Initiating an Enterprise Resource Planning (ERP) System in a business is becoming increasingly popular, not only among large companies but also among Small and Medium Enterprises (SMEs). It’s also known as the first step towards the operational digitization of any business.
The benefits of a custom ERP system are numerous. Advantages range from the seamless integration of the organization's different departments to the automation of tasks. It achieves business goals and responds to specific operational needs as it grows.
You might be thinking that if ERP system presents any inconvenience? To answer your worries we mention all the crucial aspects of Enterprise Resource Planning Systems in this article. We will also discuss the critical advantages and disadvantages of enterprise resource planning systems.
In short, you’ll know the why and what for an ERP system that can benefit your business operations.
What is an ERP, and what is it for?
We’ll start with a quick reminder that ERP stands for Enterprise Resource Planning, still, we can also say that it’s an Enterprise Resource Management System. A system that aims to optimize the workflow within any organization based on different functionalities that allow automating and centralizing processes.
Among others, it serves to improve the business management of organizations and accompany them in their process of adapting to business needs concerning market dynamics.
What are the advantages of an ERP?
Bearing in mind the costs that implementing an ERP program entails, it is expected that financial management must evaluate in detail what an ERP system integration contributes to their company. Let's see what an ERP is for: the competitive advantage that can develop with its implementation.
Among others, it serves to improve the business management of organizations and accompany them in their process of adapting to business needs concerning market dynamics.
Centralization and Unification
An ERP system allows the centralization of company data in the same database. This is your main asset. The information is managed within a platform to which all members of the organization or structure have access.
Optimization of document management
With this tool, the redundancy of information between the different poles of the company is avoided, and the restitution of divergent communication between the various departments constitutes a source of errors daily.
By sharing information, business units benefit from better coordination, making their actions more efficient and logical.
Comprehensive management
The ERP software can cover different critical functions of the company and offer support to its various departments, namely:
Sales
Inventory and stock
Digital marketing and sales
Accounting
Shopping
CRM etc.
Types of ERP and their characteristics: Which one to implement in your company?
It is made possible thanks to a series of modules that can be implemented separately and allow better coordination between the different departments, above all because the tool provides significant added value to the structure: optimized management of processes (economic and financial flows).
Greater control and traceability
Having an informed follow-up of the company's documentation leads to more fluid internal communication, contributing to better and faster decision-making.
The company's productivity is positively impacted since the ERP solution centralizes and automates all processes and communications, thus covering all the critical functions of the structure.
Accelerating growth and expansion
Thanks to its intrinsic scalability characteristic, the ERP gives companies the flexibility to consider possible restructuring. Whether at the management, organization, or communication level, enterprise resource planning software accompanies companies that seek to provide a new impetus for the business to evolve in the direction they need.
Greater competitiveness
Optimized process management and information centralization improve processes such as order processing and stock management (inputs/outputs).
As stocks are better controlled, sending invoices can be carried out on time, and avoid payment delays.
In summary, the company's processes and the flows of entry and exit are reorganized to be controlled efficiently and allow the structure not to suffer organizational errors that affect neither the finances of the company nor its competitiveness.
Internationalization
One type of organization that can benefit significantly from implementing ERP software is a multinational company. Thanks to being a multilingual and multicurrency management tool, it automatically adapts to various international contexts and real-time operational capacity.
Likewise, companies that need to manage subsidiaries in different countries and geographical areas can benefit from the standardization of human resource management that this type of system allows.
Disadvantages of ERP tools
Considering all the advantages that companies obtain by using an ERP, are there any disadvantages they should consider? Instead of disadvantages, we can say that companies that opt for an ERP do face some challenges:
Start-up time
On the one hand, the migration of information can take a long time and, on the other, the training of people for its correct use can lead to further delays.
Cost
It may be true at first and depending on the company's implementation type. However, today some solutions adapt to the needs of all companies which, besides being billing software in the cloud, offers SMEs all the power of an online ERP.
Its different configuration and customization options make it adaptable to most sectors.
The ERP in the era of digital transformation
Implementing an ERP allows considering an organizational restructuring based on optimizing and digitizing processes. With this restructuring, not only the structure of the company benefits internally but also its external relationships with customers and suppliers.
Anticipating problems, controlling costs, and making significant savings are other of the many benefits that ERPs allow.
