What is ERP? (An In-Depth Guide)

How Was ERP Created?

ERP is a term that has been around since the early to late 1990’s. Throughout the years this business solution has adapted and progressed to provide actionable business solutions for small to medium business owners and large corporations alike. There has a been a steady progression of evolution of ERP systems, which stands for Enterprise Resource Planning.

Diving Deeper Into the 1990’s

Business industry analysts created the term ERP to describe a new concept in business planning services that entails the integration of information for company transactions to be turned into actionable tasks throughout all the departments within an organization.

This system allowed for multiple departments, or all departments of a business to gain access to transactional information in a format that was relevant to their corresponding departments. For example, if one department recorded a transaction, this information would create a workflow or task for the department handling the next step in fulfilling a sale for a transaction.

Towards the tail end of the 90’s another system was introduced and quickly gained popularity called a CRM. CRM solutions, also known as “customer relationship management” solutions, was centered around the beginning steps of a sale. This system mainly used by sales departments, was an interactive tool that would assist in the documentation of relevant customer information related to potential future transactions.

Sales representatives would track updates on each customer going through the sales process from creating quotes, initiating contracts, and would include exclusive details such as products and pricing. The CRM became a partner to the ERP system. Businesses would use these two systems simultaneously to track creation and management of key business data.

However, there was one set back, which involved the labor intensive need to create reports from each system to analyze the business’ overall transactional information from pre-sale to close.

From this point, there was a new need for data warehouses that would take on the sole task of compiling all the data a business amassed each business day, and then generate reports consistently to business owners the following day.

2000’s

Fast forward to the early 2000’s when again, there was another shift in how ERP was being used and improved. There were two main changes during this time that differentiated the ERP process from its conception and use in the late 1990’s.

The first main change was that hardware increased in processing power at a lower cost to the business. And secondly, data integration tools became more advanced in that they allowed for re-usable data integration from one application to another.

This progression in ERP systems during this time resulted in a few milestones. Supply chain data became information that was able to be gathered, displayed and analyzed simultaneously. ERP vendors were able to double down and hit the ground running with new improvements much faster due to overwhelming acquisitions throughout these years.

Every business owner and organization felt the need to have an ERP integrated into their business model as it showed highly valuable information with less effort that ever before. And finally, this also meant the code used to integrate this system became fully reusable.

Looking Ahead

So, now we know where ERP systems began and why creating this capability for small to medium business owners and larger corporations alike was so highly sought after. This would reduce the time it took to gather key business data that directly reflected how a business was performing saleswise.

While the core functions are still relevant to the ERP systems used today, it is interesting to take a look back to see how ERP began and progressed from the 1990’s to 2000’s. The ability to for ERP software to then become integratable with other business programs like the CRM (customer relationship management) for example, was a milestone in and of itself, but also a stepping stone towards the ability for ERP’s to partner up and work with programs out there.

From providing information on sales, transactions, products, and fulfillment what can we expect to improve a model that seems to have it all figured out? Looking ahead to the massive changes that have happened since the early 2000’s will give us a better idea of how remarkable technological advancements can truly be in such a relatively short period of time.

How can the delivery of key business data be improved? What will come after the milestones already reached by this method? Will tasks triggered by the ERP model continue to be worked on by employees or will artificial intelligence come into play? The following paragraphs will go over ERP systems today and how information technology has carved out an even more impressive path to business solutions for business owners.

Changes Happening Today

While we have reviewed how ERP software began with a general overview of how they function. There are additional more technical business functions to go over to give us even more insight on understanding ERP, and how progressions since the early 2000’s will be different today.

There will always be, however, solid core business processes supported by ERP software that will remain intact. This includes the tracking of the sales process from the initial order date through to fulfillment and finally receiving payment. This is a given, and will not change.

Another core business function of ERP systems that will transcend time is tracking the availability or inventory of a product and that initial vendors are also distributed payment for their products or services. And finally, ensuring the financial process of a business is recorded in order to generate reports for business owners to analyze data.

Today ERP implementation is incorporating artificial intelligence and automation technologies to assist in the assembly of ERP operations. Cloud ERP implementation has also started in order to create a more sustainable host for all the data flowing from the ERP business processes. This in turn reduces the cost of the constant hardware upgrades and maintenance that was previously required and viewed as a new technology advancement not so long ago.

Industry verticals are becoming more uniform in the way their sales processes are handled. This is because the introduction of highly automated online sales systems have steadily increased in demand by consumers. Potential customers seek to find the easiest, fastest, and least time consuming alternatives to purchasing goods and services, the internet has allowed for this new wave of sales to happen.

The ERP business process has naturally welcomed this change as it ties in seamlessly to how an ERP system functions. Automation advancements have greatly improved to give consumers the efficiency they are looking for in the buyer process. While this is a great turn in the improvement of technology, there are changes beginning to happen when it comes to certain roles held by employees being replaced with robotics software analytics, for example, chatbots on facebook, other social media platforms, and business websites.

The more readily available information is for a potential customer, the more likely they are to purchase an item faster. Which means tools like chatbots that run through the sales process automatically depending on where the potential customer has landed, has become an increasingly valuable and lower cost tool than hiring an employee to provide this service.

In addition to this, artificial intelligence, or commonly referred to as AI, will allow for data to analyzed at a much more rapid pace than before. Predictive analytics are also a function that AI can produce within little to no time lost. The roles held by analysts previous to AI, who would work on the analysis of key business data is becoming less so as we continue down this path.

Now let’s take a look at the key factors that drive ERP from 2016 to 2019. Initially in 2016 a driving change in the traditional ERP method was to replace legacy systems, improve business performance, and ensure overall compliance. In 2017, improving business performance was at the top of the list.

As we previously mentioned, faster processes directly reflects a quicker sale. Which leads into the second most important factor of ERP in 2017, which was to simplify employee tasks triggered by the ERP process. The quicker an employee can complete a task by automating as much of the sales and fulfillment process is ideal in having a smoothly functioning well oiled machine.

The ability to integrate multiple systems to the ERP model was also a driving force in the progression of this model today.

What are financial professionals working on now? Firstly financial professionals have begin evaluating new trends that show great promise and high potential success rates in effectively strengthening ERP business solutions.

A major trend is using the cloud. Most ERP providers are hosted within the cloud, and unfortunately systems that do not conform to this trend, which seems to now be the status quo, will not be able to keep up with the demands in this field. The cloud ERP provides a host of new features like blockchain, AI, Machine learning, intelligent process automation, and IOT.

New capabilities are constantly being worked on for the future success of ERP to reduce errors and increase efficiency exponentially.

How Do You Know if You need an ERP Solution?

If you are a small to medium business owner you might be at the cusp of thinking about implementing ERP software into your business. When you started your business you might not have needed too many programs to keep your operations obligations in working order.

You might have felt like you had everything under control from the beginning of your sales process to fulfillment, and this is common amongst most small to medium business owners. However, if your business has continued to grow, and say you have added a list of new products and services that you did not have before, you might start to find certain areas of your overall business operations becoming cumbersome and downright clunky.

If you are starting to sense that your overall business processes as a whole are no longer running smoothly as they once did, you might want to consider an ERP solution for your business. How can you tell if you need to begin your journey in this new direction?

The tell tale sign that you might need to make some changes to your business operations process is if you are using multiple softwares and programs that do not integrate well together, if at all, and have gaps in coverage of information.

You might sense that the programs you are using feels like a juggling act where you are not always quite sure how to procure reports that make sense in order to analyze your key business data. Or the programs you are using are completely disconnected and disorganized!

This is a huge pain factor for business owners who are successfully growing their business, and if you think this sounds familiar, you are not alone! This is exactly why the ERP solution was created in the first place!

Another tell tale sign is if you are constantly unsure of your total inventory after a holiday rush, or a busy month. It might take you hours to run all your checks and balances to determine what your final inventory numbers are, and even then you might still feel uncertain if you have made a mistake.

The most dangerous aspect of running a business without an ERP solution, is if a customer purchases a product, and it turns out you do not actually have the product in stock!

Customer demands are at a level where if an efficient system is not set in place, a potential customer can tell and might be discouraged in continuing business with you. It’s important to keep this in mind when considering if it is time for you to switch to an ERP implementation solution for your organization.

Do not feel discouraged as this does not mean you are doing badly, it simply means that your systems to work for you! Rather than using twenty different platforms, it is okay to consider a better system that will help you decrease your workload when it comes to keeping the checks and balances of your business.

Why not have an easier way to see final numbers in real time and have the ability to access easy and fast reporting methods to relay information to your employees. Increasing the visibility of your operations takes the guesswork out of what is coming in to the business and what is going out.

ERP software also gives you the capability to automate and auto populate almost any aspect of your operations. This allows you to avoid the need to enter each piece of information into a spreadsheet where you are not able to transfer data from one place to another easily. Managing spreadsheets like this takes hundreds of man hours, and can ultimately hinder the success of your business.

Modern ERP also includes an application programming interface. This interface is what allows you to directly speak with your customers via phone or email and provide a paper trail of any information passed back and forth from the business to the customer. You can also view the analytics of the sales of your business, how certain products are performing, and so forth.

You can even connect your bank details to this system so you can provide payment to your vendors with the click of a button. Billing, invoicing and
inventory management all make up your ERP solution. All this information ebbing and flowing form one central hub is how you can manage to get back your time.

Your company’s metrics will completely transform to work for you, not the other way around. These key business metrics will also give you the insight you need to know where, how, and what products to market and to which audiences.

You will have all the information you need on audience demographics, when customers are purchasing your products throughout the day or even throughout the year. You will be able to see clear as day which products are performing and selling best, or even which products are performing best during certain times of the year.

This is invaluable in understanding when to market certain products. You will feel certain of which products require marketing campaigns and your paid advertisements won’t be done blind with guesswork. You paid ads will have purpose and hardcore data to back up why you will be willing to spend more on advertising certain products throughout the year.

Additionally, you will be able to easily discern a clear budget for your marketing campaigns, or any other aspect of the operations of your business. This is virtually a seamless, no hassle way to make quick decisions about the direction of your business in a way that is fully intentional and informed.

Benefits of ERP

So, what is erp? We have crossed over a great amount of information from the inception of the ERP to now, so in short, ERP in 2019 is now known as this:

ERP allows for your business to manage and integrate financials, supply chain, operations, manufacturing, reporting, and human resource activities throughout businesses. ERP providers today commonly offer clients the upkeep of new changes innovation. The most prominent changes in innovation today are the use of artificial intelligence, machine learning, blockchain, IOT, and much more!

This promise sets ERP companies apart to business owners who understand that technological advances are happening fast, and rather than having to switch to a more technologically in tune ERP company down the line, they will inevitably search for the ERP solution providers that give them the best possible services in the digital age.

If you are at the stage where you are searching for an ERP provider to partner with, keep a few things in mind to reduce your chances of choosing a company with a higher rate of failure in the future. Choose a company that is focused on new trends like organizational change management.

System providers are in the age now where new directives are becoming more prominent. Many providers are seeing organizational change management as a top performance variable in providing great ERP services. Research any recent technological deficiencies and failures an ERP solutions company might have had due to lack of movement in the digital age.

While an ERP claims to integrate all the vital aspects of your operations in one central hub, not every ERP provider can do actually execute this well. You should make sure to ask potential ERP providers that you are considering partnering with, on which capabilities they are performing best in.

You might choose to go with an ERP software they ticks 9 out of your 10 boxes rather than going with an ERP system that ticks all 10 boxes with a lower quality performance. Your business deserves the best, but with so many softwares out there to choose from in the digital age, it can be a risk to move all your business data to a platform that will not give you the particular results that are of utmost importance in your particular industry.

Keep this in mind when searching for solutions for your business operations, and always ask questions on deficiencies a provider might have had in the past in addition to their best performance aspects. The more you know the less likely you are to find yourself paying for a service that does not actually serve you.

While the best of breed model was thought to once go obsolete, it has increased in popularity recently because customization to each unique business has increased. There are so many more types of businesses and products available now then there were in the 1990’s, and this is why choosing a provider that can provide as much coverage for you as possible might be a better option for you.

Adapting to change is a requirement within the ERP design. Shorter processing times for project delivery are happening in real time and the excitement to see what will become of ERP next is anticipated to be both exciting and maybe even unsettling to some.

We hope you have found this in-depth guide to ERP software, ERP implementation, and ERP vendors useful in determining the best fit for your small to medium business or corporate organization. Overall an ERP will always be a great option for any business owner in any vertical as regardless of your industry you will always deal with countless moving factors in order to run your business successfully. ERP implementation is highly valuable because saving time is the most valuable factor of all.

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