Is your organization drowning in information? Is inter-team collaboration not even close to being one of its strong suits? Do your projects drag on for far longer than they should?
If you answered “yes” to any of these questions, your organization is a good candidate for an enterprise resource planning (ERP) system.
What is an ERP, you ask? The one-sentence answer is: ERP is a process management framework that knits together mission-critical functions within an organization to improve internal collaboration, increase productivity, and hasten the output of high-quality work product.
The longer answer follows.
What Is an ERP System?
A comprehensive, properly deployed ERP system makes work easier and better. That’s a pitch that anyone can understand, and it’s confirmed by the reality of ERP.
Just about any business information system is ripe for ERP integration. Technically speaking, ERP software is a bundle of applications that help different component systems interact with one another. In doing so, ERP systems enable members of any one team to see and use the information that members of any other team can, subject to role and seniority-based permissions. (For reasons that may be obvious, it’s not a good idea to give all your employees access to highly sensitive or privileged information.)
ERP software centralizes information collection, storage, and access. A comprehensive ERP should cover the entire product or service lifecycle, bringing in any business functions directly related to the core revenue-producing activities of the organization. ERP software can also integrate internal but non-revenue processes more effectively into the organization’s workflow, such as by providing finance teams with real-time access to each department’s purchasing and accounts receivable activities.
As we’ll see, real-time information access is a critical feature of ERP software. By definition, an ERP system shortens the time between information generation and access, reducing the need for workers to rely on after-the-fact reporting to make in-the-moment decisions.
Core Use Cases for ERP
“Real-time access to information across departments and processes” is certainly a compelling proposition, but it’s still a bit abstract. Why would an organization actually want to use ERP software rather than continue with the status quo? And when would ERP software really prove useful?
This depends on what your organization does and what it wants to accomplish in the medium- to long-term future. But these core ERP use cases apply to a wide variety of organizations, including (perhaps) yours:
- Providing finance and accounting teams with greater real-time visibility into events and instances that affect the organization’s financial position
- Informing customer service decisions and adding depth to an existing customer relationship management system
- Enabling smarter, more cost-effective production and inventory management decisions
- Facilitating better financial projections and pre-proposal estimates
- Informing vendor management, purchasing, and other supply chain decisions
- Collecting and storing more accurate, timely, and granular data about sales and customer behaviors across all sales and lead-generation channels
- Enabling more cost-effective marketing and business development decisions
This list merely scratches the surface. If you don’t see a process or capability you’d really like to improve or unlock at your organization, don’t assume ERP isn’t a good fit for it. The opposite is more likely to be true.
Key Functions and Benefits of ERP
Seeing the use cases you’ve longed to unlock on the list above might be all you need to see to deploy ERP in your business.
But perhaps you need more convincing. If so, consider this more general list of ERP functions and benefits:
- Providing real-time, across-the-organization visibility into every integrated business process
- Improving version control and ensuring everyone with access to the ERP works off the same basic set of facts
- Automating low-value processes and tasks that divert employees from revenue-producing activities but can’t be delayed or eliminated
- Speeding up consultative and decision-making processes
- Improving forecasting and historical reporting, both in terms of accuracy and granularity
- Looping in trusted third-party vendors or service providers on a “need to know” basis
- Improving and reducing the cost of legal and regulatory compliance in home and foreign markets
Determining Whether Your Business Needs an ERP System
Let’s be perfectly clear: ERP software is a serious investment in the future of your organization. While the benefits should be obvious by now, an ERP deployment is nevertheless not something to be done lightly. You’ll want to be sure it’s right for your organization, and to commit to getting the rollout right, before moving ahead.
How can you determine whether your business needs the planning and execution lift that only ERP software can provide badly enough to prioritize its deployment ahead of other no-doubt-important strategic goals? If your organization meets at least some of these tests, it’s a good candidate:
- Your teams complain (or you ascertain) that they don’t have easy access to important information that they need to make informed, timely decisions
- You are not confident that your organization is fully compliant with current regulations in all the markets where it operates
- Where they exist, your software integrations are piecemeal and informal, rather than systematic
- Your teams struggle to collaborate effectively
- You don’t have real-time visibility at a glance into critical metrics like business credit utilization, cash account balances, inventory levels, and employee overtime
- Your teams (and you personally) spend too much time looking for or requesting information and not enough time acting on it
- Your teams (and you personally) spend more time putting out fires than taking proactive or strategic steps to prepare for the future
Set Your Business Up for Success
By now, you should have a good sense of whether an ERP system is right for your business or whether you can skate by without one for the time being.
Just know that what’s true in the present might not remain so in the future. At its present size and footprint, your company might not be complex or dynamic enough to require a single system that provides real-time visibility into everything happening under its roof(s). Fast forward a few years and a whole lot of momentum later, though, and the story could be different.
It’s never too early to begin thinking about what the shift to an ERP system would look like. Nor precisely which processes and functions you’d like it to knit together. After all, it’s never too early to set your business up for success.