ERP stands for Enterprise Resource Planning. ERP software is comprised of powerful and strategic business process management tools that can be used to manage information within an organization. While every company and organization operating today is different, they all face a common challenge: in order to stay competitive in today’s business environment, they need a dependable and efficient way to store and access information. That’s where ERP systems come into play. They integrate all facets of an enterprise into one comprehensive information system that can be accessed by individuals across an entire organization.
With effective ERP software in place, business owners and leaders can automate and streamline tedious back-office tasks, help employees become more productive and successful in their roles, and get real-time visibility into the inner workings of their operations. This resource will provide you with an in-depth overview of the topic of Enterprise Resource Planning.
The term “ERP” or “Enterprise Resource Planning” was originally coined by industry analyst, The Gartner Group, in the 1990s. It evolved from MRP, a term that was already well-known in business at that time. MRP stands for both Material Requirements Planning (MRP) and Manufacturing Resource Planning (MRPII). These systems were created back in the 1960s when manufacturing-based companies were looking for ways to improve efficiency and decision-making for production line managers.
In the 1990s, The Gartner Group and other businesses sought to apply MRP systems to other business types, and desired to expand capabilities and processes to other areas within an organization, and thus ERP as we know it today was born. In its early days of existence, ERP focused on organizing data and streamlining processes that related to back-office areas, such as inventory management, fulfillment, purchasing, human resources, accounting, IT, manufacturing, planning and scheduling, and other related areas.
Later, with the introduction and widespread use of the Internet, ERP was expanded further to include other areas of a business, such as customer relationship management (CRM), supplier relationship management (SRM) and supply chain management (SCM), human capital management (HCM), business intelligence and ecommerce.
Today, ERP systems integrate into all areas and functions within an organization, with the primary purpose being to help leaders and managers better understand all moving parts of their operations, identify opportunities, and make more informed decisions that will ultimately have an impact on the future success and viability of their businesses.
Despite the use of the word enterprise in the name, ERP systems are used by businesses of all sizes, large and small. There are two primary types of ERP systems being implemented at organizations today, On-Premises and Cloud-Based. The differences between the two will be explained in another section in this resource.
“The Compass software reports have been especially eyeopening. For example, the low margin sales and cost change reports have helped us stay on top of pricing,” said Braaten. “We’ve increased our margins by adjusting items that weren’t priced correctly. Our soft lines margins have increased by 6 percent companywide.”
“Additionally, in one of our locations we saw an $80,000 increase in margin alone with the implementation of Epicor solutions, all because we have reliable information to see where to make modifications within the business,” said Braaten.
There are hundreds of concepts and terms that relate to enterprise resource planning, but here are ten worth understanding now, before you decide whether you want to implement an ERP solution at your business:
An ERP system is made up of applications and tools that help all areas of your business communicate with each other more effectively. They integrate all facets of an enterprise into one comprehensive information system. Employees in planning and scheduling, for example, have access to the same data as the staff in financial management for their specific needs. All data is available in real-time, which enables employees to make faster, more informed business decisions. Plus, all vital business functions—estimating, production, finance, human resources, marketing, sales, purchasing—share a central source of up-to-the-minute information. Enterprise resource planning systems streamline the collection, storage and use of your organization’s data. The right one can help you collect and store data into one centralized place from areas such as:
Why are more businesses of all sizes implementing ERP systems today than ever before? Here are some of the main reasons and benefits:
Every business is unique and faces different challenges at different times, so the question is, how do you decide if and when investing in Enterprise Resource Planning is right for your business?
If you’re able to check off most of the items on this list, it’s probably safe to start evaluating ERP software providers and working to allocate the resources needed for deployment:
If you can check off at least sixty or seventy percent of the list above, it’s time to start exploring vendors.
In order to justify the investment needed in order to use an ERP system at your business, use the checklist provided above. List the specific challenges you think your organization is having, and talk with your decision-maker about how you think an ERP solution could help.
There are two primary types of deployments for ERP solutions available to businesses today: Cloud-Based and On-Premises.
On-Premises is deployed locally on your hardware and servers, and managed by your IT staff. Businesses that choose this option want greater autonomy over their implementation.
Cloud ERP software looks and works the same as traditional ERP. The only difference is how it is deployed. Instead of hosting your servers and storage hardware on-site, your ERP provider hosts this for you. To access it, you simply sign in to a website hosted online (in the cloud).
Cloud-based ERP brings enterprise-grade security to today’s businesses, as well as a lower cost of ownership, ease of use, and configuration flexibility. It also provides you with real-time access and visibility into your business information via your cell phone or other mobile device, no matter where you are in the world.
Epicor delivers ERP in the cloud, on-premises, and as a mobile solution—whatever works best for your business.
Learn more about the benefits of cloud ERP by reading the ten reasons business leaders choose cloud ERP from Epicor.
Wondering which option is right for your enterprise? Contact one of our experts today.
If you’re looking for your first ERP solution or looking to upgrade from an existing system, the evaluation, selection, and implementation process is a long-term strategic decision for your organization.
To help you through this process, here are eight simple steps for success:
- Get members of your leadership together and get the initial conversations going about ERP. Make sure everyone has transparency into how you are evaluating providers.
- Look critically at your business and operations to determine what’s working well, what challenges you’re experiencing, and what you think you need in order to scale or make improvements.
- Develop a standard criteria to use when evaluating vendors. Criteria can include features, price, platform, and anything else your team thinks is important when making evaluations.
- Schedule phone calls, in-person meetings, or online demos with sales representatives and product experts at the vendors you’re considering. Get a first impression about each company and try to make note of the differences between the vendors you talk to.
- Narrow your list down to 2-3 candidates that you’d like to follow-up with.
- Contact vendors on your shortlist and schedule follow-up calls to learn more about how their products could help your business.
- Prepare specific questions that you’d like each vendor to address during the follow-up call.
- Talk to other companies that have implemented ERP systems from the vendors you’re considering. Find out what they like, what they don’t like, what they weren’t expecting, if they’d actually recommend the vendor you’re asking about, etc. Get as much information from them as you can in order to make a final decision. Once you’ve selected the ERP vendor for your business and needs, spend the time to scope the entire project, from start to finish. Work with your ERP vendor to map your critical milestones and chart your course to success.
Epicor drives business growth. We provide flexible, industry-specific ERP software that is designed around the needs of our manufacturing, distribution, retail, and service industry customers. 50 years of experience with our customers’ unique business processes and operational requirements is built into every solution—in the cloud, hosted, or on premises. With a deep understanding of your industry, Epicor solutions spur growth while managing complexity. The result is powerful solutions that free your resources so you can grow your business.
To learn more about our solutions, click one of the links below:
When you’re finally ready to implement an ERP system at your organization, follow these best practices and tips to ensure your success:
Following these recommendations and best practices will make the entire implementation process go a lot more smoothly. They will also help you get the buy-in you need from your employees in order to hit the goals and KPIs you want to be working toward once the system is in place.
Measuring the performance of your ERP system is an important part of being able to validate the investment you made or continue to make over time. When implementing an ERP system at your organization, set specific goals and KPIs that you can work against once the new system is in place. How you measure performance will depend on the nature of your business, but here are some general questions you should consider when setting your KPIs:
Think about the metrics and goals you’re currently tracking against at your organization, then make predictions and set KPIs to track success and progress over time once your new ERP system is in place.