The term ERP is an acronym, and it stands for Enterprise Resource Planning. But, even its full name doesn’t shed much light on what ERP is and what it does. Then, what is the most simple ERP definition? ERP refers to the systems and software used by businesses to manage their day-to-day business activities, such as accounting, manufacturing and project management.

What is ERP software?

ERP software ties together and defines plenty of business processes and enables the flow of data between them. An ERP system eliminates data duplication and provides data integrity. At its most basic, an Enterprise Resource Planning system integrates various features into one complete system to streamline processes and information across the entire organization. With ERP software, you can manage small or medium-sized businesses, but also enterprises, across industries.

ERP software is a powerful and strategic business process management tool. It can be used to manage information within a company. An ERP system provides intelligence, visibility, analytics, and efficiency across every aspect of a business. ERP technology also facilitates the flow of real-time information. Additionally, ERP software can automate your core business processes.

So, What is ERP and how does it work?

An ERP system is a software that connects different features or software into an all-in-one tool for businesses to use. It is easy to use and most importantly saves time when you don’t have to use all the different systems during the day. For example, you’ll have time tracking, project management, invoicing and resource scheduling in one platform, to name a few. An ERP system can be a cloud-based software that can be used wherever you are. Alternatively, it can be a standalone ERP system that is hosted in the company’s web servers or a hybrid one. In this article, we mainly focus on cloud-based ERP systems and we will explore their advantages.

At first glance, Customer Relationship Management (CRM) and Enterprise Resource Planning (ERP) seem quite similar, in many ways. They are both used to increase the overall profitability of a business. The systems overlap some areas, and they can be completely integrated into each other. However, when viewed separately it’s easier to see how CRM and ERP each play a role in improving efficiency and increasing sales.

Noticeably, CRM and ERP software use different approaches to increase profitability. By making business processes more efficient, ERP reduces the amount of capital spent on those processes. CRM works to increase profits by producing greater sales volume.

A business can also be using Manufacturing Resource Planning or Material Requirements Planning (MRP). But, be tuned for our upcoming blog posts on these topics, and for now let’s not make this more complicated.

What is CRM software?

CRM refers to strategies, tools, and technologies used by enterprises for developing, retaining and acquiring customers. But, What is CRM software? Well, CRM software ensures that every step of the interaction with customers goes smoothly and efficiently in order to increase the overall profits. CRM software gathers customers’ data from multiple channels. And the best part: all data is safely stored in a unified CRM database. Therefore, users can easily access and manage highly important data via one data source.

When we talk about CRM we are usually talking about CRM software. CRM has actually developed to include all areas of the customer experience, keeping the customers happy, and deliver the value to the customers.

What is ERP?

ERP software is designed to make a company’s processes more effective and efficient. An ERP platform allows the company to focus on what really matters: the data.

While CRM is focused on the customer, ERP focuses on the business. ERP allows for the rapid sharing of standardised information throughout all departments. ERP software usually includes the followings:

• CRM or customer relationship management
• Product and purchase planning
• Project management
• Manufacturing and delivery planning
• Invoicing and billing management
• Accounting and financial management
• Sales management 
• Supply chain management
• Multiple Branch management
• File & document sharing
• Advanced reporting & analytics

Examples of specific ERP advantages and business benefits include:

1. Improved business insight – from real-time information generated by reports
2. Lower operational costs – through defined and more streamlined business processes
3. Enhanced collaboration – from users sharing data in contracts, requisitions, and purchase orders
4. Improved efficiency – through a common user experience across many business functions and managed business processes
5. Consistent infrastructure – from the back office to the front office, all business activities have the same look and feel
6. High user-adoption rates – from a common user experience and design
7. Reduced risk – through improved data integrity and financial controls
8. Lower management and operational costs – through uniform and integrated systems

Most businesses can benefit from ERP software. Every organization manages people, purchases products and services, sells something and accounts for finances. The way each activity is handled varies by industry, but every business performs these basic functions. In most cases, it’s more effective to handle these processes through an integrated software platform than through multiple applications never designed to work together. 

ERP systems usually include features for accounting, resource scheduling, and sales CRM. However, you can combine different features to better meet your needs. Actually, there are three different types of ERP implementations: cloud-based, on-premise and hybrid. Explore the benefits of each, and choose the one that makes the most sense for your business.

Three types of ERP software include:

Cloud-based ERP

A cloud-based ERP system is a type of enterprise resource planning software that is hosted on a cloud computing platform, rather than on-premises or within an enterprise’s own data center. We will explore more in this article cloud-based ERP software.

On-premise ERP

An on-premise ERP software is installed and can be run on computers on the premises of the person or organization using the software, rather than at a remote facility such as a server farm or cloud.

Hybrid ERP

A hybrid ERP is also known as two-tier ERP which in simplest form means that some components of the ERP applications would be in the cloud and some on-premise.

Implementation of a cloud-based ERP software is simple, quick, and straightforward. You’ll have the software up and running in no time. All data is in the cloud and accessible whenever or wherever, and on any device through the internet – even mobile devices.

Notably, scalability and customization are important no matter what you do. There should be flexibility to scale up and down as the business needs change. Advanced cloud-based ERP system provides even large enterprises with easily available customization options.

Every ERP software should be easily integrated into other business software like accounting software, for instance. Because of all data and available ERP integrations, the interfaces also need to work smoothly together. More integrations are available in cloud-based ERP systems than standalone ones. Just imagine a business wants to integrate the individual system with different banks, accounting software, and other tools!

Depending on the ERP vendor, the cloud-based ERP systems usually have a pay as you go model based on different factors. For instance, there is an upfront cost per user, per month on a subscription basis in a variety of systems we have reviewed in this article. This helps in saving huge costs compared to building and maintaining an ERP system in-house. As the business grows and so its demands, the company can opt into higher tiers that fit their needs.

Purchasing an ERP system is a huge investment for any business so you have to make the best out of it. When fully utilized, ERP systems boost efficiency, quality, cut costs and errors, and improve your businesses’ performance, productivity, and profitability. Here’s how to use ERP software and get the most out of it. 

#1. Review Your Business Processes

This step can also help you decide which business processes need the most attention, as this will factor into what ERP software you end up buying. For example, do you need something with a robust accounting solution? Or is your focus more on the human resources side of things? If your answer is “all of the above”, then you know to look for a higher-priced solution that can cover all the bases. 

#2. Invest In Training

Many businesses make the mistake of assuming that initial training is enough to get your users going. However, this isn’t the case. As ERP systems continue to advance, so should your employees and users. Working with your ERP provider to set up ongoing training programs allows users to level up their knowledge as the software becomes more advanced. 

#3. Focus On Data Quality

Your ERP system helps you manage the why, when, where, and how of data flow. This data has to be rich, accurate, and accessible or else there’s no point in having it. Take some time to design your standards of data entry, including naming conventions and how to handle document versioning. Make sure everyone at the company has access to data best practices that are unified across departments. 

#4. Customize Your ERP Platform

Most ERP software comes as a jack-of-all-trades solution developed to suit all types of businesses. Designing an out-of-the-box solution that fits your business needs is one way of ensuring you get the most out of your ERP software. For the best results, ask your service provider to help you customize your system. Some of the customizations you can expect include concealing unnecessary fields, turning specific features on or off, adding required fields, and many more.

#5. Future-Proof Your ERP System

ERP systems, like any software niche, continue to develop day by day. The ERP software you employ today might look quite different in five, ten, or twenty years. Ask the ERP provider what their future roadmap looks like. To what extent do they invest in research and development? What additional features do they hope to implement? How often do they push updates through?

#6. Consider Integration Options

ERP integrations can help you improve your business’s operational efficiency by adding features to your toolkit. Integrations link two disparate applications and allow them to speak to one another. Some integrations are quite deep so that information entered into one can be seamlessly accessed in another. Common ERP system integrations might cover things like manufacturing and design, customer relationship management (CRM), supply chain management (SCM), and warehouse management systems (WMS). 

#7. Leverage Mobile Apps

A modern ERP solution will probably come with a smart device app for iOS and/or Android. Tap into this, as it has many benefits for your users. Mobile apps provide heightened accessibility and increased visibility for your ERP systems. Apps also allow your employees and users to easily access crucial information remotely. This is an easy way for everyone, no matter where they are located, to stay up-to-date with all business operations.

#8. Consider The Total Cost of Ownership

Investing in an ERP system is a huge investment for most businesses. A cost-conscious business setting up a system should look at the total cost of ownership to decide what kind of ERP they need. Software costs money—not to mention other investment factors like hardware purchasing, internal resource use, maintenance, and future upgrade costs. Take a look at the whole picture and compare it to the time and money you expect to be saving.

#9. Measure Your System’s Lifespan

The ROI you get from your ERP system determines whether it was a viable decision for the business. It fluctuates over time and may need you to adjust and track your goals from time to time. The ideal system should offer you value for your money and an impressive ROI.

Every business has its own needs and priorities. The best ERP software on the market has all the features above built into one system, it is usually cloud-based, and offers flexibility in terms of company’s growth.

We would like to hear our reader’s opinions, suggestions, and feedback. Do you have any questions that we did not cover in this blog post? Are you using a specific ERP system? What benefits are you looking for in your ERP software? Let us know in the comments down below! Get in touch with NaviWorld Việt Nam.

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