What is ERP?
ERP or Enterprise Resource Planning is a system designed to integrate management information within an entire organization, including departments such as finance, accounting, manufacturing, sales, and customer relationship management. ERP is implemented via a software application aligned with pre-existing business practices. This configuration allows access to real-time data and equips users with the information to manage internal and external business functions.
How is ERP Different from Business Software and QuickBooks?
Maybe you’ve been using QuickBooks for years, and wondering what all this “ERP hype” is about. Perhaps you’ve heard about how ERP is QuickBooks on steroids. Look no further; we plan to drill down to the nitty-gritty of how QuickBooks and ERP are different.
First off, it might help by saying that the scope of ERP extends way beyond that of QuickBooks or any other software application. As aforementioned in the previous section, the goal of ERP is to integrate management information across several departments. Thus, ERP embraces more industry specific levels than either QuickBooks or software applications combined. Here are some examples:
- Maintenance contracts
- Inventory and warehousing
- Item specific databases
- Service architecture
- Flat-rate pricing
- 700+ reports
In addition, the Microsoft Office integration with QuickBooks can hardly be compared to that of an ERP system. With drivers that link data directly to Excel and Access, along with the user’s ability to view information in Microsoft Office programs from within QuickBooks, the need to manually access these programs is eliminated. By manually eliminating these tasks, with integrated information at the user’s fingertips, business functions are even more free flowing.
Now let’s talk about the performance of your current software application or QuickBooks. While QuickBooks can handle less than 20 users, an ERP’s capacity to handle thousands means that it has the propensity to handle millions of transactions, without slowing down. If you catch yourself counting the seconds before a transaction can be processed, then maybe it’s time to heavily consider the benefits of an ERP system.
ERP and Unique Needs
It cannot be stressed enough that a good ERP system is not a one-size fits all package. Its entire conception was based on tailoring to organizations’ unique needs. But what does this exactly mean? And how far does it go?
First, it might help by saying that ERP is beneficial for several industries. For now, those in Maintenance, Repair and Operations(MRO), Food & Beverage, Manufacturing, Distribution, Aviation, Chemicals, Medical and Retail are some of the leading ERP consumers.
These Industries come to mind first due to the realization that an integrated business management solution is necessary in order to keep up with their competitors. Because of these industries' rapid growth and increasing customer demands, it is become more difficult to remain profitable in a rapidly changing industry.
Distribution specific needs.
ERP systems equip distribution companies with real-time data, including visibility into sales information, inventory controls, shipping and meeting demands. Some benefits include, but are not limited to:
- Lean, low-cost inventory solutions
- Increased market trend prediction
- Targeting emerging customer behavior
- Smarter buying decisions
- Better term negotiation with suppliers
Maintenance, Repair and Operation Needs
ERP systems help MRO gain control by providing a view into all systems, improving quote accuracy, completed invoices and precise repair budgets. Some benefits include, but are not limited to:
- Lean consumables and raw materials
- Manage efficient labor costs
- Real-time tracking visibility
- No more hidden expenses
- Better price negotiation
ERP Modules
If you came to this site wondering what ERP is, then you are probably familiar with operating your business via several software programs. The beauty of ERP incorporates the functional areas of your business into what is referred to as an ERP system. When these systems are grouped together, they are called ERP Modules. The scope of ERP modules includes, but is not limited to:
Manufacturing
- Quality Control
- BOM (Bill of Materials)
- Workflow Management
- Work Orders & Scheduling
- Engineering
Accounting & HR
- Payroll
- Recruiting & Training
- Cost Management
- Budgeting
- 401K & Retirement
Project Management
- Project & Resource Planning
- Costing
- Time & Expense
- Activity Management & Billing
Supply Chain Managment
- Lean Inventory Controls
- Supplier & Distributor Scheduling
- Purchasing & Planning
- Product Configurator
- Claim Processing
Financials
- Payables & Receivables
- Cash Management
- General Ledger
- Fixed Asset
- Financial Consolidation
As you can see, ERP modules encompass the entirety of your organization. The list could be even more exhaustive, but the point to understand is that ERP modules are designed to your organizations needs. So even if you read that and felt like ERP is not specific enough for your industry, then think again. The capabilities of ERP systems are endless.
Controlling ERP Costs
Putting a dollar amount on ERP is not so simple. Especially considering that it is specific to an organizations needs. Before talking numbers, it is important to know exactly what business functions you will be needing to address in an ERP Module, as well as being familiar with the rights of user licenses. These objectives will prepare you for the initial cost of implementing an ERP system, but what about ongoing costs?
Maintenance costs are necessary for ERP systems. With the fast changing industries that implement this software, it can be assumed that changes will need apply. Maintenance fees should be competitive and arranged up front. A predictable ERP license fee approach will help you control and maintain ongoing license and maintenance costs.
