A Beginner's Guide To ERP Software

What is ERP software? 

In a nutshell, Enterprise Resource Planning (ERP) software integrates most of the essential aspects of running a business, into one easy-to-manage system.

Who uses it?

‘Enterprise’ being part of the name might imply that ERP software is only for large organisations; however, it is also being used by many high-growth SMEs. In fact, since Cloud-based computing and Software-as-a-Service (SaaS) options have reduced the costs, companies of all sizes and from a broad range of industries are now using ERP systems.

What do they use it for?

Companies use ERP software to help them automate orders and processes, streamline their operations and ensure everyone across their organisation is working from the same information. Real-time information is generally available for all integrated systems, making businesses more responsive and efficient.

What business areas are supported?

This will vary from supplier to supplier, but in general, ERP software can include inventory and order management, supply chain management, finance and accounting systems, human resources, customer relationship management (CRM), sales and marketing, and e-commerce.

What’s the value of ERP software?

ERP software helps you make decisions by giving you access to real-time data about your entire business. It allows you to base business plans, targets and objectives on tangible evidence, instead of relying on guesswork. Armed with accurate snapshots of your sales and expenses, you can take greater control over your costs and business in general. ERP systems also allow you to automate core processes and operations, such as lead-to-cash and procure-to-pay, which will streamline operations and boost productivity.

Your customers stand to benefit as well. Aside from having one source for billing and relationship tracking, which makes it easier for customer service agents to get up-to-speed on current relationship statuses; the customers themselves can be given access to accurate despatch and delivery information. And an informed customer is a happy customer.

From a business administration perspective, the improved visibility and live data make it easy to identify what is working and what could be improved. Compliance with financial regulatory standards also becomes much simpler to manage with integrated systems, as it removes the need for customer data to be stored on multiple systems, significantly reducing the risk of data breach and other threats.

How to choose the right ERP software

With many options out there, it can be difficult to find the solution that best fits the needs of your business. First of all, you should compile a clear and extensive list of all your requirements, before you even start to look at suppliers. Make sure you engage all end-users, including any mobile workers, as well as IT and senior management.

Generalisations aren’t enough – focus on specific processes and system requirements, so suppliers can provide more detailed proposals; this will help when you compare features and check compatibility. Also, try to prioritise your objectives, so that suppliers know which features are mandatory and which are ‘nice-to-haves’; and instruct them to clearly highlight any customisations required, as these may not only increase the initial cost, but the cost of updating to newer versions as well.

This should give you a clear brief to send to ERP software providers, who can then respond with tailored proposals for your business, with all relevant features highlighted. It should then be easier to evaluate and compare the different solutions, and choose the right system for your business. 

How to implement an ERP system

Once you have chosen an ERP solution that meets your individual requirements, there are four rudimentary steps to a successful implementation.

1. Plan

Working with a team of people from across your business – from all departments – identify any processes that are in need of improvement. In particular, flag any processes that could be automated and anything that is taking up too much time. Once you have collected this information, develop a thorough plan, including a timeline and all objectives, with individual responsibilities clearly assigned. This will lay the foundations for successful change management.

2. Review

Work with your team to review the capabilities of your chosen ERP software and establish clear SOPs (standard operating procedures) for every part of your business, so you are set-up to train your employees on the new system. Always practice with your implementation team before releasing the software to the rest of your company, and make sure you run through realistic scenarios, to ensure the software is working correctly with the other systems in your business. 

3. Train

Once you have tested the software with your team, you should use what you learned to form the basis of training materials. Reference guides, handouts and FAQs etc. should complement training sessions, with optional refresher training being offered on an ongoing basis. Use your team to monitor progress and performance, once training has been completed, and make any adjustments, as necessary.

4. Evaluate

Continue to observe and evaluate your ERP software, comparing results with the original objectives you set out in your plan. Performance reviews should be held regularly, to ensure you are getting maximum return on investment from your chosen ERP system.  

Further reading

If you want to learn more about ERP software, its applications and benefits, we recommend the following resources:

CIO Magazine

ERP Insights

Capterra

NetSuite