In the past, finance and accounting, HR, production, customer service, and all the departments of an enterprise used to to work separately. Nowadays it is possible to have all the different areas of a business collaborate by integrating all of them in one system
Enterprise resource planning (ERP) is a platform that integrates the principal functional aspects of a business or organization into one system. The ERP can be personalized for each business, although they typically contain finance and accounting, HR, production, materials management, and customer relationship management.
What are the benefits of a centralized data platform?
The ERP ends up becoming a business operating system since typically all the areas of the business are centralized. This enables data sharing across departments resulting in several advantages:
- Collaborations in cross-departmental businesses can be fomented.
- Improves customer service.
- Increases productivity by automating data, and eliminating duplicated information.
- Decreases operational costs.
One of the main advantages of implementing an ERP system is the fact that it can automatically extract insights from data found in several platforms when a business intelligence software is integrated into the system.
This process is called smart reporting; all the data is collected across the different areas in the business, it is then analyzed and translated into reports. This allows us to produce insights derived from data contained in different platforms, that would otherwise be extremely time-consuming to perform manually.
For example, if you would like to manually find out the profit per customer visit by product, you would have to go to QuickBook first to check the cost of goods sold, then to Google Analytics or Facebook to check the cost per customer visit, plus you would have to collect the information on all products sold on the different e-commerce platforms.
This can be a very time-consuming process since we would have to manually collect data from different platforms, and analyze it ourselves in order to generate the reports.
Smart reporting can be taken to the next level by integrating unifying management systems like a Product Content Management Platform, a Data Asset Manager (DAM) or a CRM (Customer Relationship Manager) in the ERP platform. This incredible integration also allows us to optimize information sharing and updating.
Disadvantages
The most common concern regarding ERP systems is the costs involved:
- The software might be too expensive for the company.
- Implementation could be complicated.
- It requires a change in management.
Hardware costs represent 10% to 15% of the total cost. A way to reduce costs while implementing an ERP platform is to avoid installing a physical hardware by opting for an ERP cloud based implementation.
The benefits of using the cloud does not only rely on cost reduction; it can be used immediately, which means the business doesn’t have to suffer while the hardware is taking time to install.
How to know if a company needs an ERP
Small businesses are usually able to handle data across unintegrated platforms since they might be handling a small amount of data compared to mid-size or big corporations. However, as the business continues to grow, managing all the data becomes time-consuming, costly, and prone to mistakes.
The good news is that the demand of ERP systems is growing which reduces the barriers to acquire the system. Cloud based ERP solutions have had an important effect regarding cost reductions in addition to the systems improvement in terms of efficiency.
