June 17, 2022
General
Libby Marks

What is ERP Software & Why You Should Care

Demand for ERP software is surging. Discover everything you need to know about the benefits, features - and future - of enterprise resource planning software.

From global giants to ambitious SMEs, demand for ERP software is skyrocketing. The market for enterprise resource planning systems is predicted to grow to $86b by 2027.

Given the transformative effect ERP can have on businesses, it’s no surprise that so many enterprises want in. Especially in the post-pandemic landscape.

As businesses battle for competitive advantage in the new normal, forward-looking leaders have embraced digital transformation. They’ve looked to technology to increase operational efficiency, and data to improve decision-making.

They also sought out solutions that empower staff to work remotely and safely exchange information digitally.  

Since these are all things at which ERP systems excel, the growth in ERP adoption makes perfect sense. But what is ERP and what challenges does it rise to? Learn in our complete guide.

What is enterprise resource planning?

Enterprise resource planning (ERP) is a process that companies develop to integrate all major business functions and run them within a single system - ERP software. Both came to being to support greater transparency, data compatibility, collaboration, automation, forecasting, and decision-making. With the ultimate aim of creating competitive advantage for the business.

what is an ERP system

What is ERP software?

Also known as ERP, an enterprise resource planning software is designed to replace the often dated and disconnected tools that an enterprise currently uses to manage its operations.

Rather than having separate software for different departments - like finance, HR, production, etc. - the business implements an ERP system to minimize the pin-pong between the apps and do it all. And that allows the business to save time and money, work more efficiently, and get 360-degree insights for decision-making.

How does an ERP system work?

There’s no one-size-fits-all approach. All businesses are different. So ERP systems typically come as ‘modules’. Each module is designed to serve the needs of a different department - but to integrate seamlessly into the whole.

An ERP achieves this by providing a consistent data framework across all departments. Whether staff are based in marketing or manufacturing, supply chain or CRM, their data shares a common language and structure.

The ERP then stores all the data in a central database, providing a single-source-of-truth for all business information. That in itself is pretty impressive. It means no more chasing down information from different departments, or duplicating data entry and the risk of mismatched stats. Managers can draw on accurate data for decision-making in real-time.

But that’s not the end of what enterprise resource planning systems offer. By breaking down barriers between business functions, ERP software improves 360 visibility and transparency. And by creating a common ‘language’ across departments, it streamlines systems and enables automation.

Typical ERP modules cover all core business processes and can include: project management, accounting and finance, customer relationship management, human resources, supply chain management, manufacturing and logistics, business reporting, planning, procurement, and more.

ERP modules

What is ERP not?

We know. That sounds like a strange question. But there is sometimes confusion around ERP.

But it isn’t the same thing as resource planning.

You’ll understand the similarities and differences more as you read through the article...

How can ERP systems improve a business?

ERP helps businesses by giving them the tools they need for efficient resource planning and management.

On the planning front, ERP is a powerful BI (Business Information) platform. It provides business leaders with accurate, enterprise-wide data for decision-making. For example, capacity planning and financial forecasting.

On the management side, ERP integrates cross-functional activities and gives managers full visibility of business performance. For example, supply chain management, inventory management, and customer relationship management.

It provides insights into improvement opportunities and is - in itself - a platform for improving processes through automation.

Together, these symbiotic components of enterprise resource planning software deliver significant competitive advantage.

What are the benefits of ERP software?

By implementing an ERP, enterprises can unlock a lot of business benefits. Here are some of our favorites.

  • Eliminates duplicate technology
  • Breaks down data and workflow silos
  • Reduces duplication of effort
  • Enhances operational efficiency
  • Increases productivity and profitability
  • Provides 360 visibility - of finance, supply chain, HR, and more
  • Informs better decision-making
  • Creates BI/reports in seconds
  • Visualizes data for fast comprehension
  • Optimizes resource allocation
  • Automates manual tasks
  • Better business processes
  • Standardization across business units
  • Easier collaboration

ERP in practice: spotlight on people management

One of the core modules of an ERP system is human resource management. It makes human resource planning so much easier as you can see capability and capacity for everyone in your department.

The ability to see resource availability (in this case, your talented team) lets you optimize your resources to maximize productivity. This is especially important in service-based businesses where your people are your core offer.

Imagine you're a digital agency. You’re responsible for resource planning for multiple projects at any one time. Or resource planning for agile teams.

You might have staffing perfectly planned one minute. Then a client moves a project deadline and - suddenly - everything is in flux. You don't have the resource availability to cover the new project schedule. And the people you had assigned to the project could be twiddling their thumbs with no work...

You're on constantly shifting sands with moving deadlines and deliverables. And that makes it challenging to manage resources effectively. But manage them you must. Because otherwise, your business will be running below optimum efficiency and productivity. And that ultimately undermines your bottom line.

An ERP system helps automate the process of planning these ‘human resources’ by using machine logic to automatically reallocate staff when projects shift.

A good ERP system will identify your staffing needs, know the skill profile of your team, assess their individual availability, and optimize your resources for every project. And when things change - as they invariably do - it automatically recalculates in a couple of clicks. Clever.

What’s the future of ERP?

If we could accurately predict the future of an $86b growth sector, we’d probably not be sitting here writing this guide. We’d be seeking out Series B funding for the next big thing in tech! But there are some advances that pundits agree will improve ERP further in the future.

ERP market

Internet of Things (IoT)

IoT promises to enhance ERP in manufacturing by empowering resources - like machinery - to manage itself with minimal intervention. For example, ordering its own supplies when it runs low and adding the order automatically to the ERP’s finance module.

Artificial Intelligence (AI)

AI is transforming ERP in numerous ways. But a biggie is forecasting. Machine learning and AI will be able to model projections more accurately and give decision-makers stronger grounds for strategy, such as entering new markets or changing payment terms.

Big data analytics

Big data analytics will see ERP’s capacity to analyze datasets grow. Businesses will be able to gain insights from more data than ever before. And, paired with AI, derive more valuable insights from it.

What industries can benefit from ERP systems?

Almost every sector uses Enterprise Resource Planning software these days. The bottom-line benefits to business are just too big to ignore. But certain sectors are power users. Typically these are businesses that rely on resources and capacity being aligned.

  • Manufacturing
  • Healthcare
  • Retail and e-commerce
  • Government
  • Utilities
  • Construction
  • Aerospace
  • Defense

Here at www.runn.io, we also see lots of demand for ERP from service-based businesses. This is because they rely on effective ‘human resource’ management to deliver projects profitably for clients.

Allied Market Research predicts rising ERP penetration in manufacturing and retail markets will be a key driver of growth in the sector. But that’s not all.

Advances in technology make ERP more viable and valuable to SMEs than ever before. The rise of cloud-based ERP reduces entry costs and opens up ERP to a wider spectrum of businesses. That’s another reason why ERP is exploding right now.

Does MY business need ERP?

We’re going to go out on a limb here and say any business could benefit from an ERP system. But we’re going to asterisk it too.  Many ERP systems are designed as all-in-one solutions. These deliver broad functionality but often at the expense of depth.

If you’re a smaller business - or specialist - you might not get ROI from this type of ERP. You could find yourself paying for features you can’t use or that don’t offer sufficient depth for your niche needs.

Fortunately, the emergence of more narrowly focused ERPs -  especially cloud-based ERPs that are easy to deploy and integrate well with others - means it’s possible to build your own ideal ERP from individual products.

5 signs your business needs ERP

There are lots of signs that your business is ready from ERP. Maybe you’ve got a growth strategy that focuses on eradicating inefficiencies in your business. Or maybe you’re just feeling the pinch of the following pain points, day-to-day…

signs you need ERP for your business

5 essential features of ERP software

As we’ve said, there's no one-size-fits-all ERP system. Your needs will determine what your ERP comprises - whether that’s an all-in-one solution, selected ERP modules, or a bespoke stack of separate products. However, there are a few must-haves that apply to any modern ERP system. Here are our top five.

Process automation

Consolidating all business data and processes into a single system makes it possible to automate processes through RPA (robotic process automation). And because all of the modules are integrated centrally, it may be possible to automate processes across multiple departments.

Mobile compatibility

With hybrid working on the rise, your staff are more likely than ever to access work tools via mobile devices. For maximum productivity and employee choice, your ERP needs to be accessible via mobile.

Cloud ERP deployment

There are a lot of reasons why cloud-based software models are so popular.  Allied Market Research describes a ‘surge’ in cloud ERP deployments during COVID that shows no sign of slowing down. For many, it’s the future of ERP… See ERP Implementation Models below.

Intuitive user interface

Your ERP will only deliver efficiencies if people use it. So choosing one that's easy to use and has an intuitive user interface is essential. It’s the fast track to actually achieving your operational objectives and reaping desired ROI.

Integrations / API

ERP solutions can be pretty comprehensive. But they won't do everything. You may still need separate software for specialist tasks, such as Digital Asset Management (DAM) or Product Information Management (PIM). So make sure your ERP allows for other software to be easily integrated.

ERP implementation models

Enterprise Resource Planning software can be on-premise, cloud-based, or a hybrid of the two. Cloud-based ERP is becoming increasingly popular - a trend reflected in many software sectors - due to its flexibility and the low cost of entry compared to on-premises deployment. But it isn’t right for everyone. Here are the headlines on ERP deployment models.

On-premises ERP

On-premise ERP systems are installed on your company’s servers and hardware, then managed by your internal IT team. The main benefits are security and control. Everything is in-house and you’re in the driving seat. But disadvantages include the high upfront investment and lack of flexibility if you want to change.

Cloud-based ERP platform

Cloud-based ERP solutions mean you buy a license to use an ERP that’s hosted online. This is very flexible - you can scale up your seats, or cancel your subscription, with minimal notice. It’s quicker to deploy and has lower upfront costs than on-premise. It also includes regular updates, upgrades, and patches to keep your software up-to-date. But some businesses prefer the extra security of an in-house install.

Hybrid ERP

A hybrid ERP promises to combine the best of on-premise and cloud-based deployment. It typically has lower upfront costs than on-premise but higher than purely cloud-based. It matches the flexibility of cloud-based deployment and the security of an on-premise install.

What are some examples of ERP?

The ERP market is dominated by big hitters and established names like Microsoft, Oracle, Sage, and SAP.

Cloud-based disruptors are also rising to prominence, such as WorkDay and Deskera.

On the flip side, ERP is very expensive, and is generally only implemented by large companies.

And then there are more specialist providers, who double-down on particular functionality, like Runn.io specializing in high-level resource planning. Runn's version of resource management is much more about people.

Give it a go if your business is built on the success of projects and people.

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