Enterprise resource planning (ERP) is important for all companies to ensure they efficiently manage important parts of the business, such as planning, purchasing, sales, marketing, finance, and HR. ERP applications streamline the process by integrating all the systems needed to perform ERP tasks within a single platform. These applications facilitate communication between business units and provide useful reporting functions.
ERP applications have evolved over the years, and most are now cloud-based services. While ERP applications can be customized, it’s important for businesses to choose the right one initially based on the features they need. That is one of the keys to successful ERP application deployment. The other is implementing the system effectively once it is in place.
In the sections below, we explore the following questions: How many types of ERP applications are there? What are the types of ERP systems? What are the components of ERP software? What should we consider when shopping for an ERP application? And where can we find ERP applications?
Types of ERP Systems
ERP systems can be accessed in one of three ways: via the cloud, on premise, or a combination of the two. The types of ERP systems can also be broken down according to type. While many ERP applications contain many modules in one, some are identified as “manufacturing ERPs.” They may also be categorized by the industry they are specific to, such as a “food and beverage ERP.”
The following video further explains ERP modules.
What Are the Components of ERP?
Typically, ERP systems include the following components, or modules:
Inventory. The inventory module helps team leaders track the availability of products purchased. It uses unique identifiers that correspond with each item and tracks the physical location of items, such as raw materials being used in the manufacturing process.
Purchasing. The purchasing module includes processes related to the procurement of raw materials needed to produce products the company sells. It may contain vendor lists, requests for quotation (RFQs) to suppliers, and purchase orders. This component coordinates closely with the inventory module.
Finance and accounting. This section of the ERP helps finance professionals manage cash inflow and outflow and tracks information such as expenditures, balance sheets, account ledgers, bank statements, tax management, and receipts. Professionals can also generate useful reports using this module.
Human resources. This module helps the human resources (HR) team manage employee information, such as job titles, skills, attendance, and performance reviews. Often, payroll functionality is included in this module, helping HR to manage salaries, payroll reports, and travel reimbursement.
Logistics and manufacturing. This component helps companies manage logistics and manufacturing procedures, plan production, maintain equipment, and ensure all materials needed are present. This module tracks manufacturing progress in real time and interfaces with the procurement component.
Supply chain management. This module helps companies manage the flow of materials through the supply chain, including suppliers, manufacturers, distributors, and retailers. It may interact with the purchasing, inventory, and manufacturing components.
Customer relationship management. As its name implies, the customer relationship management (CRM) component helps companies establish and maintain good relationships with customers. It tracks things like communication, calls, meetings, and purchases. This module integrates closely with the sales and marketing module to highlight sales opportunities.
Sales and marketing. This component handles matters such as RFQs, proposals, sales orders, invoices, and pending sales. It also manages promotional campaigns across all channels, especially automated activities, which can be a subcomponent of this module. Reports from this module can help shape future campaigns by tracking customer response.
Things to Consider When Shopping for ERP Applications
The previous section lists many modules that are available in ERP applications, but there are others. Some companies might need those not listed here, while others may need only a small selection. Critical to the success of ERP application deployment is finding a solution that includes the modules the company needs. For example, every company needs a finance component but not every company manufactures the products it sells, so some may not need that module.
According to a recent Forbes article reviewing a study performed about ERP users, the most-liked ERP applications reflect continuous feature and quality improvement and reliability, which help users innovate faster, saves time, and enhances the company’s performance. The providers of these applications also offer product enhancements at no additional cost. Well-liked ERP application providers additionally include excellent sales teams and respectful customer care representatives.
According to ERP Focus, the top 10 ERP selection criteria are:
- Business requirements – why you need the ERP
- Upper management support – whether you have C-level buy-in for implementation
- User support – whether you have buy-in from end users
- Functional requirements – the specific functions you need the ERP to perform
- Integration with existing systems – whether the ERP will work with your current technology stack
- Budget and resources – whether you have enough to pay for and maintain the ERP
- Technology and future scalability – whether you can support the technology and whether it can support your company as it grows
- Total cost of ownership and ROI – knowledge of what the system will cost over time
- Evaluate and select options – methods for determining whether a system is a good fit
- Necessary customization – whether the application has the modules your company needs
ERPs for Today’s Business Environment
Choosing the right ERP is critical, especially in today’s challenging business environment. For instance, a good ERP can help with employee retention. Checking the status of team members could bring up points to improve upon to help them stay happy within the company. It can also show potential internal candidates for hard-to-fill positions they may be qualified for. Companies that manage the HR function and other processes successfully will thrive, while others may not do as well.
