You’ve quite your day job and decided to kickstart your dream of running your own business. Getting setup can be simple enough, but then your business begins to grow, and you need to scale to match the increasing complexity.
This has been the scenario for many during the pandemic; the so-called pandemic entrepreneurs helped to start 4.4 million news businesses in 2020, an increase of 24.3% from 2019.
When businesses reach a certain level, there comes a moment where you begin to wonder whether to invest in an enterprise resource planning (ERP) system.
Any investment of this kind understandably means taking the time to weigh both the strengths of weaknesses of each potential platform.
But what exactly is an ERP system and how does it function?
Enterprise resource planning (ERP) systems
Enterprise resource planning systems are either programs or systems that hold all those important operations of a company and combine them into a single powerful system. This can be for accounting, or human resources, purchasing, or inventory management.
An ERP system is able to elevate businesses’ project management and performance by facilitating their ability to budget, plan, forecast, and report on their financial health and procedures.
The ERP industry essentially boils down to two types: cloud ERPs and on-premises ERPs.
When it comes to cloud ERPs, they hold better integration capabilities, which makes them more popular. Today, businesses usually have to apply so much software as well as systems in order to run smoothly. Essentially, to be considered a good ERP system, a prerequisite is the ability to integrate well with other software.
Alternatively, some vendors provide all-in-one business solutions that integrate an ERP with a POS and other capabilities into one software. Examples of these types of vendors include NetSuite and QuickBooks.
Despite the initial complexity and cost of setting up an ERP system, they remain incredibly popular with businesses to manage their operations because their strengths simply outweigh any challenges. Strengths such as these:
Enterprise resource planning helps businesses increase their operational efficiency. And that’s because ERPs essentially eliminate repetitive processes. They cut down enormously on the amount of data that has to be entered by human fingers. And this streamlines businesses through data collecting – no matter in which industry they operate.
With greater efficiency comes stronger productivity. That’s because it reduces the amount of time it takes for workers to finish tasks and projects – since repeated processes are automated. Workers can finish tasks faster with the help of automation and move on to other tasks earlier.
ERP solutions centralize processes and put them in a single storage of truth – and in real-time. This reduces a lot of paperwork, removes repetitiveness, and optimizes everyday routines. This in turn accelerates many corporate activities such as information approvals and requests, logistics, supply management, etc.
This has the effect of driving down costs for both administration and operations. According to one study, ERP systems help to reduce operational costs by an average of 23% and overall administration by 22%.
Planning and reporting improvements
Because ERP systems pull in data from everywhere and consolidate it into a single source, its rich data bank can provide meaningful reports and analytics. Because this leads to less spreadsheet work, fewer emails, and the ability to compare functionality across business areas, you’re able to get a broad view of the business much easier, leading to better planning.
Better customer service
And finally, ERP has positive effects on customer service in general and customer relationship management in particular. As centralized data storage collects all info related to clients and sales, it makes it much smoother for managers and customer-facing reps to engage with customers and meet their needs much faster.
And with more data and better organized data, businesses are in a better position to collect and analyze data to enhance customer loyalty by creating more personalized experiences and benefits.