Defining ERP so We Can Tame Its Implementation
ERP are three letters that can strike fear into any executive in charge of systems and processes across all functions of the business. For a legacy business with legacy systems – likely meaning many end-to-end business processes still have a pen-to-paper method of tracking and follow through – the thought of a complete or partial ERP implementation boggles the mind.
Have no fear. There are experts like Strategic Solutions NW, who have for 20 years assembled a team of knowledgeable professionals who have perfected managing ERP system updates and implementations for businesses of all types and sizes.
What is ERP?
ERP stands for Enterprise Resource Planning. Gartner defines ERP “as the ability to deliver an integrated suite of business applications.” Common ERP tools manage data across all business functions, including finance, HR, distribution/supply chain, sales, service, and manufacturing.
Think of an ERP system as the hub through which all data passes, so the business can link all aspects of its operations to see correlations between HR, sales, finance, and more. An ERP system provides business leadership with a holistic view of how the business is operating and allows for more nimble decision making.
“ERP deployments are complex and expensive endeavors, and some organizations struggle to define the business benefits,” says Gartner. “Look for business benefits in four areas: a catalyst for business innovation, a platform for business process efficiency, a vehicle for process standardization, and IT cost savings. Most enterprises focus on the last two areas, because they are the easiest to quantify; however, the first two areas often have the most significant impact on the enterprise.”
How do ERP Systems Function?
As mentioned above, an ERP system is truly the hub of business operations. It’s the central database for housing all the information from the disparate business systems (finance, HR, supply chain, and the like). It also provides the consistency needed to make sense of data coming in from all the individual systems. Once HR and finance data, for instance, dump into the ERP system, it can be assessed together in a visual manner so it makes sense for reporting out to business leadership.
A simple example is to think of ERP from a sales and fulfillment lens. Customer orders come in. To fulfill the order, someone enters the customer data into the ERP system, checks product availability in the inventory portion of the ERP, then arranges shipping to the customer.
But the process does not stop there. If the customer paid in advance, that information is logged and recorded in the ERP system. If the customer is billed upon receipt, that information is entered into the system. Accounts receivable and accounts payable data is logged when appropriate and the transaction is reconciled with the recording of revenue and payment to the business’ bank account.
That’s one simple transaction example. Imagine that happening thousands of times over not just on the customer sales and fulfillment side, but for manufacturing goods and inventory management, payroll, and more. ERP done correctly helps eliminate the number of manual inputs required; automation takes over and efficiencies are created.
What ERP System is Right for Your Business?
Size does matter when it comes to choosing an ERP system. Small businesses can be quite successful with what we call entry-level ERP systems. As long as finance and HR, and perhaps customer relationship management (CRM), is part of the setup package, most small business can operate just fine without the expense of larger systems. More items can be added on as the business grows.
The larger the business, the more add-ons that are needed, which increases the complexity. Not only are there more systems to be managed and funneled to the hub, there are a lot more users adding inputs to the system, pushing data and making sure that data is complete, accurate and up to date.
Other factors to consider are the age of the business and the age of existing systems, if applicable. South Coast Lumber is a case study in bringing a legacy business and systems into the 21st century. Strategic Solutions NW was able to implement Microsoft Dynamics 365 Finance and Operations for the privately held, family-run, timber business on Oregon’s south coast.
The result was significant reduction in costs and risks, a move toward automated workflows, the allocation of workforce resources to core business needs, and systems training that empowered all employees to contribute to business growth – and allowing for onsite staff to follow a train-the-trainer model.
It wasn’t easy, with old systems being completely overhauled or replaced, but SSNW supported the business from strategy through implementation and execution.
Check out our ERP Implementation page to learn how to get started. Here are our core strategies we lean into when guiding a business through an ERP implementation:
Planning and Discovery