benefits of ERP, ERP, cloud ERP, ERP benefits, enterprise resource planning

Updated: August 02, 2023

What is ERP, and Why is it Important?

For many companies, Enterprise Resource Planning (ERP) systems are a critical element of their success. ERP refers to software and systems that are used to plan and manage all core supply chain, manufacturing, services, financial and other processes of an organization. ERP can considerably streamline an organization’s operations, automating functions such as accounting, procurement, project management, customer relationship management, risk management, compliance and supply chain operations.

While a business can utilize an individual ERP application, a complete ERP application suite brings processes together across a business, connecting every aspect of the enterprise and allowing for improved communication and data gathering. Today’s ERP systems extend processes by providing collaboration and digital solutions to effectively connect with partners outside the organization including, customers, suppliers, carriers, financial institutions and others.

What are the Benefits of ERP?

The benefits of ERP are many. ERP system benefits range from optimizing processes to helping different departments better collaborate to improving the relationship between a business and its customers. The following are several of the most valued benefits to utilizing ERP.

Increased Efficiency

One of the primary advantages of ERP is that it allows companies to automate manual and routine functions. This frees up employees to focus on more revenue-driving tasks, as well as standardize common business processes. The increased efficiency leads to improved demand forecasting, reduced production bottlenecks, shorter lead times, and a more transparent and responsive supply chain, not to mention business growth and the ability to stay ahead of competitors.

Improved Collaboration

ERP systems also connect teams, improving communication and employee engagement. With an ERP system, every approved employee has on-demand access to operational data, allowing them to understand all of the company’s moving parts and the role they play. Reduced silos and real-time project updates further aid the efficiency that leads to smoother workflows and cost savings. Collaboration capabilities also extend outside the four walls of an organization to connect with key trading partners and further progress business benefits.

Real-time Data & Enhanced Reporting

One of the biggest benefits of ERP is that it’s a powerful data hub. An ERP system allows you to collect, store, and analyze data across your operations in one centralized location, providing a single source of truth and the visibility to act more strategically. That centralized data enables a business to access real-time information and generate more useful reports. One can compare functions across departments without multiple spreadsheets or data sources, as well as monitor business aspects like inventory levels on a daily basis to control capital more precisely. Data is the new gold and advances in technology are combining data with smart AI systems for augmented analytics reporting, potentially providing insights on demand with voice commands. 

Built-in Compliance

Other benefits don’t amount to much if your business doesn’t maintain regulatory compliance. A powerful advantage of ERP systems that often gets overlooked is that they’re designed to help keep track of industry regulations and compliance changes. This allows businesses to stay on top of and in compliance with relevant laws, guidelines and specifications. 

Cloud Accessibility

Though ERP systems are available as on-premise solutions, cloud ERP software has become more popular in recent years. The major benefits of cloud ERP include a reduced burden on IT staff, dedicated data security and mobility. Using a cloud-hosted ERP solution means that the system can be accessed anywhere, anytime on mobile devices as long as there’s an internet connection. This allows for quicker action without the need for team members to be together.

Better Customer Service

A portion of the data ERP provides a central hub for is customer information. With centralized customer data, multiple departments can easily access and collaborate on customer needs for faster response times and improved delivery and order accuracy. Sales representatives can focus on building customer relationships instead of maintaining spreadsheets and marketers can create customer-focused campaigns.

Flexibility

One thing many users like about today’s ERP systems is their modularity. A modular makeup means that applications can be used singularly or together as a full suite. A company can pick and choose which applications best suit their business needs without having to purchase what it doesn’t need. This flexibility helps businesses move away from the clunky systems they’ve been using.

Long-Term Cost Savings

ERP implementation involves upfront costs, but its long-term savings potential and ROI are substantial. Despite expenses for setup, training, and integration, ERP optimizes operations, enhancing supply chains, demand forecasting, and production efficiency. These improvements lead to considerable cost reductions over time, outweighing initial investments. Cloud-based solutions offer a cost-effective option, with expenses spread through manageable monthly subscriptions. The enduring financial benefits of ERP make it a strategic investment for sustained profitability.

What are the Disadvantages of ERP?

Though the advantages of an ERP system far outweigh the disadvantages, there are a few to consider to make sure moving forward with ERP is right for your business at a given time.

Upfront Costs

There are initial costs to keep in mind when considering an ERP system, particularly an on-premise system, such as the cost of implementation, maintenance, training and potential third-party software add-ins. The cost is easier to manage if you opt for a cloud-hosted ERP solution, however. Cloud ERP solutions typically operate on a monthly subscription, so you’ll be billed over time. Either way, the counter to this disadvantage is the long-term cost savings having an ERP system provides.

Training

To get the most out of ERP software, proper training is a must. Training should cover all of the ERP system’s features, with sessions in line with business processes. IT staff should also be trained to manage the technical aspects of the system. To prevent knowledge loss when trained employees leave the company, an organization would be wise to invest the time to create ERP training plans, manuals and other resources for new team members to quickly become acquainted with the system.

Buy-in

Making company changes is always time-consuming and requires back and forth between stakeholders. This is especially the case when adopting new technology. This process usually requires getting approval and support from the top down, which can be challenging if those you seek buy-in from don’t understand the value of ERP. Once implemented, it may also be difficult to get some employees on board with utilizing the system and learning how to best use its features.

Customization

To fully realize ERP benefits, a system should be fine-tuned to a company’s needs. When it’s a ready-to-use system or custom-made, adjusting it to fit business needs and practices is critical to success. Each business must be prepared to take the time to ensure an ERP system has all the features it needs and none it doesn’t. Otherwise, ERP is not a sound investment.

Fortunately, QAD’s adaptive ERP solutions negate or minimize common disadvantages, providing benefits and ROI opportunities that make getting an organization on board less of a challenge.

What Industries Benefit the Most from ERP?

The versatility of ERP allows almost any industry to benefit from ERP efficiencies. A few top industry examples include:

Any organization involved in manufacturing in particular will reap the benefits of ERP. Manufacturing ERP can drastically streamline operations to maximize resources, save time, cut costs, and drive measurable business growth. 

Would My Organization Benefit from Implementing (or Upgrading) ERP?

The ERP options on the market today have enough benefits to make for a strong business case. If you’re on the fence about whether to make the investment, consider the following questions to help determine if an ERP upgrade or implementation would be valuable for your company.

  1. Do you need more accurate business data? The type and amount of data an ERP system allows you to collect, report on and use in decision making is a tremendous benefit.
  2. Is your company growing, or do you want it to? It’s possible your current technology doesn’t have the capabilities to grow you or grow with you. The right ERP setup will help you get where you want to be.
  3. Are your customers satisfied? If not, a modern ERP system can help eliminate the pain points that leave your customers disappointed.
  4. Are your business systems integrated? Having one company-wide solution can unify your teams for better communication and efficiency.
  5. Are you looking for ways to reduce costs? The efficiencies gained through an ERP system allows you to trim expenses in a variety of ways, from improved inventory planning and more accurate forecasting to shop floor optimization and reduced purchasing and freight spend.

Choosing an ERP System for Your Business

Choosing and implementing the right ERP system might seem overwhelming given the multitude of software options available. When making your ERP selection, it’s crucial to ensure the software aligns effectively with your company’s unique needs and objectives, while also offering the necessary implementation support. Your strategy can involve conducting internal research, engaging key decision-makers, and analyzing the ERP software utilized by industry leaders for reference. Alternatively, you have the option to seek external assistance by partnering with specialized software selection consultants or directly collaborating with established ERP software vendors to utilize their expert guidance for a successful software selection and implementation process.

How Does QAD Adaptive ERP Provide a Competitive Advantage?

Maintaining a competitive advantage is what keeps business owners up at night. A critical and often overlooked piece of the success puzzle, however, is regularly evaluating enterprise systems.

Why? Data accumulation.

Regardless of company size, having the right software that allows your business to collect and use the right data can provide a tremendous advantage. Being able to easily and quickly access real-time information puts companies in a better position to manufacture more competitive products and therefore stay relevant. The advancements in cloud and encryption technology over the last several years have dramatically changed how a company can collect, analyze and secure data. Machine and data-enabled learning tools can acquire even more cloud datasets using advanced algorithms to quickly turn collected data into valuable insights.

The data-driven insights are what’s important. It’s not enough to simply collect data. You have to use it well to get ahead. To make the most informed, strategic decisions, manufacturers should utilize data to drive product development, make investment decisions, identify industry trends, and improve operational efficiency to increase productivity and decrease spending.

QAD Adaptive ERP solutions use these data insights to help companies respond quickly to change. The ability to quickly adapt contributes greatly to a company’s competitiveness. An ERP solution should be agile enough to align with a business, enable new technologies and improve a company’s opportunity for success.

To stay competitive, an adaptive ERP should:

  • Simplify the adoption of advanced technologies
  • Enable the company to deploy rapidly and allow for faster upgrades
  • Have real-time data visibility to enhance operational efficiency
  • Enable companies to quickly adopt and implement industry best practices
  • Allow for scaling and future growth of the business

Without agile ERP software, companies struggle to react quickly and strategically enough to inevitable business disruption. QAD Adaptive ERP is an essential ingredient in helping companies perform at their best and become profitable leaders in their industry.

7 COMMENTS

  1. I like that you mentioned how one of the primary advantages of ERP software is that it allows companies to automate manual and routine functions. I was listening to a business management podcast last night and one of the guests of that episode talked about ERP. It seems to be quite a convenient thing to have for businesses so I could see why they’d use it.

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