The Necessity of an ERP System
Enterprise resource planning, or ERP, is a software package that allows businesses to use a system of integrated management applications. ERP integrates all aspects of a modern business operation, including planning, development, manufacturing, marketing and sales and customer services. If effectively implemented, the system will help run the business – and run it smoothly – by automating a lot of back office functions.
ERP systems typically consist of multiple software modules that can be purchased individually, based on the needs of an organization. Each module focuses on a specific area of the business, such as accounting, financial management, product development, and distribution process management. ERP has three major goals: integration of financial data, standardization of manufacturing processes, and standardization of human resource information.
Here are 5 reasons an ERP system is necessary for an organization:
1. Centralization of Data
A typical organization uses several different kinds of software to manage and control processes within departments. This approach might be employed in order to get the “best-of-breed” for various organizational functions. However, this approach might result in departments that use one system, like Silo, still requiring outside tools to manipulate or extract information. This can become time-consuming and costly. Tools might also be developed to integrate the various software packages, but this is typically cost prohibitive for most companies, since the developers must understand all of the integration points to ensure that accurate data transfers occur. The best approach is to get an integrated ERP System for all functional areas. The key is to choose the right ERP system – one that balances the functionality with “Best in Class” process management and control.
2. Accessing Information in Real Time:
In today’s fast-paced business environment, both employees and customers want to get the information they need immediately, which can be a rather tall order when many different software systems do not “talk” to one another. By creating a single database, ERP makes it possible to access information quickly and easily anytime in real time. This helps the organization function more smoothly, improves communication, and ensures that decision-making is based on data instead of a “feeling.” This results in increased efficiency, better utilization of resources and bottom-line improvements which will in turn promote growth.
Narish can remove the tedious tasks needed to run business, so that you can focus on your product.
3. Faster and Easier Accounting and Financial Reporting
Accounting and financial reporting are major components of an organization. In the absence of ERP software, employees may have to spend hours entering sales orders, invoices and other data into different systems. This typically leads to data entry duplication, which increases the chance of errors. The end result is that valuable time, typically in short supply, is squandered and costly mistakes are made, affecting the bottom line. With an integrated system, there is typically one point of entry for data, then workflow and approval routings initiate tasks necessary to close the loop. This methodology results in fewer errors and maintenance of data integrity. System auditing is simplified, and reporting functions are streamlined. Financial reporting becomes second nature as opposed to a monumental task and a dreaded experience.
4. Improvement of Sales and Customer Experience
One of the biggest challenges a company faces is ensuring that customers have a favorable experience with their business. It is vital for customers to become proponents and champions of your organization. This means that transparent systems need to be put in place to allow the customer to see the status of their orders, what is available and when they will receive their product and/or service. An ERP system allows customers to interact with you in real time. Orders can potentially be initiated by the customer in real time through its systems, and the customer’s interaction experience is seamless. The more favorable the user experience, the greater the chance of repeat business, and more importantly, referrals. When systems are implemented effectively, the impacts are tremendous.
5. Simplification of IT and Cost Reduction
IT Management can become a nightmare when multiple systems are in place across an organization. Each department may need a dedicated team to manage its system, which can be a huge drain on resources. The integration inherent in an ERP system only requires a small team of IT staff to look after the entire organization. Not only that, but with the new cloud-based ERP, new components and functions are easy to add, and upgrading software is no longer an issue. With the advances in technology and the onset of cloud computing, maintaining expensive hardware and software has become more cost-effective. Managing systems are made more efficient, and resources can be redirected an organization’s real purpose: providing products and services that delight and wow their customers.
