Should Your Business Adopt An Enterprise Resource Planning System?

Should Your Business Adopt An Enterprise Resource Planning System?

Data appears to be the new currency of the 21st century. It is becoming more imperative for all large organizations like governments and corporations to function in a meaningful way in world where the rate of human knowledge appears to be doubling every 18 months. Moreover, IBM estimates that as the Internet of Things builds out, this will be every 12 hours.

Governments need to access accurate data to make relevant decisions about a wide variety of issues from border security to annual employment. Inaccurate data can lead to wasteful spending, the wrong course of action, or an inability to manage large scale problems.

Meanwhile, corporations need to share accurate and current data among their different departments. Accounts receivables might need access to inventory records for parts’ numbers and description to create invoices, marketing might need product specs to create credible leads for the sales dept, and human resources might need significant job description data to hire the right talent for different departments.

or most of human history, our species struggled to understand what was going on in the world. There was not only a dearth of data, but much of it was based on wild guesses on how things worked. Today, our problems are different. In most institutions and organization, data-related problems are not due to a scarcity of data, but too much data. This makes it extremely difficult for key decision-makers to comprehend the plethora of data and decide on its accuracy and relevance.

One solution to managing the complexity of data gathering and sifting for large institutions and organizations like governments and corporations is the use of Enterprise Resource Planning Systems.

What is Enterprise Resource Planning (ERP)?

This is an umbrella term for software that’s used by a business to manage its disparate processes. ERP allows an organization to use a systematic approach to integrate all the applications that manage the business. The software automates back office functionality for a wide number of departments.

ERP systems provide numerous benefits, including improved efficiency, integrated information, clearer reporting, better customer service, and enhanced security. A Netsuite article, What is ERP?, explains why ERP provides these benefits: “The central feature of all ERP systems is a shared database that supports multiple functions used by different business units. In practice, this means that employees in different divisions—for example, accounting and sales—can rely on the same information for their specific needs.”

Customized By Industry

All ERP systems are not uniformly the same. Unlike, say, an Office Software Suite which can be used by any office regardless of the nature of their business, ERP systems work more efficiently when they are adapted to suit a particular industry.

Since each industry has different business process, there are different ERP systems for each one. For instance, there are different ERP systems for the distribution industry, the service industry, the manufacturing industry, the retail industry, and the supply chain management industry.

Choosing the Right Software

Due to this level of diversity, procurement personnel or other key decision makers may often be confused about what to buy when they have to choose or update parts of their enterprise application architecture. For instance, a procurement agent in the logistics industry might wonder if it’s better to get supply chain software tools or an enterprise resource planning system. The difference is that while a supply chain software tool works well in processing incoming data from vendors, enterprise resource planning software focuses on processes related to internal work.

In order for key decision makers to make the right decisions, they have to do a lot of research and work with an expert vendor to choose the right ERP solution for their line of business.

Should You Buy On-Premise ERP or Cloud Based ERP?

On-Premise ERP systems

These are capital-intensive systems. Besides the initial purchase cost, there is also the cost of managing the software. A company needs a seasoned IT team to keep things up-and-running. This service includes maintaining the hardware and maintaining the server rooms. Upgrading the ERP system requires IT staff to deploy ERP across all employee computers and redo the customizations and integrations.

Cloud-based ERP systems

Initial costs are lower and the cloud ERP provider takes care of all the maintenance issues. The user simply accesses their software through their device’s Internet connection. Cloud ERP usually works on the pay-as-you go business model. A businesses’ IT department is free to focus on growing other aspects of the business since the cloud ERP provider takes care of operations, data security, and product enhancement.

ERP and Emerging Technology Trends

One concern buyers often have when buying new technology is how fast the technology will become obsolete. For instance, when cloud computing first loomed on the horizon, it was greeted with a great deal of skepticism. Many companies stuck to their more expensive and less efficient legacy architecture for a long time before adopting a hybrid cloud strategy.

Today, ERP faces a similar phase in its widespread adoption. Will it last? Will it be replaced by a completely new technology that will make it obsolete? The good news is that ERP appears to have a bright future.

ERP that adopts an open approach will work well with emerging technological trends like the Internet of Things, big data analytics, and wearable technology.

Photo Credit: Pixabay

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