What Are The Primary Business Benefits of an ERP System?

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Exploring The Main Benefits Of An Erp System For Your Business

Modern day businesses depend on a multitude of processes across their organization to maintain their operations and achieve their business goals. These processes include CRM (customer relationship management), human resources, accounting, inventory and order management, marketing, public relations, and much more. Implementing an ERP (enterprise resource planning) software platform is what will help you to integrate all of these separate processes into a single system. Doing so will help improve communication, access to important information, and the overall efficiency of all of your organization’s business processes. 

What Is An Erp System?

ERP systems are somewhat similar to CRM systems in that they provide a central database that can support multiple functions throughout your company. So no matter what department an employee is in, they can rely on the same data that another department has access to. An ERP system helps prevent information silos by ensuring that every department has access to the same information, but also improves their department-specific processes. And despite the use of the term “enterprise,” ERP systems are suitable for businesses of all sizes, especially as newer SaaS (software as a service) ERP solutions have become available, making them more affordable to implement.

Why Is It Important to Your Business?

What makes an ERP different from a CRM is that a CRM focuses more on collecting customer data into a centralized location to increase profits, whereas ERP collects business data in a centralized location as a way to increase efficiency across your organization, thereby helping to reduce costs. The main ways that an ERP system will help to reduce business costs include:

Streamlines Business Processes

One of the biggest challenges that businesses face is information bottlenecking. When data is collected by various processes throughout the organization and remains isolated within their respective departments, it’s decentralized. Your business will have difficulties analyzing its performance because it won’t be able to obtain a big picture view, so it is more challenging to make informed decisions.

By implementing an ERP system, you create a centralized location to collect all of your data which streamlines your business processes. Not only does this help eliminate bottlenecks, it creates more opportunities to automate your processes and to ensure accountability.

Creates the Opportunity to Automate Processes

Because you’ll have a big picture view of all of your business processes, you’ll have an easier time identifying processes that may be inefficient because they require repetitive tasks. You may be able to reduce inefficiencies by implementing automation. Automating the workflow of your processes could help to save a significant amount of time and effort that can be allocated towards other tasks. This improves efficiency and productivity in a number of ways.

Ensures Accountability

ERPs are usually set up so that all actions are tied to the users who take them based on their login. Users have access to the features and data relevant to them through the assignment of roles (users can be assigned multiple roles in an ERP system). This makes it easy to identify if there are issues in your business processes and who is accountable for those issues based on roles and actions. It also makes it much easier to address those issues and to prevent them from occurring again in the future.

Encourages Departmental Cooperation & Collaboration

ERP systems help to promote communication and resource sharing across your entire organization. This can help build stronger relationships between employees and encourage more collaboration on different projects between departments. You’ll find that the different departments will be more capable of helping each other to improve their processes and quality of work. This is particularly important in larger organizations that are split into more separate departments.

Smoother Communication

One of the ways in which cooperation and collaboration is improved throughout your company is through how ERP systems improve communications. For example, you can configure your ERP system to address the approval rules and process steps of your organization. This will allow you to replace manual communication with workflows that will notify your employees when it’s time to perform the next step in any given process. An ERP system will help to significantly reduce miscommunication, which is one of the biggest causes of inefficiency throughout any company.

Allows Monitoring of Inventory & Services Better

The ability to view all business processes and how they affect one another will also make it much easier to monitor your inventory and services. Using the tools provided by an ERP system, you’ll be able to manage your raw materials, track orders, monitor your inventory, and keep track of revenue all from a single dashboard. 

Real-Time Monitoring

With an ERP system, you’ll be able to track your inventory in real time. This can minimize delays in services and allow you to provide much faster delivery greatly reduce overhead costs, and improve customer experience.

Makes Relying on BI Possible

Most midsize to large companies depend heavily on business intelligence (BI) to judge the health of their business and to obtain actionable insights into their organization. However, the challenge will be obtaining operational-level analytics that allow you to create a good BI system without implementing an ERP solution. You’ll get much more out of your BI if your data is centralized by an ERP system.

Accelerates Decision Making

By integrating your BI tools with your ERP system, you’ll be able to view valuable data in real time. Real time data will enable you to make quicker and better decisions. Without ERP integration, it can take weeks to gather the data you need to create an effective BI plan.

More Competent Customer Service

An ERP system will help improve speed and accuracy throughout your organization, improving your customer service as a direct result. Think about it: by being able to track your inventory in real time, you can make sure that you’re properly stocked so that you can fulfill orders with little delay. This ensures that your customers will get their orders delivered as quickly as possible. 

Customers are Prioritized

Besides improving order fulfillment and delivery speeds, an ERP system will collect sales information from existing customers that can be easily viewed by your marketing, sales, and customer service teams. Access to such data can help you prioritize your customers by rewarding them. Customer retention should increase by keeping them interested in your products and/or services. 

Built-in Regulatory Compliance

Depending on your business, there may be a number of regulations that you will be legally required to remain in compliance with. For example, health care-related organizations have to stay compliant with HIPAA (Health Insurance Portability and Accountability Act), while publicly traded companies need to be compliant with SOX (Sarbanes-Oxley Act). ERP systems can offer built-in compliance support so that you don’t have to worry about any of your business processes violating regulation compliance.

Pinpoints Improvement Opportunities

By implementing an ERP system, you’ll be able to identify opportunities for improvement across your organization that can help improve your company’s efficiency as well as your decision making. Opportunities for improvement can come in the form of actionable insights provided by BI tools that are integrated with your ERP system or through the ability to identify opportunities for automation, just to name a couple of examples.

Efficiency Will Save You Money

Implementing an ERP system will help make it easier to track all of your business processes while providing you with a big picture view of your company. An ERP system can help improve collaboration, communication, customer service, and productivity. ERP tools can also help you identify different opportunities throughout every department to reduce your overhead costs by increasing efficiency. The lower your costs are, the more resources you’ll be able to put towards achieving your business needs and goals.

Need help start getting these benefits for your business? Consult with our experts today!