ERP systems, or the Enterprise resource planning systems were traditionally found back in the 90s because of rapid developments, as many companies have taken this opportunity to replace their old systems with ERP.
ERP systems initially focused on automating back office functions, the departments are not directly interacting with the customers and the public. The internal system was then evolving from time to time to be adaptable with the human needs, then finally it was integrated with the front office functions, including customer relationship management (CRM), e-business systems (e-commerce and e-government), supplier relationship management and inventory management software.
So, exactly, what is an ERP system and how does it work? Let’s find out what this term means in 2024, with practical examples and a listicle of the most effective ERP software today!
What are enterprise resource planning systems?
Enterprise Resource Planning (ERP) systems are solutions for business workflow, which integrate various functions and processes into a unified system, which should be aligned with the business operation needs. An effective ERP system helps businesses to manage, automate and maintain core operations.
ERP important components
An effective ERP should have the following ERP fundamentals, as an effective ERP system is the backbone of daily operations. An ERP should integrate perfectly with the essential business functions, and improve the overall efficiency. Therefore, essential ERP fundamentals should be:
- Finance and accounting components, which's supportive to general ledger, accounts payable, accounts receivable, fixed assets, budgeting, and financial reporting.
- Human resources functions, to help HR managers with payroll, benefits administration, time and attendance, talent management, and HR analytics.
- Supply chain management, to help maintain inventory management software, purchasing, production planning, order management, and distribution.
- Customer relationship management (CRM) systems, which supports sales, marketing and customer support.
- Manufacturing management, which helps on the production planning, quality control, and maintenance management.
- Project management, including planning, executing, reporting, resource allocation and tracking.
By integrating these functions, ERP systems provide a comprehensive view of business operations, enabling better decision-making, improved efficiency, and increased profitability.
Key benefits of an effective ERP system
- ERP systems enable businesses to boost productivity and efficiency by automating routine tasks. Streamline core business processes to empower your team and achieve more with fewer resources.
- Gain deeper understanding by unifying data for actionable tasks. Break down data silos, access a single source of truth, and make informed decisions faster and more efficiently into mission-critical business matters.
- Streamline reporting and improve decision-making, by generating quick reports, sharing insights easily with real-time performance improvements.
- Take lower risks by enhancing controls overall comprehensive business visibility, to ensure regulatory compliance, and proactively identify potential threats.
- Streamline technology with integrated ERP systems by sharing a single database; the ERP solutions then can simplify operations and enhance user experience.
- Enhance business agility by efficient operations and real-time data, which empower users to seize new opportunities rapidly.
What are the major plan implementations of ERP?
ERP system implementation plan normally depends significantly on the internal work processes and practices.
Generally, three types of services are available to help implementation, including changes in consulting, customization, and support.
Implementation time normally depends on business size, number of modules, customization, the scope of process changes, and the readiness of the business to take over the ERP project entirely.
Normally, a large enterprise takes about 14 months with ~100 consultants to conduct a new ERP system, with much shorter time with smaller projects.
The major ERP implementation phases and processes may include:
- Planning and analysis the current business processes, to identify pain points of the internal workflow, then to define project goals and scopes.
- System selection by researching and selecting the most suitable ERP system based on business requirements.
- Data migration, to transfer data from existing systems to the new ERP platform.
- Configuration, to customize the ERP system to match business process and workflow requirements.
- Testing is an important phase, to ensure that the system is satisfying the business matters.
- User training, to ensure that all employees have trained effectively to use the new system.
- Go live, to convert and transition the business into using the new system.
- Post-implementation support and optimization, to provide ongoing support, monitor system performance, and make necessary adjustments to ensure that an ERP system is expected with what the business needs.
Each phase requires careful planning, execution, and stakeholder involvement to ensure successful ERP implementation.
Types of ERP systems
Cloud ERP
Cloud ERP is an enterprise resource planning (ERP) system hosted and managed on a cloud platform. Instead of installing software on-premises, businesses can use ERP on cloud applications.
The most highlighted advantages of cloud ERP are accessibility, which allows users to access ERP anywhere; it’s scalable with automatic updates and faster implementation.
By leveraging to cloud technology, businesses can focus on core competencies while relying on cloud providers for IT infrastructure and maintenance.
On-premise ERP
On-premise ERP is an enterprise resource planning system which’s installed and operated in the organization servers (Physical location). Unlike cloud-based ERP, on-premise ERP is not hosted externally
Top 5 ERP systems in 2024
|
Standout feature | Note |
Pricing | |
|
MS Dynamics 365 |
Microsoft Copilot included |
$70 per user per month |
|
Oracle ERP |
A minimum of ten users is required for purchase |
$7,500 per year |
|
SAP ERP |
Widely known, completed ERP solution |
10,000 per year to $250,000 a year |
|
Sage ERP |
Real-time financial management, business intelligence, supply chain management, and industry-specific solutions |
$1,655 to $1,665, but depending on plans |
|
Odoo ERP |
Available both in the cloud and on-premise |
$2,600.00 per year |
No-code apps | Top ERP Alternative
What is no-code?
No-code app is a solution to create business software without knowing code, which meets with the business requirements.
No-code app is a future of ERP, as it’s AI-powered, which enhances productivity by saving staff manual hours to set up, to help them focus on higher productivity tasks.
Learn more: LCNC Platforms
Why is no-code app suitable for SMEs?
No-code apps are much cheaper, as now the business can choose to pay by month, per number of users, which’s suitable for small-medium enterprises (SMEs).
Business owners can also self-make the apps in house, and can adjust the workflow anytime to make sure that it’s fitted with their needs.
Business also doesn’t have to take care of the IT infrastructure, as no-code apps are normally stored on cloud and by service providers.
Differences between ERP systems and no-code apps
Both ERP systems and no-code apps aim to streamline business operations, but they offer distinct characteristics as following:
ERP systems
- Comprehensive: Cover a broad range of core business functions (finance, HR, supply chain, etc.).
- Complex: Often require IT expertise for implementation and customization.
- Enterprise-focused: Typically designed for larger organizations with complex operations.
- High Cost: Significant investment in software, implementation, and maintenance.
No-Code Apps
- Focused: Typically address specific business needs or departments (e.g., sales, marketing, HR).
- User-friendly: Designed for non-technical users, with easy-to-use interfaces.
- Rapid Development: Allow for quick creation and modification of applications.
- Lower Cost: Generally more affordable than traditional ERP systems.
- Scalability: Can grow with the business but may have limitations compared to ERP systems.
FAQs
- What is ERP in simple terms?
- ERP stands for enterprise resource planning system, to manage business workflow for several purposes of the company, including HR, manufacturing, supply chain, finance, accounting… ERP systems are crucial for business success.
- Is Microsoft 365 an ERP system?
- No, Microsoft 365 is not a full-fledged ERP system. Microsoft 365 at the moment is providing tools, including Word, Excel, PowerPoint, Outlook, as it primarily focuses on office collaboration and productivity. MS365 doesn’t have workflow, which is one of the key comprehensive capabilities of a dedicated ERP system.
- Is Excel an ERP system?
- No, Excel is not an ERP system. Excel excelled in spreadsheets, data analysis and calculations, but it lacked the collaboration and integration functions, which are essential to form an unified ERP platform.
- What are key differences between ERP systems and no-code apps?
- ERP systems are holistic platforms to manage an entire business operations, while no-code apps excel at addressing specific needs and can complement ERP systems; or serve as standalone solutions for smaller organizations.
- What is an example of an ERP system?
- Top example of an ERP system is SAPas the SAP system is recognized globally. SAP system offers a comprehensive suite of applications which cover various business functions, from finance and accounting to supply chain management, human resources, and customer relationship management.