ERP System Meaning: Key Features, Modules & Deployment Models

Whether you are into selling products or providing services, it cannot be denied that businesses face new challenges every day. These can range from resolving communication breakdowns, dealing with repetitive and manual tasks, and tracking customer data. But with the right ERP system, you can overcome these challenges, optimize your business, and steer it towards success.

In this article, you will learn all about the ERP system meaning, plus its core components and its various deployment models. With this information, you can learn more about the nature of this software category as well as what resources you need to prepare to achieve a successful ERP implementation. In this way, you can have a well-informed opinion of what the software is about to prepare you to make a purchasing decision.

As businesses grow, they need software that can address their needs and support different facets of their operations. Thus, they look for solutions like an ERP and make selection decisions depending on their needs. Based on a report, 34.4% of organizations want to shift away from legacy systems. On the other hand, 23.23% say they want an upgrade and 14.14% say they wanted to shift to a Tier 1 solution.

Another factor that businesses must consider is the deployment model of their ERP solution. In a survey, 46% of executives in the United Kingdom said their primary ERP solution is cloud-based or on a private cloud. On the other hand, 25% said their solution is on-site, and 17% said it is hybrid or partially on-site or partially cloud-based. Meanwhile, only 12% said it is cloud-based or on a public cloud.

Once they find a solution they want to implement, organizations must prepare to hurdle resistance to its implementation. In a survey, one of the barriers to ERP implementation is resistance to change (82%). Other barriers cited are inadequate sponsorship (72%), unrealistic expectations (65%), and poor project management (54%).

If you’re still on the fence about implementing an ERP solution, perhaps it is best to learn its ins and outs first. Below, we discuss the ERP system meaning to help you get a more concrete idea of what it can do for your company and how it can be implemented. In this way, you can make the most out of your investment should you decide to commit to an ERP system subscription.

Exploring the ERP System Meaning

When one mentions ERP, it is often confused with “financials.” This is why the ERP system meaning can be muddled. However, it is important to note that financials and ERP are two different things. Financials refer to the business functions that are performed by the finance department of an organization. It includes a wide range of activities that covers grants, billing, financial accounting, payables and receivables, and more. As can be seen below, an ERP can include financial management as one of its modules.

In reality, ERP encompasses financials, supply chain, operations, commerce, reporting, manufacturing, and human resource activities. Software solutions for ERP are built to handle day-to-day activities, be it budgeting your projects, handling your employees, or managing inventory. In many cases, comprehensive solutions can also include enterprise performance management, which helps you in building and analyzing your company’s financial results. At the end of the day, ERP systems are there to help companies ensure seamless processes and optimize their workflows.

Rossum is an example of a cloud-based ERP.

Key Features of an ERP

Different ERP solutions from various vendors have varying features. However, they do share some common core features which include the following:

• Central database. ERP systems have a centralized relational database where all your data is stored. This ensures that data keyed in one part of the company is always accessible to other parts of the organization. In this way, users have a single source of truth.
• Automation. ERP often involves repetitive business tasks. These include payroll, invoicing, reporting, order processing, and more. By enabling automation, you can lessen errors, spend less time on manual data entry, and let employees focus on more strategic tasks.
• Consistent UI/UX. Since it caters to different business needs, users of the ERP software should be able to use the system with ease as they go about performing their core functions. It should be intuitive for all kinds of users, from individual users to functional managers to executives and other stakeholders.
• Integration. With this feature, an ERP system allows the software to work with other solutions. This encourages the free flow of information and eliminates data siloes that prevent employees from working effectively. Having integrated systems also promotes seamless communication, reduces errors, and lowers costs.
• Data analysis. Organizations should put to good use the data that their ERP systems gather from various business units. This will allow users to spot trends and patterns in their data. In turn, organizations can gauge how effective their processes are and gain insights for making future business decisions.
• Reporting. An ERP software usually equips users with reporting tools so they can communicate data analysis to end-users. This allows users to present data through Gantt charts, pie charts, bar graphs, and other visual representations. It also allows them to restrict access to data based on the user’s credentials.
• Customer relationship management. A CRM serves as the repository for information about your customer base. With a CRM, you can have a central database for customer information within your ERP system so users have easy access even when they are working in other parts of the system.

NetSuite ERP offers all the key features of enterprise resource planning from automation to data analysis.

Common ERP Modules

ERP solutions can contain different modules that are meant to address specific business requirements. Each module fetches information from specific areas of the business to put it into a central database. Below are some common ERP modules.

• Financial management. Financial management encompasses planning, organizing, and deciding the optimal use of funds for your organization. Finance leaders are mandated to track and use financial data to make key decisions around managing cash, funding sources, capital projects, and more. With an ERP with financial management features, you can manage credit, track revenue, and handle customer payment schedules.
• Human resource management. The human resource management module of your ERP software allows you to keep records of your employees. Employee data can include name, address, designation, salary, and employee code.
• Sourcing and procurement. Within an ERP, you should have a sourcing network that enables you to go through the steps of the strategic sourcing process. By building a network of trusted and reliable vendors, looking for potential suppliers in the future is much easier. One just needs to look at your supplier network for a match and avoid putting out a request for information (RFI).
• Sales. An ERP with a sales module enables organizations to implement order placement, order scheduling, shipping, and invoicing functions. It is also capable of sales planning, which involves determining the sales rate of a company in order to keep up with its product lines as detailed in its strategic plan. The sales module can also work together with your organization’s logistics system.

ERP Deployment Models

Aside from looking at the features of ERP software, you would also want to consider how you want the solution to be deployed. There are different deployment options available for ERP software, including the following:

• Cloud-based. A cloud-based ERP means that the software is managed over the internet versus being hosted on-premise. With a cloud-based solution, the vendor takes care of the management and maintenance of the solution, instead of placing the burden on the client. Cloud-based vendors include software updates as part of their service. Since it requires little to no IT involvement, your team can focus on completing more value-added tasks for your organization. Thus, it is no wonder that cloud-based ERP solutions are favored by the majority of businesses, as per recent ERP statistics.
• On-premise. With an on-premise solution, the ERP software is installed locally on your organization’s hardware and servers, which is managed by the organization’s own IT staff. With an on-premise solution, the task of maintaining the software is on the organization. This also means that the organization can opt to buy the core software but then, later on, incur additional costs for installation, troubleshooting, and maintaining the system.
• Single-tenant solution. Single tenancy refers to a kind of architecture where there is a single instance of the software application plus, its accompanying infrastructure server caters to only one customer. Under this infrastructure, the hosting provider will assist the tenant in managing the software instance and dedicated infrastructure. A single-tenant infrastructure is ideal for those who want to control and flexibility within their environments
• Multi-tenant solution. Multi-tenancy involves architecture where a single instance of a software application serves multiple customers. In this type of solution, each customer shares the same database and application. Benefits of a multi-tenant architecture include lower costs, efficient resource usage, more effortless start-up experience, and fewer hardware requirements.

Popular ERP Software

With the number of ERP software available on the market, businesses can find it overwhelming to choose the right product for their operations. To help you get a better idea of the different solutions out there, here are some of the most popular platforms today.

NetSuite ERPVISIT WEBSITE

NetSuite ERP is among the most well-known ERP platforms today, and for good reason. Created for businesses of all sizes, it can be used to automate an extensive list of business processes such as financial management, order management, inventory tracking, demand planning, and vendor management. It also comes equipped with reporting and analytics tools which make it easy for companies to track KPIs and make data-driven business decisions.

Rossum

Rossum is an end-to-end document gateway that leverages artificial intelligence to automatically capture incoming file traffic. However, like ERP solutions, this platform also supports unified mail channels, document status tracking, and analytics so companies can accurately process all documents needed for day-to-day operations. With this, you can connect document senders and recipients in one hub, make sure all files are stored in a secure place, and accelerate workflows that rely heavily on paperwork.

Method:CRM

Method:CRM is a customizable web-based CRM solution built for small businesses. It enables users to automate lead capture, track lead interactions, and close more deals. More than that, however, this platform also supports document sharing, calendar management, and payment portals, among others. Meaning, it lets you bring together different aspects of the sales process and financial management. In fact, it can fully integrate with QuickBooks products as well as various third-party business systems to ensure that no information falls through the cracks.

Sage Intacct

Sage Intacct is primarily a cloud financial management software that provides cash management, accounts payable, accounts receivable, and spend tracking solutions. However, the platform comes with tools for fixed asset management, project management, and workflow management similar to an ERP system. As such, it allows companies from different industries to drive growth and efficiency by streamlining day-to-day processes, particularly in the financial aspect of your business. It can also integrate with a wide range of native and third-party solutions, allowing users to conveniently import and export financial data across platforms.

SYSPRO

SYSPRO is an ERP business software created specifically for the manufacturing and distribution sectors. It comes equipped with all the tools you need to improve the way you operate. These include inventory optimization, scheduling tools, order management, supply chain management, and accounting management. With this at your disposal, you can gain a 360-degree view of all your business activities. Moreover, you can manage your data better and gain insights into your day-to-day operations. SYSPRO also offers cloud-based and on-premise deployments, so businesses can choose how they want to implement the platform.

NetSuite ERP is a leading ERP solution with tools ranging from complete workflow automation to inventory management.

Business Functions that Can Benefit from an ERP

As ERP handles various processes, implementing it can impact many essential parts of your business.  Some of which are:

• Finance. An ERP with an accounting module allows users to gain access to critical business information. Moreover, it allows the user to create a budget and allocate financial resources for various purposes such as marketing campaigns, raw material procurement, employee salaries, and more. Managing these processes from one unified system lessens the time spent on buying separate tools. Still, it pays to keep in mind the six hidden ERP accounting software licensing costs.
• Supply chain. An ERP has the ability to consolidate supply chain operations into one dashboard, giving organizations the visibility and coordination they need with suppliers and vendors. With an ERP, you can automate demand planning, warehouse resource management, transportation of materials, and other supply chain tasks. It also allows you to automatically create and send invoices to the customer, eliminating errors and ensuring prompt delivery.
• eCommerce. Integrating your ERP with your ecommerce store allows you to monitor the flow of critical data like items, consumer details, order shipping and tracking, and inventory, which are to your stand-alone systems. With this, customers are informed throughout the entire sales process, which enables you to deliver a better customer experience. By integrating web orders, shipping, and payment information into a single system, organizations can also reduce operational costs.

ERP Implementation Roles

If you are looking to implement an ERP within your organization, it’s crucial to get the buy-in of your key personnel. Below are some of the people you would want to get involved:

• Project manager. The project manager supervises the implementation of the ERP project to make sure that it is completed on time and meets organizational goals. They work in tandem with the executive sponsor to realize the vision of the project. Responsibilities include outlining requirements, identifying key members of the ERP selection process, and reporting progress to senior management.
• Implementation planner. Implementation planners act as advisers on ERP software selection, customizing said software, and giving clients technical support during implementation and past the go-live date. With their business insights, they can show you how an ERP can be implemented to find solutions specific to your business. Coming from an external company or vendor, the implementation team often includes a project manager, business analyst, and technical consultant.
• Executive sponsor. The executive sponsor is responsible for overseeing the high-level responsibilities of the ERP implementation project. He plays a crucial role in selecting the right ERP software based on the budget, business need, and the organization’s readiness to implement it. His responsibilities include crafting the vision and goals of the project, communicating issues faced by the company, and assessing and addressing project issues. Thus, it can be helpful to executive sponsors to read through the top three ERP software systems.
• Change management team. The change management personnel can be seen as intermediaries during the implementation of the ERP project. Their main responsibility is to drive the change management strategy of the implementation project. As such, they manage expectations around the ERP software needs, secure buy-in from the rest of the company, and align the software changes with departmental needs.
• Superusers. Superusers work together with the members of the change management team so that they have the required software training to provide support throughout the project implementation. They also collect and put together data so they could give advice about the user experience and guide colleagues on how the ERP system operates. Once the project is implemented, they are considered the cross-functional internal expert in using the ERP software.
• Functional team members. Functional team members consist of individuals across the company, ranging from finance to manufacturing to sales and logistics. Their task is to define the needs of their department to the project manager and ERP provider or vendor. At the same time, they are the ones who are tasked to relay the processes and future requirements to the implementation team as well as to future end-users.

Method:CRM can be used by employees from different departments, making it a highly flexible platform.

Benefits of an ERP System

The impact of an ERP system on a business will be different in small businesses versus large enterprises. In general, companies that implement an ERP system can become more efficient and effective, thereby boosting productivity and increasing profits. Below are some benefits of adopting an ERP system.

• Drive optimal performance. With an ERP, you can define the KPIs that align with the particular needs of your company. Once you identify the relevant KPIs, it becomes a matter of tracking them and conducting detailed data analysis. Having data accessible in real-time plus, actionable insights allows you to make the needed adjustments to steer you towards business success.
• Accelerate operational impact. Modern-day businesses operate in complex and diverse environments. In order to thrive, businesses have to ensure that their business processes work seamlessly and that mundane tasks are minimized. With an ERP, businesses can streamline their whole production schedules, as well as their order fulfillment and delivery. This enables them to gain efficiencies in their operations, thereby positively affecting their bottom line.
• Ensure business agility. Business agility means that the organization can adapt quickly in a cost-effective manner to the events around an ever-changing business environment. ERP solutions usually have analytics capabilities to enable leaders to make fast and sound business decisions. It also comes with mobile apps so that you can make timely action that can impact the entire value chain.
• Achieve cost savings. An ERP solution eliminates the need for IT staff to maintain various programs scattered across different departments. With a centralized repository for information and related processes, organizations can achieve cost savings as well as time spent maintaining these programs. ERP solutions with automation enable people to get more work done using less time, thus resulting in lower operational costs. According to the latest ERP software statistics, companies that implement ERP systems achieve their return on investment after 2.5 years.

Finding the Right ERP Match for Your Business

Organizations looking into implementing an ERP will find a number of factors that they should take into consideration. For one, they have to know the key features of the ERP, the various modules included, as well as its different deployment structures. They also have to assemble the organizational roles that will be key to its successful implementation.

As you look for the right ERP that suits your needs, it pays to keep abreast of the latest ERP trends. One of these is the integration of artificial intelligence and integration with the Internet of Things. Thus, exciting times are up ahead for those who have existing ERP solutions as well as those who have yet to acquire one.

By Louie Andre

B2B & SaaS market analyst and senior writer for FinancesOnline. He is most interested in project management solutions, believing all businesses are a work in progress. From pitch deck to exit strategy, he is no stranger to project business hiccups and essentials. He has been involved in a few internet startups including a digital route planner for a triple A affiliate. His advice to vendors and users alike? "Think of benefits, not features."