ERP is a term, or rather an acronym (it stands for Enterprise Resource Planning), that indicate a complete system able to integrate all the essential functions for the management of a company and to automate and computerize the processes and information of the entire organization.
INDICE DEI CONTENUTI
The common feature of all ERP systems is a shared database that supports multiple functions used by different business units. This means that all the employees of a company can rely on the same information for their specific needs.
In addition to what has been said, 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 chaintocollect and process informationto 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 becomes an "organism", the vertebral column of which (the ERP) connects the different areas and makes them communicate with each other and with the outside world.
Let's make some practical examples (but many others could be made):
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:
FOR MORE PRODUCTIVITY
Simplify and automate core business processes for greater resource optimization. Plus, with more efficient operations and real-time data access, new opportunities can be intercepted immediately.
IN REAL TIME
Get timely and real-time information to quickly track business and financial reports and share their results. Act promptly based on the proposed insights and improve business performance in real time.
WITH OTHER SOFTWARE
It interfaces and integrates completely with different applications in the company, to manage, organize and track information in real time
By maximizing the visibility and control of your business, you minimize the possibility of errors related to forgetfulness and delays, guarantee compliance with regulations, predicting and preventing risks.
By using integrated ERP applications that share the same database, it is possible to simplify IT and offer resources an easier way to work.
Reduce the time of customization and personalization, to get a tailored solution as vertical as possible.
The term ERP was coined in 1990 by Gartner, but its roots go back to the 1960s. Initially, ERP were programs for the management and control of inventories in the manufacturing sector, to which functionalities 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 production processes and other back office functions, until, in 1990, they laid the foundations for ERP systems, as we know them today.
We have seen how ERP systems are a very important tool for a company and a long time investment, at least 10 years. It is therefore quite natural that this choice should be as prudent and documented as possible.
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:
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 like a suit tailored to the peculiarities of each company.
In the past, it was usual to implement very complex and costly IT architectures, to which the company had to adapt. Making changes to this system was difficult and consequently expensive. This is why ERP solutions were mostly accessible only to large companies. But fortunately the technological progress brought by the Digital Transformation has turned the tables: now no longer the company has to adapt to the solution, but the other way round.
Flexibility, or the ability to adapt to any type of company and business objective, is today considered a primary requirement for an ERP solutions.
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 individual 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, as well as to deepen the level of detail for specific business areas.
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 an updated picture of the business trend in real time.
It is important for an ERP also to be integrated with other softwares and applications already present in the company, from the most common to the sophisticated ones, such as Business Intelligence tools, WMS or DMS softwares, for example.
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.
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 to keep up with the times. 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 commitment that the ERP Vendor demonstrates in Research and Development is a positive index to consider: very often brand's reputation and internationality are not guarantee of innovation.
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 a IT infrastructure within the company.
Cloud-based solutions not only offer an economic advantage, but also make these systems easier to implement and manage. Perhaps more importantly, Cloud ERP allows real-time and BI reporting, making it a valuable resource even for executives who are interested in business visibility.
An ERP should be user friendly and easy to learn. A good user experience will overcome users' natural resistance to a new software and facilitate its rapid adoption by all employees, without slowing down work flows.
Most companies start out using a variety of simple, stand-alone tools to manage different, very 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 the management of the most important activities takes longer, such as the closure of the accounting books, it is possible that the cause is due to too many different 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 easily decipher 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 software. 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 becoming an enigma? Have managing the inventory, meeting customer requests or keeping costs under control become unsurpassed challenges? In this case, an ERP software could support you in the restructuring of business processes to adapt to the growth or change of priorities.
Are your resources forced to manually enter the same data in multiple applications? If so, they are likely to spend too much time entering duplicate 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 so 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 facilitate the identification of new profitable initiatives.