Best ERP Software

ERP Software Guide

Enterprise resource planning (ERP) software is a type of enterprise application software used by businesses to manage their core operations, automate and integrate processes, and improve visibility across their business. It does this by providing integrated applications that allow for the collection, storage and retrieval of data from multiple sources within the organization. ERP systems are typically implemented through an integrated suite of software modules which provide support for financial management, human resources management, inventory control, distribution, order processing, customer service, manufacturing and project management.

The primary goal of ERP systems is to streamline operations and reduce paperwork while providing better access to all the information necessary for day-to-day decisions. They are designed to help companies easily monitor their performance in areas such as sales or product fulfillment; manage internal activities such as production scheduling or inventory control; and provide a platform for external communication with customers or suppliers. Additionally, ERP systems can be used to create standardized reports which make it easier for managers to analyze performance in various aspects of the business.

ERP solutions are typically comprised of three main components: hardware infrastructure (servers), software applications (modules) and data repositories (databases). Hardware infrastructure provides the physical foundation upon which applications run; servers host the software modules that run on them while data repositories store data collected by those modules. Applications include everything from accounting suites to CRM tools to billing and manufacturing modules. Data repositories house the transactional information processed by the applications, such as customer sales data or inventory quantities.

ERP systems are often implemented through a phased approach, with each phase focusing on a different business area and allowing for the integration of those areas over time. This is typically done through the use of third-party consultants who help organizations identify where their business processes can be optimized and formulate an ERP implementation plan accordingly. ERP implementation requires intense upfront planning and investment in order to be successful; however, it often results in significant operational efficiency improvements that result in reduced costs and improved customer service levels.

How Does ERP Software Work?

At its core, an ERP suite is modular software that handles the most basic financial aspects of running a business. Users can build outward from that base by adding additional modules to handle other specific business functions. These modules can include business functions such as supply chain management and business intelligence. It can also include materials resource management, which is a broad topic that can address fixed asset management, review point of sale performance, offer project management solutions, and even manage inventory through Just-In-Time strategies.

What differentiates ERP software from more basic accounting software is that an ERP suite provides a system that can be used to manage an entire enterprise instead of merely tracking its finances. Outside of convenience, users also benefit from all of these resources working cohesively through one base ERP suite thanks to the possibility of creating new processes or gaining a better holistic view of an organization that wouldn't be available under a series of unconnected software tools.

For example, while accounting software would only offer a basic framework limited to accounting processes, most ERP systems have more expansive options that allow for modules that integrate basic payroll functions into a broader human resources tool. An ERP suite can also add modules that would customize inventory software for an organization with unique distribution or logistical needs.

The More Complex an Entity, The Greater The Value of Customization

At first glance, generic single-use applications that only serve one specific part of an enterprise may seem sufficient. It may not be obvious on the surface but a one-size-fits-all application likely won't be effective for every type of enterprise. Payroll systems, for example, can have vastly different requirements across different types of businesses. A service organization will be more concerned with payroll software that is able to integrate billing and expense management, while a restaurant chain is going to be more concerned about recording employee tips and factoring in any related tax issues. Both of those types of enterprises will have needs that are far different from that of a construction company that has to account for contractors versus employees and even calculate different rates of pay for the same worker depending on what task he or she is performing that day.

Another area outside of payroll that can have a wide variance in needs is inventory. For example, an enterprise that focuses on manufacturing will need more than just spreadsheets tracking inventory; such a company would potentially need a barcode scanning system to track building components. Those needs are completely different from a seasonal business that would need an automated system able to manage production levels for high and low volume seasons.

Ultimately, the modular and highly customizable nature of ERP suites requires an SME to game plan for what they need from the suite long before contacting a vendor. To determine exactly what type of ERP suite is needed, an enterprise must do a top-down review of its processes and the way it does business. This includes contemplating every phase of business from development, to implementation, to manufacturing, to the sales and billing process all the way through customer support. An enterprise will need to consider how all of these phases work together and how it processes information between all of these phases. The process of an enterprise looking inward when reviewing its ERP needs will go far beyond the questions that are asked for standard financial software, which includes reviewing the number of servers needed and calculating the number of software licenses required. While those questions would still apply to an ERP suite an enterprise would need to go deeper and ask questions that will lead to a greater understanding of the way an enterprise operates.

A comprehensive understanding of the way an enterprise functions is important for designing an ERP suite for reasons other than utilizing the wide range of business systems ERP can offer. Because ERP modules all function together on the same framework it's possible for an enterprise to achieve increased integration between the different modules and the various parts of the business they represent. Because standard business software usually has one function, it's rare that it encourages integration with other software. For example, assume a food processing company receives a delivery of beef on a specific day of the week. The company has employees that specialize in processing the beef when it arrives. In this circumstance, an ERP platform's HR module might coordinate with the inventory module to make certain the correct employees are scheduled to work on the day the beef arrives. Traditional business software is unlikely to have this capability. In most cases, the software would be unable to work with each other and the potential for synergy between processes would be lost.

The example above is just one of the many possibilities that might arise. The potential for what an ERP system is capable of is limited only by the boundaries of the platform and an enterprise's understanding of the manner in which it conducts its business.

The Cloud and Its Effect on ERP Pricing

ERP software is not a new concept. First marketed decades ago, ERP has long been available but until recently was typically outside the budget of most SMEs. The reasoning is pretty simple; the computing power needed to operate these modules and allow them to run optimally can be intense. ERP suites often need multiple servers to function. Many require a server for each separate module. For instance, an SME might have separate servers for an HR module, one for the database backend, one for financials, etc. That's not to mention additional redundant servers for increased performance and backup. All of this hardware adds up quickly, often costing more than the ERP suite itself. It's no surprise that since the development there have been many enterprises unable to take advantage of an ERP system due to budget constraints.

Luckily for some SMEs, cloud-based computing has opened doors to ERP not seen before. Many vendors are using cloud-based computing to power their ERP's which they are deploying with a Software-as-a-Service (SaaS) model. The SaaS model allows a business to license software that is centrally hosted elsewhere. It allows them to save on the upfront hardware costs of hosting the software themselves, including server and network costs. With all servers operating on the cloud, an ERP system can offer a much lower cost and much higher scalability.

The higher scalability possible through the cloud can make an enormous difference for some businesses. For example, a retail business might have a module for online sales. During the holiday season, it's not uncommon for businesses to see large spikes in traffic. To accommodate that traffic without SaaS distribution would require the business to buy new servers for redundancy to handle the increase in traffic. That would involve a large hardware cost for a server that will no longer be necessary for much of the remaining year. That leaves the company with a tough choice: settle for spotty ecommerce during peak online buying, or spend more money on hardware that will only be needed a few weeks out of the year. Cloud-based ERP systems remove the need for that difficult choice. A company can simply pay for additional cloud-based servers for the busy holiday season and then dissolve those servers once they are no longer needed. This allows an enterprise to only pay for the server space they need and only when they need it.

One final benefit of SaaS deployment of an ERP suite is lowered licensing costs. When software is hosted on-site an enterprise must pay a setup fee as well as a dollar amount per licensed user. This amount per user is often between $1,000 and $5,000 and the license would last until there are significant changes made to the software. Cloud-based ERP systems often charge a nominal setup fee or waive it completely. What’s more, the monthly amount is usually between $90 and $500. In many instances, the subscription route of paying a lower monthly rate can be significantly cheaper than the traditional method of paying a larger lump sum per license.

There is one area in which an ERP system won’t save any money over traditional software, and that is when using a third party to handle software deployment. Most ERP vendors suggest or require an enterprise to deploy an ERP suite through a third-party partner. The third-party partner will manage the actual deployment of the ERP system which can take up to several months. This is more than simply installing software, as the third-party partner is responsible for in-depth work including coding middleware that connects the modules if they weren’t already coded prior to purchase. These third-party partners are also responsible for employee training and troubleshooting after deployment. While hiring a third-party partner may not be required it’s likely to be highly recommended by the vendor.

The bottom line is that an enterprise should take stock of the way it does business and evaluate its needs long before even contemplating an ERP system. There will likely be a third-party partner to guide an enterprise through the process and smooth out any issues, so the real work is for an enterprise to go into the relationship knowing exactly what it wants from an ERP system.

ERP Software Features

• Accounting & Financial Management: ERP software provides tools for financial management and accounting, including general ledger, accounts receivable and payable, budgeting, asset tracking, financial reporting, taxation and auditing.
• Analytics & Forecasting: ERP systems provide real-time business insights through customizable dashboards, allowing users to identify trends, spot problems early on and make informed decisions. The software also offers forecasting capabilities to help companies better plan ahead for future growth.
• Customer Relationship Management (CRM): ERP software includes CRM functionality that enables organizations to manage customer relationships in a single platform. This includes managing leads and sales opportunities, automating marketing campaigns, tracking customer service requests, and providing customers with self-service portals.
• Human Resources Management: ERP systems provide comprehensive HR management capabilities, including employee onboarding and offboarding, payroll processing, time & attendance tracking, benefits administration, compliance management and performance review.
• Inventory Management: ERP solutions enable organizations to manage their inventory more effectively by providing visibility into stock levels and item information. This includes features such as automated reordering, order tracking and real-time inventory updates.
• Manufacturing & Supply Chain Management: ERP software provides tools for managing the entire manufacturing process from product design to delivery. This includes scheduling production tasks based on available resources and tracking orders through each stage of the supply chain process.
• Project Management: ERP systems include project management capabilities for managing complex projects and tasks. This includes task scheduling and assigning, resource capacity planning, time tracking, budgeting and reporting.
• Security & Compliance: ERP systems provide secure access to data and applications with multi-factor authentication, role-based permissions and audit logging. The software also helps organizations meet regulatory requirements such as GDPR, HIPAA and Sarbanes-Oxley.
• Warehouse Management: ERP software provides tools for managing warehouse operations, such as receiving and shipping orders, tracking stock levels and generating pick lists. This helps reduce costs by streamlining the inventory management process.

Types of ERP Software

• Core ERP software usually includes modules for finance, manufacturing, sales, customer service and supply chain management. Additional functions may include project management, quality control or HR applications.
• Cloud-based ERP systems provide users with remote access to their data and applications from any device with an internet connection. These solutions are particularly useful for organizations with multiple locations or those who have employees working remotely.
• Customized ERP solutions can be built to meet the unique needs of an organization by integrating existing on-premise applications or building specialized modules that don’t exist in off-the-shelf packages.
• Open source ERP systems are free software solutions that can be modified and distributed in accordance with their open source license. These solutions are often maintained and developed by a community of users, which makes them attractive to businesses who want to save money but still get a quality product.

Industry Specific ERP Software

• School ERP: School ERP software is a type of software solution that helps educational institutions automate their administrative processes and enhance communication between staff, students, and parents. It enables schools to streamline tasks such as registration, scheduling, attendance tracking and student information management. Additionally, it provides teachers with tools to track individual student progress and maintain a digital record of grades. School ERP software can help streamline school operations while saving valuable time for administrators.
• Manufacturing ERP: Manufacturing ERP software is a type of enterprise resource planning system used to manage and coordinate activities within the production process. It helps streamline operations by providing tools for inventory, quality control and other shop floor functions. It also provides visibility into production times, costs and performance metrics in real time. This type of software is used by many manufactures to run their day-to-day operations more efficiently.
• Construction ERP: Construction ERP software is a type of software used to assist with operational and financial management in the construction industry. It offers features such as project management, accounting, inventory control, asset tracking and more. This software helps with all aspects of a construction business from bidding, planning and scheduling through to completion of projects. It can help streamline processes and increase efficiency in the workplace.
• Fashion ERP: Fashion ERP software is a specialized type of enterprise resource planning software designed to manage the unique needs of fashion companies. It helps streamline operations, automate tasks and provide insight into business performance and customer trends. This software typically includes modules for inventory management, production scheduling, financials and analytics. It is often used by retailers, wholesalers and apparel manufacturers to stay competitive in the market.

Trends Related to ERP Software

1. Mobility: ERP software is becoming increasingly mobile-friendly, allowing businesses to access their data anytime, anywhere on a range of devices. This trend has been driven by the growing need for a more agile and responsive workplace that can respond quickly to changing customer needs.
2. Automation: ERP systems are utilizing automated processes to reduce manual data entry and increase efficiency, allowing users to spend more time on strategic activities instead of manual data entry tasks.
3. Data Visualization: Many ERP systems are now featuring advanced analytics and reporting tools that offer real-time visualizations of critical enterprise performance metrics in easy-to-understand formats, such as charts and graphs. This helps give companies actionable insights into their operations so they can make smarter decisions faster.
4. Cloud Computing: More companies are exploring cloud-based ERP solutions due to their scalability and cost advantages compared to traditional on-premise deployments. The cloud provides greater flexibility for businesses, with options for subscription or pay-as-you go models making it easier for smaller enterprises to take advantage of the latest technologies without breaking the bank.
5. Integration: ERP systems are increasingly integrating with other software applications in order to provide an even more powerful platform for managing business operations across various departments and locations globally. For example, many large enterprises have integrated their ERP platforms with HR systems, supply chain management software, CRM platforms, financial applications and other corporate IT systems in order to achieve greater visibility into key business processes throughout the organization.
6. Artificial Intelligence: Artificial intelligence (AI) and machine learning are being used to help automate more complex business processes within ERP systems. This technology can provide predictive analytics, streamline the user experience, and increase accuracy of data-driven insights into operational performance.
7. Security: As the volume and sensitivity of data managed by these systems increase, so does the importance of secure access to this data. To address this vulnerability, ERP systems are now incorporating advanced security features such as biometric authentication and encrypted data communication protocols to ensure only authorized users have access to critical information stored within their systems.

Benefits of ERP Software

1. System Integration: ERP software offers a unified system that provides a common database for every area of an organization, resulting in improved data consistency and accuracy. This allows all departments to access the same information, resulting in increased efficiency and better decision-making capabilities.
2. Automation: ERP systems automate mundane tasks such as bookkeeping, account management, and inventory management. This saves businesses time and money by streamlining processes and eliminating manual errors.
3. Cost Savings: ERP software helps businesses reduce operational costs over time by streamlining processes and eliminating redundant tasks. It also reduces the costs associated with manual labor since most operations are automated.
4. Scalability: ERP systems can easily be adapted to fit the changing needs of a business. As businesses grow or add new products or services, the system can adjust accordingly without expensive changes or upgrades.
5. Improved Decision Making: By providing a single source of truth for an organization's data, ERP software ensures that business decisions are based on accurate information. This can lead to more informed decisions that better align with organizational goals over time.
6. Increased Efficiency: The integrated nature of ERP systems eliminates unnecessary duplication of data entry across departments while also automating many routine tasks. These features result in greater efficiency throughout an organization's operations which leads to higher productivity over time.
7. Increased Visibility: ERP solutions provide businesses with greater visibility into their operations by collecting data from all departments and providing it in one centralized location. This allows managers to easily access real-time information which can be used to better manage resources, analyze performance, and make more informed decisions.

How to Select the Right ERP Software

1. System Functionality: Make sure the ERP software you choose will be able to meet all of your current and future needs. Analyze what tasks need to be automated, what data needs to be tracked, and any other features you may need.
2. User Experience: It’s essential that your users find the ERP easy to use and navigate in order to maximize adoption rates. Look for ERP solutions with a user-friendly interface that is intuitive and simple to understand.
3. Scalability: Consider both short-term and long-term goals when selecting an ERP software solution so that it can grow with your business as needed. Look for an ERP system that offers scalability options such as modularity or add-ons for expanding capabilities if necessary in the future.
4. Budget: Establish a budget before beginning your search so you know which systems are a financially viable option for your organization. Aim for an ERP within your budget but don’t sacrifice quality or key features just to save money – in the long run this could lead to additional costs due to compatibility issues or extra training sessions required due lack of usability of the system itself, or lack of efficiency from not having certain features available on the system you have selected.
5. Security: Ensure that your chosen ERP system has comprehensive security protocols including encryption and authentication methods to protect sensitive data from cyber threats.
6. Vendor Support: Select a vendor with a good reputation for customer support, offering round-the-clock technical assistance if necessary. This will ensure that any issues you experience can be quickly resolved and won’t cause disruption to your business operations.

Who Uses ERP Software?

• Business Owners: Business owners use ERP software to manage the day-to-day operations of their business. They use this software to automate processes, analyze data, and make informed decisions.
• Accountants: Accountants use ERP software to monitor financial activity within the business. This includes tracking accounts receivable and payable, as well as generating detailed financial reports.
• Operations Managers: Operations managers use ERP software to plan and execute production activities such as materials inventory, scheduling, and cost control. This helps them streamline workflow processes and maintain a more efficient operation.
• Human Resources Personnel: Human resources personnel utilize ERP software for talent management tasks such as recruiting, hiring, training and employee performance evaluation.
• Sales Representatives: Sales representatives use ERP software to manage customer relationships and track sales activities. They can also generate detailed sales reports that help in decision making.
• IT Professionals: IT professionals leverage ERP systems for system administration tasks such as patching servers, deploying applications, monitoring user access rights, etc.
• Consultants: Consultants use ERP software to provide support and guidance to businesses, helping them deploy customized solutions for their unique needs.
• End-Users: End users are the individuals who interact with the software on a daily basis. They access the system to perform tasks such as creating orders, tracking sales opportunities, etc.

How Much Does ERP Software Cost?

The cost of an Enterprise Resource Planning (ERP) software system can vary dramatically, depending on the size and scope of the business. Smaller businesses may be able to purchase a basic ERP system for just a few thousand dollars, while larger enterprises looking for more comprehensive suite of features could end up spending millions.

More commonly, most companies fall somewhere in between those two extremes and will typically invest anywhere from $10,000 to $500,000 or more in an ERP solution. This investment often includes both the ERP software package as well as related consulting services. The process of selecting and implementing an ERP system is complex and full-service providers can help with design, customization, installation and training. This cost can add substantially to the total price tag when all is said and done.

In addition to the initial cost of deployment, there are also recurring costs associated with having an ERP system in place. Most vendors offer annual maintenance contracts which may include updates and modifications to ensure compatibility with other systems within the organization as well as any new technology that comes along. These fees may range from 10-20% of the original purchase price so should be taken into consideration before making a final decision on what type of system to use.

Finally, there are hidden costs that need to be factored into any purchasing decision like personnel needs for implementation or additional hardware or software purchases necessary for proper operation of your chosen solution. All these factors must be weighed against each other when deciding how much to spend on your ERP software system.

What Software Integrates With ERP Software?

ERP software can integrate with a variety of different types of software, including customer relationship management (CRM) software, inventory management and fulfillment systems, warehouse management systems, data visualization tools, ecommerce solutions, business intelligence suites, project management or task tracking applications, document management platforms, and more. The ability to easily link multiple software programs together gives businesses a powerful tool for streamlining internal processes and providing better services to their customers. In addition to these types of software integrations, ERP systems can also be connected with external technologies such as banking websites and payment gateways. By connecting the different pieces in this way it allows for real-time analysis of complex financial transactions and other data points.