What is Enterprise Resource Planning? (ERP)
Chances are, you’ve already heard of ERP. You may have heard all these wonderful and fantastic things an ERP system does: Save time. Save money. Save this, save that. But it can be hard to relate this to your own business without first knowing what ERP is.
ERP is an acronym for Enterprise Resource Planning, which is a business management system.
What does it do? An ERP system gives you accurate, real-time insight and information into the daily running of your business, all while helping you reduce administration and operational costs by over 20%, according to the Aberdeen Group.
To borrow a commonplace colloquialism, ERP brings everything together under one roof. So instead of having all these different systems to perform different functions, such as stock, sales and administration, you just have one.
The benefit? You save time, money and ensure that all data is correct and up-to-date since everything uses the same data set. In addition, Management and Human Resources can look at data processes, create up-to-date reports, and make decisions based on the latest information available – all from one system.
So now you know what ERP is and what it does. The only question remaining is, do you need it? If you can relate to at least 2 of the following signs, then chances are, your business could benefit greatly from an integrated ERP solution.
Different ERP Solutions:
On-premise, Cloud-based and Hosted
If you’re considering an ERP system for your business, the chances are you are overwhelmed with the copious amount of options. You will have to choose a solution that is cloud-based, installed locally on-premise – or hosted. Let’s look at the three ways that ERP software is deployed.
This means the software is installed on a server physically located at the customer’s business premises. Most licenses are sold on a perpetual basis and are treated as a capital expense. An example of this type of solution would be MYOB EXO Business. On-premise solutions may also be referred to as traditional ERP solutions.
These solutions are accessed via the Internet and are paid for on a subscription basis. The software itself is not owned or licensed by the end user but is provided as a service – which is why cloud solutions are also known as Software-as-a-Service (SaaS). In general terms, cloud solutions like MYOB Advanced will suit larger businesses because it has the ability to offer enterprise-level software at an affordable monthly price and the flexibility to easily scale up and down.
This is where the software is installed on a server hosted by a third party. It could be installed on a dedicated piece of hardware or on a piece of hardware shared by multiple tenants. Sometimes with this deployment method the software is delivered to the end user on a subscription basis.
Reasons to Invest in a ERP Business Management System?
Your business can benefit from a well-designed and well-implemented business management system (BMS), sometimes referred to as an ERP (enterprise resource planning) solution. You will be able to make more informed decisions, access detailed information faster, prepare key reports automatically and track transactions as they occur. You will be able to see, at a glance, daily sales, stock levels, accounts receivable, work in progress and a host of other key performance indicators. You can prepare customised dashboards for individuals, specific roles, work-groups and managers. With ERP/BMS, you can spend your time looking after your business instead of looking for information.
ERP/BMS is a technology that takes key data from a variety of sources within your business and transforms that raw data into actionable information. All from a single graphical interface. A comprehensive ERP enables you to match sales projections and the sales pipeline with inventory and back-orders. You can combine expenses and apply them to particular jobs. You can track orders and
identify which products sit in the warehouse the longest. In short, you can run your business from a single, all-encompassing application.
ERP/BMS is ideally situated for a growing business. You already have a financial system that helps you track general ledger, accounts receivable and payable and maybe even invoicing, banking and perhaps payroll. But any time you want to add more functions or include more than a few users you reach a roadblock. The truth is that most financial packages are very good at what they do but they are limited in scope. As you grow, your business becomes more complex. Doing things ‘the same old way’ just doesn’t produce the
results you need. An ERP/BMS blows away those limitations.
Where to start?
Sounds good you say? So how do we get started? The first place to look is inside your business. You can start by mapping out your business processes. How does information low through your organisation? How does an order get processed and invoiced? What events trigger which responses. This is a major undertaking and one that will require a lot of legwork if you don’t already have these
procedures well documented.
An organisational chart is a good place to look for guidance. Who does what and where are they. What decisions do they make? And, most importantly, what information do they need to make those decisions. The next step is to look at your databases. How many of them are there? How are they structured? How accurate are they? Why were they initiated? How up-to-date are they? Who maintains them? Who has access to them and why?
Now we are starting to see some sort of structure. You know which people are in need of information and you know where those information resources are. The challenge is to combine these two assets. Your business management system will help you deliver the right information to the right people in the right format.
So now you are ready to document the business processes. One strategy is follow the data…when and how is it captured, what vetting is done to it and how does this information make its way to the decision-makers. Or you can work the other way…how do your managers access and use the information? How does the information get to them and how much data manipulation is performed before they see it? Do they access spreadsheets? Can they change key indicators themselves or do they request changes? Do they take educated guesses if they can’t get the data they need?
Next you need to break down the individual steps that support the overall business processes. This is where costs start to come in. How much does it cost to prepare ad hoc reports? Is there any redundancy in data entry? Do people have to spend a lot of time ‘cleaning’ data? Is there a costly time-lag between the time a report is requested and the delivery? And is that data out-of-date by the time it’s read? What are the ramifications?
Nobody knows your business better than you do, but sometimes an outside party can add value at this stage of the process, especially if that party is a specialist and has helped similar organisations implement a BMS/ERP solution. Third-party consultants will have time-tested methodologies to quickly and efficiently conduct data audits and can often resolve any internal issues that might otherwise impact an
They can help you document your current state of affairs and suggest ways of improving your procedures. As you continue along the path of looking at implementing an ERP/BMS solution, it is a good opportunity to review your business processes and retain which ones work well and upgrade those that can be improved. If your business is running along very well, an ERP/BMS will help you automate and standardise procedures
so that you can work faster and more efficiently. If you are facing challenges; bottlenecks, missed deadlines, stock shortages, high turnover or diminishing returns; An ERP/BMS can help you turn things around and gain more control over your operations.
Who can benefit from a Business Management System?
You can! Most small to medium-sized businesses can implement a BMS/ERP solution at a cost that is affordable and justifiable. Today’s ERP solutions are optimised for the mid-market and there are a wide variety of specialist firms who can help you implement a comprehensive BMS/ERP solution quickly and easily. Sure, there are costs involve, software licensing, database cleansing, report design and perhaps even a hardware upgrade, but when you start to look at the overall benefits to your business processes, the return on investment jumps out at you. ERP/BMS, once expensive and reserved exclusively for big business, is now a mainstream option for your business and is readily accessible. In today’s competitive environment, a BMS/ERP can help you and your business thrive. It is not easy running a business and you need to take every opportunity to keep up. ERP/BMS is ideally placed to give you the edge you need to succeed.
Can an ERP Solution benefit your business?
Duplicating work is expensive and harmful to data integrity
One of the biggest time kills is the duplication of work. This is often the case when staff have to use multiple separate systems to work. For example, does your sales team use the same system to track orders that warehouse workers uses to manage stock? Is this the same system that your accounting staff uses? And to go one step further, is it the same system which integrates into your websites e-Commerce? Chances are the answer is no.
This is the definition of inefficiency. In fact, if you find yourself or your staff duplicating data over several different systems, then you will greatly benefit from ERP software. An ERP system can provide your entire team with access to the same, real-time data. Thereby eradicating duplication and re-entry errors. Increase productivity. Improve decision-making speed. Maintain data integrity. Concentrate in growing your business.
Automation of manual business processes.
If your business is stuck in the 1950’s using pencil and paper processes, your staff is most likely drowning in paperwork. And you should throw them an ERP life raft. Manual accounting is tedious. Boring. Dull and everything between. Not only that, spending hour after hour manually entering data from paper-based invoices and orders is time that could be better spent elsewhere.
In business, time equates to money. Loss of time means loss of revenue. So if reconciling your financial records takes forever, you will definitely benefit from an ERP software solution. An ERP system can be customised to meet your individual business needs and streamline day-to-day tasks. Boost productivity while dramatically reducing operational overhead expenses.
Over stocked. Under stocked: Profits go down.
As a business grows, so does its complexity and the need for proper stock management. Customer demands need to be met while avoiding stock-outs or ending up with warehouses full of surplus stock. If your sales, customer service, and warehouse staff are not using the same data, this is impossible to do.
For example, increased product demand can easily cause stock outs – all because your purchasing team doesn’t know how much stock you really need. Or say a customer calls up enquiring about product availability or a delivery date – if you can’t offer them a correct answer you may lose that customer forever.
How can an ERP system help? An ERP system brings everything neatly together – allowing your staff to access the same real time information. Sales and customer service staff can give confident answers to customers and warehouse staff can monitor stock levels.
Struggling to retrieve data? The struggle is real.
Recording data is one thing. Having the ability to create and retrieve accurate reports that present all the fact and figures you need is another. If getting data from your system requires hours of work tediously manipulating data into spreadsheets – you should look into an ERP system.
Why? Because by the time you finish your reports, they’re out of date. So important decisions are made with inaccurate data. With an ERP system you can control when and how often information is updated and extract real time data so you can run accurate reports.
Collecting, transferring and analysing data shouldn’t be a burden or a game of chance. If you want to start making informed business decisions with confidence, the answer is an ERP system.
Top 5 Reasons to Invest in ERP / BMS?
1. Your business is growing and becoming more complex – ERP/BMS helps you plan and manage that growth.
2. The cost of doing business is becoming more expensive and you need to boost productivity while keeping a lid on costs – ERP helps you work faster, smarter and more efficiently.
3. Vital business data is often locked away in ‘silos’ and inaccessible to the people who need it – BMS helps you leverafe your database resources to the maximum extent possible giving those that need information access to it instantly.
4. You want to foster inter-department communications and increase transparency across your organisation – ERP provides a ‘single-version of the truth’ so all your staff are using the same up-to-date information for decision-making.
5. you want to standardise your business processes, reporting data capture procedures – BMS enables you to implement uniform procedures across your organisation and ensure that business rules are followed.
The world of ERP can be confusing, and somewhat misleading at times. With so many products available on the market it can all become too much. At the same time, deciding to take the plunge is a hard decision and shouldn’t be made on impulse.
When you’re evaluating ERP systems you will have to consider cost, availability and quality of support. Your business will be better suited to either a cloud-based ERP solution or an on-premise solution. And no one understands this more than us. For most businesses, functionality and ease-of-use are crucial, not whether it’s a cloud or on-premise solution. This is why we show you all options available, and work with you to get the best solution for your business.
Many companies choose cloud-based solutions primarily because this will lessen their dependency on IT resources and give them certainty around cash-flow. But at the same time, security is often a concern when deciding between cloud and on-premise solutions. While it can’t be said that one deployment is categorically more secure than the other, the fact that business owners can see the server on which their ERP system sits is comforting.
For companies who regularly update their server infrastructure, the total cost of ownership of an on-premise solution will over time be similar to or greater than the sum total of monthly subscription payments for a cloud solution. If a company stays with an old server infrastructure, then the long term cost of an on-premise solution will tend to be less over an extended period of time than an equivalent cloud solution deployment.
However, if you’re reading this, then it’s probably time to start exploring your options – maybe even book a demo and see exactly how an ERP system, whether it be on-premise like MYOB EXO Business or cloud-based like MYOB Advanced can greatly benefit your business. All you need do is call or award-winning, expert sales team on 1300 553 228, email email@example.com or contact us online here>
For further reading, why not have a look at how Australia’s top businesses have gained more control, greater insights and increased sales thanks to MYOB ERP Solutions. Read their testimonials here>
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