What is Enterprise Resource Planning Software?

Enterprise Resource Planning (ERP) software is any of a number of software platforms that bring together customer relationship management, accounting, core HR, and supply chain management features together in a single software. Because of the complexity and number of features available through ERP software, it has been traditionally adopted by large enterprise corporations, but recent years have proved that ERP software is useful even for small and medium-sized businesses (SMBs).

This overview contains high-level information on what you can expect when searching and implementing ERP software. For tailored software recommendations use our Product Selection Tool at the top of this page to receive a free shortlist of options for your needs.

Benefits of ERP solutions
Reduced software overhead
ERP software allows teams to consolidate their tools into one unified system. Instead of paying for separate subscriptions for a supply chain management, core HR, CRM, shipping, and inventory software, teams pay for a single platform that handles each of these tasks in a centralized system. Depending on the company’s size and complexity, reducing the number of software system subscriptions can significantly cut the monthly overhead.

Increased communication
When all sectors of the company gather in a single software to plan and track business events, all of the business data can then be made available for team review. Many modern ERP systems invest heavily in analysis tools and visualizations that let team members create reports that show progress, indicate inventory levels, and notify colleagues of wins. ERP software then acts as the single source of truth for stakeholders to compare successes and prepare for bumps in the road.

Silo reduction
While still useful for storing grain, business silos–where teams work independent of one another to everyone’s detriment–are a luxury no one can afford. An ERP helps to bring business goals and planning out into the light of day where teams can share effortlessly with one another. This allows teams to compare notes across departments, helping everyone move toward those big business goals.

Standardization of manufacturing processes
For large manufacturing corporations with several facilities, sharing manufacturing plans and best practices can be vital for product and process standardization. ERP systems allow manufacturing teams to store manuals, blueprints, regulatory information, and vital statistics for each process in a single, searchable location. This allows processes to be replicated across county and country lines without sacrificing quality or speed.

Inventory reduction
Whether it’s the number of widgets or the humans that install them, it’s costly to keep more resources on hand than you need. ERP solutions provide inventory tracking and analysis that allows companies to run leaner. Using technology like RFID tags, geofencing, and biometric data, ERP systems can track assets through their entire lifecycle from supply to sale, and many ERP systems will suggest inventory improvements over time. With reduced inventories, companies can repurpose storage space and cut down on their payroll costs.

Standardization of human resources information
Many ERP solutions provide Core HR products like payroll, scheduling, time clock, and benefits management. These were a logical extension of the types of software that connected the front of house, warehouse, and c-suite. With Core HR features, an ERP system can use the time clock software to calculate payroll and benefits, and managers can access employee information when building schedules. Because humans are often a company’s most expensive and valuable resource, it’s vital to connect the software that manages them with the rest of the enterprise’s data.

What to expect from ERP systems
Onboarding and time to market
ERP software is best characterized as a category of categories: each instance of the software can be made up of varying features and modules that best suit the needs of the purchasing company. That being said, onboarding can take anywhere from a couple of weeks to several years depending on the size and complexity of the purchasing company. Pay careful attention to features that are included, any integrations you can make to existing software not covered by those features, and the price of any custom or add-on features. You should also ask any ERP vendor up-front whether they have dedicated onboarding teams to assist you in those first several months and whether they charge an onboarding fee for any and all initial services.

Pricing overview
The ERP software market has exploded in the last 25 years, providing companies with lots of options for both single license and subscription SaaS products with varying price ranges. Depending on the features your company needs, an ERP software can range from a couple dollars a month per user at the SMB level to many thousands of dollars a month for an enterprise corporation. Refer to individual vendors on the Products page for more detailed information.

Potential pitfalls
Any ERP software purchase should be carefully considered, not only because it can be so pricy, but also because of the amount of data each of these systems potentially manage. You want to make sure you’ve chosen the right software before you start porting over all your databases. To ease your transition, ask your ERP partner if they provide onboarding support like data upload and integrations to other systems. You’ll also want to check that your ERP lets you own your data with easy exporting.

Author: MahesH

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