What is Enterprise Resource Planning (ERP) and Why do You Need it?

enterprise resource planning meeting

Running a business includes a number of critical processes, including purchase order management, inventory management, human resources (HR) accounting, customer relationship management (CRM) and more. For many organizations, these processes are decentralized and all over the place, with each having its own database, independent of others. This is where enterprise resource planning comes in.

Enterprise resource planning or ERP for short, acts as a central repository for all of these business processes, bringing them together and making sure they perform much better in unison than they ever could separately.

At the most basic level, ERP software creates one system, which brings together all of the different business units. The result of this union is a more streamlined process and better flow of data and information across different departments in the organization.

What is the Importance of Enterprise Resource Planning for a Business?

When we talk about the importance or value of enterprise resource planning for a business, the benefits are many and varied. Perhaps the biggest is that, thanks to a common user experience across different business processes, ERP helps improve the organization’s efficiency.

Additionally, with centralization, comes an improvement in the company’s data integrity and financial control and with that, reduced risk for the business that uses ERP.

ERP also serves to lower management and operational costs through unified systems, but also better defined and more streamlined business processes.

Finally, businesses adopting ERP can also see higher user-adoption rates thanks to a universal user experience (UX) and design.

What do You Need to Keep in Mind When Comparing ERP Software?

Every organization is different, with different business processes and, of course, different needs for enterprise resource planning. Historically, ERP was something that was only available to large, global enterprises. The costs were just too high for smaller companies.

However, with the introduction of cloud-based ERP and su subscription-based pricing, things changed. ERP is now something everyone from large conglomerates to SMBs and startups are moving towards.

So, whether you’re a small company and want to bring your purchase order, accounting and inventory management teams together, or a large enterprise present in several countries across the world, but with an outdated ERP system that you want to change, here are a few things that you need to consider when choosing an ERP system.

  1. Functionality

What exactly can the ERP system do? Like we already said, every organization has its own needs. What works for one company, may not work for the other.

Defining what features and functions you need from the ERP is crucial.

  1. Cost

When considering the cost of an ERP system, don’t just stop with what it costs now. Think also what it will cost in the future. In other words, yes, you should check if your budget can cover it.  But also keep in mind data migration, licensing, consulting and system maintenance that will come as a part of it.

  1. Vendor

Adopting an ERP system is a big deal. A good one can take your business to the next level, a bad one can run it into the ground. This is why it’s vital to predict if the vendor will be able to deliver as promised.

Before selecting an ERP vendor, be sure to do research on them. Consult online ratings and reviews and see what its other clients have to say.

Conclusion

ERP is no longer reserved for large enterprises and smaller companies can benefit from it as well. There is no more excuse not having it.

Do you have an enterprise resource planning (ERP) software in your organization? Which one are you using and how has it worked for you so far? Let us know in the comments below.

Also, if you are tired of not being able to send purchase orders on mobile devices and of a slow approval process, sign up for early access to Purchase Order Plus and easily integrate it with your Xero. Available on both Android and iOS mobile devices.

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