What is an ERP
and what can it do
for your business?

ERP: Features and Functions

The common feature of all ERP systems is a shared database The common feature of all ERP systems is a shared database that supports multiple functions used by different business units. This means that various sections such as the Administration office, the Purchasing Department, the Warehouse or the Marketing Department, can rely on the same information for their specific needs.

In addition, new generation ERP systems also leverage new technologies - such as machine learning, artificial intelligence and communication technologies - to allow real-time dialogue with the entire production and sales chain, tocollect and process information, to monitor the progress of the business and to suggest or plan activities accordingly.

The ERP system is now an essential requirement for a company, not only for the manufacturing sector (it would be unthinkable to approach the world of Industry 4.0 without a good ERP), but for any company that wants to grow its business and reduce wasted time and money.

An ERP integrates all the essential functions for the management of a company (Accounting, Inventory and Order Management, Human Resources, Customer Relationship Management, Production, Supply Chain, Services etc.).

This is why ERP is often compared to the IT backbone of a company, since it connects all the processes together, automating and improving them.
The company thus can be seen an "organism", whose backbone (the ERP in fact) connects the different areas and makes them communicate with each other and with the outside world.

Here are a few examples (among many more):

• An ERP system suggests what is necessary to buy and when, helps to find the most suitable supplier and it advises what to produce and when.
• With an ERP, sales orders automatically enter the financial system without any manual re-coding: the order management department can work faster and more accurately and the financial department can close books faster.
• An advanced ERP offers dashboards to quickly understand the company's performance based on established key parameters.

The benefits of an ERP

With an ERP solution the company has access to accurate information that helps make better decisions faster. It also automates repetitive processes, drastically reducing costs and possible risks and errors.
Here are the main advantages of using an ERP system:

A bit of history

The term ERP was first used in the 1990s by Gartner, but its roots date back to the 1960s. Initially, these were programs for the management and control of stocks in the manufacturing sector, to which features were added to monitor inventory and reconcile balances.
In the 1970s, these rudimentary programs were replaced by MRP (Material Requirements Planning), for the planning of production processes.

Since then, MRP systems have evolved to include manufacturing processes and other back office functions. In 1990 ERP systems addressed all core enterprise functions, as they do now.

Things to consider when choosing an ERP

We have seen how ERP systems are a very important tool for a company and a long-term investment made for a period of more than 10 years. It is therefore important to make thoughtful choices.
The decision-making process should be based on an in-depth strategic analysis, which first of all must highlight business objectives and the mapping of information flows.

Some features to consider when choosing the most suitable ERP solution are:

FLEXIBILITY

A fundamental feature to look for in an ERP system is configuration flexibility: there is no ready solution that is good for everyone, the ERP solution should be able to adapt to the peculiarities of each company.
In the past, companies were used to implement very complex and costly IT architectures. Realizing changes to this system was difficult and expensive. This is why ERP solutions were only accessible to large companies. But fortunately the Digital Transformation has turned the tables: it is no longer the company that has to adapt to the solution, but the opposite.
Flexibility, or the ability to adapt to any type of company and business objective, is today considered a primary requirement for an ERP solution.

MODULARITY

Modularity is an aspect that refers to flexibility and refers to the structure of the ERP. Fortunately, most of the current solutions have a modular structure, to adapt more easily to the needs of each company. Typically an ERP covers the following macro areas: Accountancy, Sales, Logistics and Warehouse, Production.
But with the technologies available today, it is possible to cover practically any functional need, increasing the level of detail for specific business areas.

INTEGRATION

Another important feature is the integration capability. The modularity of the solution must be fully integrated, to facilitate the workflow between the various business units and to provide real-time information about business trends.

It is important for an ERP to be integrated with other softwares and applications within the company, from the most common to the sophisticated ones, such as Business Intelligence tools, WMS or DMS softwares.
Certainly the presence of departmental applications natively integrated into an ERP is a very appreciable factor: being able to count on an integrated CRM module, for example, on a DMS, Workflows, or integrated SCM (Supply Chain Management) is a "benefit" not to underestimate at all.

TECHNOLOGY AND EVOLUTIONARY POTENTIAL

This is a determining factor to consider when choosing an ERP: technology is making great progresses and it is important to rely on advanced and constantly updated softwares that keep up with time. This becomes even more important if we consider that an ERP solution is a long-term investment: it is important to carefully evaluate the technological update of the product and its evolutionary potential.
The investment that the ERP Vendor dedicates to Research and Development has to be considered: very often a brand's reputation and internationality are not a guarantee of innovation.

AVAILABILITY OF THE SOLUTION IN CLOUD OR SAAS

An important technological advantage that new generation ERPs offer is the availability of the solutions in CLOUD or SaaS (Software as a Service) mode, or the possibility of using the product on a "subscription" basis, without having to bear the costs of an IT infrastructure within the company.

Cloud-based solutions not only offer an economic advantage, but also make these systems easier to implement and manage. More importantly, Cloud ERP allows real-time reports and BI, making it a valuable resource even for executives who are interested in business visibility.

SIMPLICITY OF USE

An ERP should be user friendly and easy to learn. A good user experience will overcome users' resistance to a new software and facilitate its rapid adoption by all employees, without slowing down work flows.

How to Know When You Need an ERP System

Most companies start out using a variety of simple, stand-alone tools to manage different and simple management processes or even Excel spreadsheets. If you recognize yourself in one or more of the scenarios listed below, it is a sign that it is time to adopt a more advanced system for managing your business.

You are spending more time on daily activities 
If management of important activities, such as closure of accounting books, takes longer than anticipated, it is possible that your system has too many applications that are unable to communicate with each other. An ERP software integrates solutions and data into a single system with a common interface, making it easier for business units to communicate and carry out their work effectively.

You can't detect easily the key data of your business
If it becomes difficult to obtain important information, such as inventory or the number of returns, the problem may be related to separate and non-integrated softwares. Lack of access to metrics and KPIs could block your business from developing. ERP software is designed to meet these challenges.

Business processes that you can't keep under control
Are some areas of your business hard to handle? Managing the inventory, meeting customer needs or keeping costs under control have become challenging? In this case, an ERP software could improve your business processes encouraging growth and change of priorities.

Duplicated data
Are your resources forced to manually enter the same data in multiple applications? If so, they are likely to spend too much time entering the same data. When information cannot flow between systems, reports become more difficult, errors increase and decision making is compromised.

You are missing out on business growth opportunities
Are you spending too much time running your business that you can't pursue interesting new opportunities? The new ERP systems include advanced and intelligent features, such as machine learning and predictive analysis, which facilitates the identification of new profitable initiatives.