Enterprise resource planning or ERP software is a suite of applications that manage core business processes, such as sales, purchasing, accounting, human resources, customer support, CRM, and inventory. It’s an integrated system as opposed to individual software designed for specific business processes.
ERP software solutions have been increasingly gaining traction among businesses, both big and small, owing to its centralized approach to business processes. With it, you can collect, store, manage, and interpret data from various business units. Likewise, ERP is used to automate back-office processes and streamline cross-departmental workflows. When optimized, the solution can drive efficiency, lower costs, and increase profitability.
However, there are still plenty of companies that have yet to invest in one primarily because they are unaware of what it can do as well as what to expect when implementing one. If you are one of these companies, well, you’re in luck. We have prepared an in-depth analysis of the features, types, and benefits that these ERP programs have to offer. Also, we’ll present how ERP systems are typically priced, so you’ll have an idea of how it impacts your budget and listed down some examples that you might want to consider as you browse for one for your company.
ERP used to be accessible only to large enterprises because of the costly hardware they require, like servers and multiple workstations, and dedicated teams to handle its complex deployment, upgrades, and maintenance. However, in Accenture’s 2019 ERP trends study, they predicted that SaaS ERP deployment has been accelerating as a mainstream delivery model with cloud vendors chipping away chunks of the market from legacy developers.
Today, SaaS technology enables vendors to also offer ERP solutions to small and medium enterprises. Modules are sold separately or bundled as a plan, while hardware and technical maintenance are managed by vendors. The features of ERP software may be pared down or limited to a couple of functions, but this still allows companies of all sizes to reap the benefits of ERP software.
Some of the reasons they implement these ERP platforms are to improve business performance (64%), to position the company for growth (57%), or to reduce working capital (57%). In addition, startups and SMBs can now rely less on manpower to go about their day-to-day operations.
To improve business performance64%
To position the business for growth57%
To reduce working capital57%
To better serve customers54%
To make employee job easier49%
To better integrate systems across multiple locations41%
To replace an old ERP system38%
Source: HubSpot (2018)Designed by
Another reason why SaaS ERPs are now becoming more popular among businesses of all sizes is because of their scalability. Companies can now choose to utilize all facets of ERP or simply select a combination of modules depending on their needs. Modules often address a core business area, such as inventory management, accounting, payroll, human resources, marketing, and product planning. The more robust ERP solutions feature CRM and business intelligence, but, expectedly, are pricier.
If you are still wondering why ERP solutions are now essential to your business, read on. We will get right down to the nitty-gritty of its features, benefits, and types. This way, you have an idea of what to expect when you invest in one for your business.
To help you get a better idea of what a good ERP tool is, we have listed down some of the leading software solutions on the market, along with a short description of what they can do. These platforms are known for their fully integrated interfaces, comprehensive feature sets, scalability, and easily configurable systems, so you can be sure that these are indeed the best of the best when it comes to ERP software. Of course, these are not the only platforms that you can consider. If you’d like to see more options, check out our list of 20 best ERP software tools.
Integrated ERP software NetSuite ERP is built for fast-growing companies. The platform offers a scalable interface equipped with everything you need from financial management and inventory management to payment processing and vendor management. It is capable of automating a wide range of front- and back-office processes so that streamlining operations is much more simple. Moreover, it gives users robust reporting tools that offer actionable insights into your performance.
Cloud-based business management software Scoro is a powerful solution designed for professional services businesses, primarily those in the consulting, IT, and advertising industries. The platform provides robust tools, including work scheduling and tracking, project management, financial management, quote management, CRM, reporting, and customization. Businesses leverage these tools to plan projects and team time usage, send invoices, build client relationships, and monitor results, from one integrated system.
Cloud accounting software Sage Intacct is created for small and medium businesses. This platform features ERP capabilities via integration, such as financial management, wholesale distribution, and retail management. Also, it comes with workflow management options that let you perform bank reconciliation, automated journal entries, and trial balance. What’s more, Sage Intacct comes with a no-fuss interface that both novice and professional users can get the hang of in little to no time.
Powerful ERP software SYSPRO is designed specifically for companies in the manufacturing industry. Interestingly, the solution has been providing ERP solutions to companies for over 40 years. It comes with robust tools for accounting, document planning, work order management, project management, as well as inventory control so that it is easier to keep all data in one place and manage all processes from one platform. It is also known for its use of BOT agents that are in charge of automating redundant processes and giving you fast support for all aspects of your operations.
ERP software Odoo is unique because of its open-sourced, modular architecture. It provides you with best-in-class sales and project management functionalities to start. As your business grows, you can choose to extend the platform’s capabilities by choosing from their extensive selection of applications. They offer a variety of applications for MRP, POS, accounting, ecommerce, and other business processes. Moreover, the system is capable of seamlessly integrating with third-party applications so you can use your existing systems.
Business management platform Oracle ERP Cloud is an end-to-end solution that provides users with an integrated system for large businesses ranging from telecommunication and sales firms to pharmaceutical and manufacturing companies. It comes with financial planning features, risk management tools, project execution capabilities, as well as compliance monitoring options. In addition, Oracle ERP Cloud also offers users a performance management module to help you gauge productivity within your enterprise and pinpoint how to improve overall operations.
Business management solution Microsoft Dynamics GP offers a robust set of features that tackle financial management, human resource management, supply chain management, and workspace collaboration. Coming from an industry leader, it is also known for its top-notch business intelligence feature that lets users get actionable insights on their ERP data. Another claim to fame of this particular platform is that it seamlessly integrates with third-party partners, both cloud-hosted and on-premise.
Powerful ERP software SAP ERP is designed by a prominent software provider, SAP ERP. Used by over 172,000 companies globally, this platform comes with supply chain management and customer relationship management functionalities and can integrate with various applications and modules for other business processes. Other than its highly scalable interface, another thing that makes this platform unique is that it can be deployed on-premise, on the cloud, or as a hybrid model for your convenience.
Integrated business system ADVANTAGE 365 unifies a plethora of core functionalities to simplify the way you run your business operations. With core features for accounting, rental, inventory, credit card processing, sales, and other tools available within a single system, you can handle more demanding tasks and smoothly execute your operations. Furthermore, with all core capabilities easily accessible with a few clicks, you can significantly bolster your operational efficiency without suffering from the headaches of using separate business systems.
ERP software Z Suite ERP is a suite of business applications that houses the core functionalities of CRM, POS, and HRM. This system equips you with all the essential tools to centralize your data and streamline interdepartmental operations. Specifically built for SMBs, Z Suite ERP comes with all the essential functionalities needed to drive growth to your businesses, but without the bloat that comes with advanced tools. With all information unified from within a single platform, you can rest assured that everyone in your organization is working with a single version of the truth.
Beyond answering the question of “what is ERP software?” you should also know why you need it. The purpose of ERP software is to increase efficiency, streamline processes, and promote a culture of collaboration in an organization. This results in minimized costs and increased productivity, which can eventually lead to a better bottom line. Let’s break down the advantages of ERP software:
Business processes like accounting, sales, marketing, production, and inventory are integrated into one ERP platform. It’s easier to collect and access data across the organization, streamlining cross-departmental workflows.
Likewise, ERP automates day-to-day tasks, like entering data or generating reports. Repetitive processes are eliminated, freeing teams to focus on their core deliverables. For instance, marketing can run a daily web traffic report without bugging tech; or, accounting can instantly access the week’s sales stats without chasing the sales director.
ERP also provides managers and key stakeholders with quick look-ups. Dashboards allow decision-makers to glance at key performance indicators across the organization. If they want to investigate more, managers can drill down into details with just a few clicks.
ERP breaks down walls between departments. Data silos are integrated, and a process superhighway links local workstations together. This setup allows teams that used to operate in a vacuum to easily collaborate with other teams inside the ERP platform.
Moreover, SaaS ERP further extends collaboration between remote teams and headquarters through the internet. Offshore business units are now within earshot of their mother unit. A culture of collaboration drives innovation and team play and, in general, makes businesses more competitive.
ERP solutions have firewalls and restriction controls to guard against data breach. Having a single data warehouse means access points are tightly monitored, and security is concentrated. Likewise, user permission rules give the admins the flexibility to lock in sensitive data without limiting user access to other information.
Administrators can also quickly deactivate the access of terminated employees and grant permission to new ones. ERP solutions also display user activities, so you can easily spot unauthorized actions or suspicious activity patterns in the system.
Many ERP solutions feature built-in regulatory process standards and compliance reporting to help businesses meet myriad business requirements. ERP solutions subscribe to reporting protocols for aspects like financial accounting, product regulations, and data security.
The only worse thing about the lack of a forecast is making the wrong one. Forecasts shape strategies; thus, it’s crucial organizations get the real picture. Using a centralized database, ERP lends to a company’s disparate business solutions, a standardized process, ultimately enhancing data integrity.
ERP reporting tools use advanced filters and analytics to sift data for inconsistencies. Features of ERP software like deduplication also ensures data is updated and duplicate-free. With data integrity intact, managers can generate reports with realistic forecasts. Similarly, estimates are within a sensible range of outcomes.
Moreover, advanced ERP solutions with business intelligence tools use machine learning and predictive algorithm that allow users to dig deep into big data. Companies with complex data sources can leverage ERP for hidden insights and gain a competitive edge.
SaaS ERP also gives you the means to increase operational flexibility. For one, it helps you integrate existing apps to your system or export your ERP data to other business apps for a more streamlined workflow. Secondly, most of these give you the option to add more modules as your business grows so that you no longer need to replace your system with new software. Lastly, SaaS ERP gives you mobility as it can often be accessed on any device so long as it is connected to the internet.
A company can also leverage ERP to cut down costs. When processes are streamlined and key metrics are closely monitored, disruptions, delays, and breakdowns are anticipated, and their impact better managed.
Manufacturing and distribution are especially vulnerable to disruption. But with ERP allowing production, engineering, customer service, and other business units to work closely together using real-time data, resolving sudden problems is faster. Operating costs are also kept within budget.
To add to these, ERP software providers often take care of patches, give regular updates, and handles troubleshooting in case of technical problems. This means you don’t have to worry about maintenance costs.
You’ve learned what is ERP software, let’s now look at the different types. The fluidity of ERP dynamics and the diversity of factors affecting it make it difficult to classify the category. It can be grouped by functional levels, business size, and deployment. To simplify the types, ERP can be grouped as follows:
ERP can be fully integrated or customized to specific processes. A typical ERP system covers key business processes and consists of the following modules:
In addition to these basic functions, there are more advanced ERP platforms that also include business intelligence, asset management, and ecommerce. Moreover, ERP can be vertical with industry-specific features for, among others, retail, healthcare, government, and nonprofits.
Suppose you already weighed the cost-benefit ratio of getting an ERP, and you’re convinced it’ll drive overall profitability. You now need to consider these key factors to ensure you optimize your ROI.
Most ERP solutions are priced by quotation for customized features. The cost of ERP software is usually based on factors like several users, modules, installation, add-ons, maintenance, and training. Let’s take a look at the pricing models of some of the most popular ERP solutions today.
Plug-and-play, off-the-shelf ERP solutions work well with small businesses with straightforward processes. But for large corporations with subsidiaries in different places, a uniform system quickly runs into bumps in a diverse environment. Variations in factors like culture, policies, and regulations make it difficult to implement an overarching infrastructure. The result is either the ERP suffers low user adoption or an expensive system is left in an abandoned company warehouse.
Many large enterprises today are trying a two-tier ERP approach to address their organizational complexities. A corporate ERP is used by headquarters, while another ERP system is used by the subsidiaries.
If your business is using dozens of productivity apps, introducing a plug-and-play ERP won’t be that smooth. The more existing applications you have in place, the narrower your options to find a fully integrated quick-install ERP solution.
Unless you plan to discard existing applications, you need to assess ERP integration for each of these apps. It’s time-consuming and, even if you’re lucky, you’ll find the best ERP falling one or two apps short in compatibility space. In such a case, getting an ERP with an open API ensures your developer can tweak the system to integrate your current apps.
ERP aspires to cover the whole nine yards of operational and financial tasks. This overarching infrastructure, in fact, lends to ERP its strengths: shared files, integrated and automated processes, central database and a collaborative platform. They drive efficiency and lower costs.
However, the same single architecture is its source of weakness. the classic all-eggs-in-one-basket risk. The wider the scope of ERP, the more access points it has. This means there are more chances of an internal data breach. Although firewalls and encryption mitigate this risk, the fact is all your data is attached to this system superhighway.
Poorly designed ERPs heighten even more the security risk. Incompatible applications can lead to crashes. Limited reporting tools force users to import external files, leading to a firewall break. Moreover, a disgruntled tech employee can wreak large-scale havoc. Delayed updates or old system version also exposes all your data to hacks.
The good news is, ERP vendors are fully capable of putting up security checks and controls. After all, any breach is a death kiss to their business.
Most ERP solutions are designed for financial compliance, so the problem is less of a technical shortcoming and more of how the ERP is implemented. When an accountant is not part of the ERP project, it’s easy to gloss over financial compliance. The CEO or CIO is focused on streamlining processes to drive efficiency.
Without the auditing and regulatory knowledge of a CPA, financial regulations can easily be overstepped, including GAAP requirements and Sarbanes-Oxley Act (SOX) protocols for US-based public companies.
The issue can easily be addressed by including a certified accountant in your ERP project team. He or she can verify if the configuration, controls, and processes are compliant and recommend audit controls, where necessary.
The hype around Internet-of-Things and artificial intelligence, notwithstanding, ERP trends revolve around predictable tech developments. This niche is playing catch up to other SaaS solutions, possibly due to the more complex setup of ERP. Here, we have a compiled a list of trends that are gaining traction among ERP vendors, both legacy and startups:
As you can probably tell with what we’ve discussed so far, ERP platforms provide businesses with practically everything they need to manage operations. It can streamline workflows, facilitate collaboration, process transactions, and the list goes on. However, you should also acknowledge that ERP solutions are not supposed to be treated as a silver bullet that will magically optimize your entire business. Instead, think of it as a tool that will reinforce the work system that you’ve already set for your operations.
If you want to make the most of your investment, you will need to put in some effort not only into learning how it works but also into understanding how you can make it work for you. One such way to do this is by applying some of these best practices:
Ready to choose an ERP system for your organization? A good idea is to start by evaluating the top ones in this niche, which you can measure against the other systems. Check our comparison of the top 3 ERP systems here to jumpstart your product research.
FinancesOnline is available for free for all business professionals interested in an efficient way to find top-notch SaaS solutions. We are able to keep our service free of charge thanks to cooperation with some of the vendors, who are willing to pay us for traffic and sales opportunities provided by our website. Please note, that FinancesOnline lists all vendors, we’re not limited only to the ones that pay us, and all software providers have an equal opportunity to get featured in our rankings and comparisons, win awards, gather user reviews, all in our effort to give you reliable advice that will enable you to make well-informed purchase decisions.