needed business process, the implementation will be a complete waste of time and money.
Here is how such a requirements list may look like:
Sales management and Order tracking
Service quality control
Field pre-repair diagnostics, field employees management, and workload control
Warehouse management and procurement planning
Project costing and ROI calculation
Support for complex business processes
Invoicing and cash flow management
Customer relations management
So, you've mapped your list and shortlisted some ERP solutions. What's next? Let's talk about things to look for to find the best tool.Step #1: choose among different types of installation
There are different ways of ERP implementations, and all of them have their pros and cons. There are two major types of ERP solutions you can choose from on-premise software and cloud systems.
On-premise or on-prem software runs locally in the corporate infrastructure. This gives the company full control over its data, and information flows, etc. However, this option also has a management overhead as you will need to support your ERP, update it, spend time and resources. That said, you will also get a higher level of flexibility and will be able to develop your system to tailor it to changing business processes and requirements.
Alternatively, cloud ERP works in the cloud, i.e., on a remote server managed by the ERP developers. These companies have a large-scale infrastructure that can cost hundreds and thousands of customers at the same time. This option reduces an overhead as support, fixes, and development are delegated to the vendor. However, in this case, the business will also have limited customization capabilities and flexibility.
There is also a hybrid model of private cloud, when the company has access to the cloud and full control over the data storage, access policy, etc.
You will have to analyze all these options to pick the one that will fit your budget and provide the desired service level. Sometimes the final decision is also affected by regulatory rules of the specific county. For example, some countries prohibit businesses from storing customers' information on remote servers abroad. In such a case, you will have to go with the on-prem solution.Step #2: UX and localization
Though ERP is a powerful software solution and the common perception is that it should be complex, this is not how things should work. The tool may not have a fancy interface, but it should be easy-to-use and intuitive, or else the employees will struggle to work with it. And when people struggle, they do not want to use the tool, and the overall effectiveness decreases.
Another critical factor here is localization, which should go far beyond the translations of buttons and UX elements. International vendors often overlook local regulations and business processes' peculiarities, making the solution completely unusable for local businesses.
For example, in some Latin American countries, businesses are required to store all operations history. To send this data to regulators, the ERP should be integrated with the State Tax Service (facturacion electronica). Lots of well-known ERP solutions do not have this integration, while 1Ci:Drive does.Step#3: customization and scalability
As said above, every business is unique, so there will be no ERP to fill all businesses' needs out of the box. And so, you will eventually want to have some customizations. Whether your ERP will deliver them or not is a fundamental question, and it is better to answer it before the implementation starts.
If the ERP can be flexibly customized in many ways, this will unlock various opportunities for business processes automation and ROI growth. As an example, 1C:Drive ERP enables customers to:
add CAD/PDM connectors fast,
set up custom dashboards and reports,
conduct multi-currency accounting,
support several processes within one solution (e.g., sales and services),
manage stocks in real-time.
Another crucial factor is scalability. ERP that can perfectly serve 20 may become a limiting factor when this number grows to 100. So, before you even start to implement your ERP, it is excellent to understand how it can be scaled in the future. Sometimes, vendors implement multiple service tiers based on the user count, or you will be required to purchase additional resources. Sometimes, they offer the same stable solution to everyone, but the tool can't work great for a tiny startup and a medium-sized production company.
You will need to spend some time talking to developers, digging into documentation, and searching for the current users' feedback. But the result of this work will pay out when you will experience seamless growth.Step #4: data security and support
Indeed, the system's security that has access to the most crucial business data is something you should not underestimate. Collect information about encryption, security mechanisms, data management policies, etc.
You also should have an opportunity to set flexible access permissions, implement additional security measures like two-factor authentication, etc. And when talking cloud, this should be viewed as an extra security risk.
Also, ERP vendors often do not provide accessible support and training, which may also pose additional risks, reduce efficiency, extend the learning curve, and affect the implementation project timeline.
There are multiple features and business processes to automate. It is great to have an opportunity to access thorough documentation, talk to the vendor's local reps, and ask questions on how to unlock the software's full power.
1C:Drive enables data-driven decisions for businesses of all kinds, provides high flexibility and customization opportunities, and serves you on any platform you may need. Learn more here.
Once you've understood the concept of an ERP system, it is easier to navigate through different systems, crucial modules, and things to analyze. If chosen right, an ERP software can deliver great results, giving you a 360 degrees view of the business and all critical KPIs. As a result, the whole company and each department will become more efficient.