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The Benefits of ERP: Advantages and Disadvantages of Enterprise Resource Planning
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The Benefits of ERP: Advantages and Disadvantages of Enterprise Resource Planning
19 Jun 2023Aptean Staff Writer
Deciding whether or not your business should take on enterprise resource planning (ERP) software can be an overwhelming decision, especially if it's your first time implementing major software.
You may think that operating without ERP can be done—and you'd be right. It can be. But that doesn't mean that it should be. Conducting business without an ERP in today's dynamic marketplace will put you two steps behind the competition and limit your potential success.
If you want to see a positive change in your business and experience continued growth, ERP software is your answer. So, if you're wondering if investing and implementing ERP software worth your time? We say yes. But, don't take our word for it, the benefits of ERP software speak for themselves.
From improved productivity, increased efficiency, reduced costs and streamlined processes, let’s take a look at 15 of the most common benefits of enterprise resource planning systems that companies have reported after implementation.
15 Benefits of ERP Software - Why Is ERP Important?
The importance of ERP revolves around what it can do for your business. ERP manages a number of business functions through streamlining and automating daily business operations. The software creates a leaner and more accurate operation and provides a complete, 360 view into the ins and outs of your business. With ERP software, you're able to improve both user efficiency and productivity, becoming more agile and improving customer service as a result.
Let's dive into the primary ERP benefits when implementing a robust system.
1. Competitive Advantage
It’s true that ERP software requires a major investment, but the cost of not investing could be even greater. While some businesses choose to stick to the tried and true methods of the past, others seek technology solutions. With so many enterprise resource planning advantages the software provides, users can see improvements within multiple departments. Implementing ERP software helps to keep you ahead of the competition because you no longer run the risk of making costly business mistakes, which could place you behind the pack instead of ahead. In today's competitive marketplace, you cannot afford to put off an ERP implementation while your competition invests in ERP and starts reaping the many benefits we’ll touch on below.
2. Improved Process Efficiency
An ERP platform eliminates repetitive processes and greatly reduces the need to manually enter information, which not only improves user productivity, but eliminates the possibility of inaccurate data which could lead to making costly business mistakes. The benefits of implementing an ERP system in an organization will also improve daily business activities by streamlining business processes, which makes it easier and more efficient for companies to collect data, no matter what department they’re working in. Think of ERP as an extra hand and brain, designed to keep businesses on track, noticing every detail and making work life easier and more efficient, from software users down to its customers.
3. Accurate Forecasting
Enterprise resource planning software gives your users, and especially managers, the tools they need to create more accurate forecasts. This helps software users, and businesses as a whole, think ahead and properly plan what they need from inventory and sales down to financials and customer service. With stronger forecasting, your organization can effectively decrease business costs as well as helping you become an overall more proactive unit—saving you money and increasing profitability. Since the information within ERP is as accurate as possible, updating in real time, businesses can make realistic estimates and more effective forecasts.
4. Department Collaboration
Nobody wants to run a siloed business with each department functioning separate from the other. Collaboration between departments is a crucial and often necessary part of the business, especially because business projects often involve more than just one department. With the data entered into your ERP tool being centralized and consistent, there’s no reason why departments can’t work together, sharing information and collaborating whenever it is needed. The software also touches on almost every aspect of a business, thus naturally encouraging collaborative, interdepartmental efforts. The beauty of ERP software is that it updates in real time, so no matter if you are using ERP software in the morning, afternoon or from a remote location, the opportunity to communicate, share information and use data is always available and accurate.
5. Scalable Resource
Did you know, structured ERP systems allow the addition of new users and functions to grow the initially implemented solution over time? No matter how big or small your business is ERP grows with it—being able to add new users and new rounds of data whenever required ensures your technology grows with you as your business expands. There is no worry about whether you will need a brand new system once a new user or two needs to be added, simply make sure that the enterprise solution that you choose is able to evolve with your business. The best ERP systems should even provide you the functionalities to facilitate and accelerate that growth.
6. Integrated Information
Enterprise resource planning software acts as a central hub for all of the important information that your business and the departments within it need to maintain daily business practices and operations. No more issues with data spread across separate databases; all information will be housed in a single location. This means you can integrate platforms like your customer relationship management (CRM), or product lifecycle management (PLM) software with your ERP software, keeping data consistent, accurate and unique. Know your customer, their orders, and your inventory, all in one place. There is also no need to worry about whether the information that you are using from the system is accurate, since it is updated in real time across the board. This improves your data accuracy, which eliminates making potential business mistakes with false data and analytics.
7. Cost Savings
With every business, you want to be smart with your financials and avoid making costly mistakes that could hurt your business in the end. With one source of accurate, real-time information, enterprise resource planning software reduces administrative and operations costs, allows businesses to utilize money in other, much needed areas. It allows manufacturers to proactively manage operations, prevents disruptions and delays, breaks up information logjams and helps users make decisions more quickly. If you’ve chosen the right solution for your business, and the right vendor who meets your needs, you’re bound to see a powerful return on investment (ROI). ERP software is available to help you become smarter about saving and spending when necessary.
8. Streamlined Processes
As manufacturers grow, their operations become more and more complex, which unfortunately increases the opportunity for costly mistakes to be made. Manufacturing software automates business operations cross-departmentally, providing accurate, real-time information to everyone utilizing the solution, all while eliminating manual duty, which often has the potential to lead to errors. ERP increases efficiency and productivity by helping users navigate complex processes, preventing data re-entry, and improving functions such as production, order completion and delivery with streamlined efficient processes throughout.
An enterprise resource planning advantage is the software’s ability to make users the center of its attention, providing deployment styles that will give on the road sales reps the same opportunities as in-office users to use ERP whenever and wherever they need. With ERP software from Aptean, users have access to a centralized database from anywhere you work and from different devices including your laptop, tablet or cell phone. The adaptability and mobility of ERP software is crucial, as it increases productivity and makes information accessible no matter where you are. Do you often have time sensitive projects that have hard deadlines? Use ERP at home, in the office, wherever, through our mobile-friendly solution and application.
10. Customized Reporting
ERP software helps make reporting easier and more customizable, fit to meet all of your needs. With improved reporting capabilities, your company can respond to complex data requests more easily. This improves productivity, completes process faster and helps to close out projects without large wait times in between. Users can also run their own reports without relying on help from IT, saving your users time to use toward other projects. And, if you integrate your ERP software with a business intelligence (BI) solution, you can boost your reporting capabilities and kickstart a robust continuous improvement loop in your business.
11. Increased Productivity
Save time and increase productivity levels. Sound too good to be true? It’s not with ERP software’s automation and streamlining capabilities. Often times, when tedious tasks take up much needed business time, there can be a delay in production, which can effect your business and even the customer service experience. By having redundant processes automated, users have more time to work on other time sensitive, pressing projects and tasks that may truly require more of your attention and time. Users will also be able to work easier since the solution was designed for ease-of-use. ERP was designed with usability in mind, as well as giving businesses a break from long winded tasks, allowing you to shift your focus toward other matters.
12. Regulatory Compliance
A benefit of ERP software, which often times goes unnoticed, is how it ties well into regulatory compliance within the manufacturing industry. Powerful ERP platforms are designed to keep track of regulations within the industry and monitor changes in compliance. This allows users, and businesses at large, to stay abreast with laws, regulations, guidelines and specifications as it relates to business processes. So whether it's new MoCRA legislation for the cosmetics industry, or the broad range of food traceability regulations in force across the world, the right ERP system can help you stay compliant.
13. Flexible Systems
Modern ERP software platforms are robust, flexible and configurable. They are not a one-size-fits-all proposition but can be tailored to the unique needs of a business. ERP software can adapt to the ever-changing needs of a growing business, ensuring you won’t have to buy a new solution once your needs change or your business grows. When you compare ERP systems, it's important to make sure that you can customize applications and suites, so that your system has every function needed in order to assist with daily business operations. ERP’s flexibility also goes into how it is implemented, which can be done in either your choice of the cloud or on-premise. And finally, don't forget to look for industry-specific ERP solutions, as these systems can offer flexible functionality designed for the specifics of your vertical or sector—meaning fewer costly customizations.
14. Customer Service
It’s easier to provide high-quality customer service using an enterprise solution, especially when you’re using one that's designed for the challenges, trends and requirements of your sector—like Aptean's range of industry-specific ERPs. Sales and customer service people can interact with customers better and improve relationships with them through faster, more accurate access to customers’ information and history. For example, with our Industrial Manufacturing ERP, you’ll also have access to marketing automation and contact center software, ensuring your customers are being interacted with consistently. Additional features including lead scoring, which helps with searching for leads to move through the sales pipeline, social media monitoring and email campaigning, which allows users to track the status of their campaigns.
15. Data Reliability
ERP provides reliable data that can be accessed from different locations (if implemented in the cloud) and through multiple devices including tablets and smartphones. With the ability to update in real time, ERP improves data accuracy and consistency. With this, users can ensure that all data and analytics are safe to use, without running the risk of errors. ERP user data can also have additional security through firewalls and built-in protection resources. Improved security removes the risk of important business information getting into the hands of the wrong person.
The 4 Disadvantages of ERP Software
When detailing the benefits of ERP software, we often hear businesses discuss the "disadvantages". But the way we see it, when implemented and used correctly, there really are only advantages to choosing ERP for your business. There are however, some barriers to success that you should be aware of before you embark on this journey. Understanding these challenges will help you plan and account for them in your project.
1. The Cost of ERP
Depending on how much your business can spend budget-wise, a disadvantage of ERP can be the pricing. With most ERP solutions, there are multiple fees that are applied, which can lead to higher costs. From licenses to upfront cost, implementation and recurring potential monthly fees, some ERP solutions may be too expensive. Researching ERP solutions within your price point can help spare you from spending more money than originally anticipated.
Having said that, make sure not to become too focused on choosing the cheapest solution. Instead, select the solution that best fits your needs. Doing so will help you achieve maximum benefit and speedy ROI—saving you time and money in the long-term.
2. ERP Success Depending on Software Experience
If you choose to forgo the training process or if your chosen ERP vendor does not offer ERP software training, that can put your entire workforce in a vulnerable position. Not knowing exactly how the software works means there is a greater risk of making costly mistakes and spending long lengths of time trying to make the software work for you. Not only does this reduce productivity, but it can also damage the ROI you get from your new system. Finding a vendor that offers ERP training will ultimately make the software easier to use and helps to build a knowledgeable workforce.
3. Not Purchasing a Customizable System
When looking at the various types of ERP, it is important to purchase a solution that is developed specifically for your industry and has all of the suites, modules and applications that will help your business with its daily activities and processes. Spending money on a system that does not have all of the bells and whistles that your business needs is essentially a bad investment. You'll also want to make sure that your ERP software doesn’t include more than what you need, so that applications aren’t sitting idle with no use to your business—that is a potential waste of company money. Instead, look for a solution that can scale with your growth, from a provider that knows your industry needs inside out.
4. ERP Resistance
It may take some time for employees to get used to new ERP software, which can lead to it not being used to its full extent. Other members of the workforce may also struggle with placing information into the software, which makes it hard for ERP software to truly serve all departments that make up a business.
To counter this, ensure you have staff buy-in from the very start of the process. You may want to consider setting up an internal implementation team, with stakeholders from different levels and departments of your business so that everyone's needs and concerns are addressed throughout the process. In addition, as we mentioned above, securing the right training package can help ensure quick staff adoption once the system is in place.
Why You Should Invest in ERP Software
Ultimately, even with these potential barriers, ERP software is still a key ingredient in building a successful business. The benefits of implementing an ERP system in your organization speak for themselves and deliver a competitive and financial boost to your company while improving productivity, collaboration and communication. With thorough research, your business can avoid the potential challenges and instead beginning reaping the many rewards.
Ready to learn more? Our ERP solution experts are ready and willing to answer all your questions and help you get started on selecting the right solution for your business.
Or, you can take a look at Aptean's range of specialized, industry-specific ERP solutions that are designed to help you be Ready for What's Next, Now®.
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