What is an ERP?
Updated: Mar 19
Enterprise resource planning (ERP) alludes to a kind of software that businesses use to oversee everyday business functions like accounting, procurement, project management, risk management and compliance, and supply chain operations. A total ERP suite additionally incorporates enterprise performance management, software that helps plan, forecast, anticipate, and report on an business’s financial outcomes. The ERP system incorporates key business process with the ability for data to be integrated seamlessly between them. ERP systems eliminate duplication and improve data integrity by being a single source of truth to share data from various sub-systems and other data sources. ERP systems are critical for businesses of all shapes and sizes. However, not all businesses are created equal and neither are all ERP systems.
ERP’s value to a business
ERP’s impact many organisations today and all a growing or large business to segregate various areas and departments and to manage the flow of data to result in better accountability and cost savings.
Examples of business benefits include:
Consolidation and Oversight where information is brought together from various sources all across the organisation
Cost Minimisation through standard best practices to avoid complex customised business processes
Breaking down silos by sharing information and data flows throughout the various departments
Improved user experience through a standard look and feel that helps engage employees and enable collaboration.
Improving governance to enable data integrity, financial controls and minimising inherent and control risks
Minimising manual effort through uniform and integrated systems
7 Reasons when an organisation should consider moving to an ERP system
For businesses, starting out, a very simple SaaS Accounting Package is more than adequate to manage the day to day running of a business. As the business is starting to grow there may some functions that are maybe not completely fit for purposes but the organisation is getting by. There will come a time, however, when the organisation should really consider jumping to a much more robust back office accounting system. Here are the key signs to look out for:
1 Business is expanding rapidly. The business is opening new locations frequently, adding many more lines of products or acquiring many customers at a rapid pace. There will be a point when data integrity will start to show cracks and there will be limitations with a very simple accounting package. 2 Listing on the share market or considering a IPO Public company’s have much more stringent responsibilities and the board are personally liable if a company cannot report to the market on-time nor provide adequate reporting to help drive board and management decision making. 3 Data and Support Issues Many organisations start to get into a battle with data integrity and errors that require on-going support. This eventually snowballs as data volumes grow and will eventually become completely unsustainable with an existing accounting package as opposed to an ERP system. 4 Operating costs are growing. Expanding businesses can struggle with managing costs and resources. This is often due to overlapping business processes and the management of information between people. This is where ERP’s can enable much better collaboration and integrate data to avoid people playing the role of messenger. 5 Needing a future-proof solution Growing business know that it will eventually outgrow its premises, processes, and systems. Having software that is flexible with constant improvements and updates will avoid having to build bespoke solutions and band-aids over time. There is also standardised training on-line which makes on-boarding new users much easier. 6 More secure environment Cyber-security is a very real threat to any company’s survival and should never be taken for granted. An ERP system has a much richer level of security control from the environment it is hosted, to user access to data. This is something a simple bookkeeping software will just never be able to step up to this level. 7 Mobile and Web-friendly The latest generation of ERP’s are all web-hosted and can offer a much richer experience from entry level workers to C-Suite to self-serve on their devices with an incredible amount of flexibility. Entry level accounting packages may offer some reporting but not to the same degree as an ERP with self-service, report build capabilities and collaborate tools.
Justin Lake is the CEO of Think Numbers, a Finance and Transformation consulting business to help organisations on the path to excellence through Finance Transformation. Feel free to get in touch.
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