The current business arena is competitive and aggressive. Operational efficiency is the keyword and companies need to constantly innovate to stay ahead of their business rivals that’s why ERP is important.
Here is where technology can be a game-changer!
Businesses must adopt the latest tools and technologies to reduce operating costs, streamline workflows, and boost bottom-line results. Enterprise resource planning tools are one business asset that you simply cannot ignore – they can drive on-the-job productivity by facilitating financial management, supply chain functions, and inventory management.
Enterprise resource planning systems suites comprise a number of highly customizable and fully integrated applications that will allow your business to grow efficiently. Companies need to understand the need for ERP systems and their relevance to end business objectives.
ERP software is a cost-effective method to increase operational output, streamline work processes, and improve productivity. There is no doubt that implementing ERP software is the best thing that you can do for your organization.
So let’s dive deeper into the world of ERP solutions and learn why ERP is important for all kinds of businesses.
What are the Uses of ERP Systems?
Enterprise Resource Planning (ERP) system is the answer you were looking for! In the simplest of words, the role of ERP in business is to make your job easy by integrating the core business processes in your office and helping you manage it smoothly is what we call ERP.
The most used core processes include manufacturing, finance, HR, services, sales, customer support, procurement, supply chain, and many others. Enterprise resource planning system merges these various processes into a single system.
The ERP software industry is taking huge strides. The global ERP software market is expected to reach $86,303 million by 2026, growing at a whopping 9.8 CAGR from 2020 to 2027. We cannot highlight the importance of ERP system technology enough! The main advantage of ERP is that it creates leaner and more efficient workflows and improves 360-degree visibility into core business processes.
As such, organizations can study processes, earnings, and performance closely by merging their operational information with their financial information. This, in turn, helps the business to get accurate and integrated information, take speedy and effective decisions and improve performance as well as cut costs.
12 Reasons Why ERP is Important for Business
While ERP systems were initially conceptualized majorly for manufacturing firms, they are now used by all industrial sectors such as retail, pharmaceutical, construction, banking, and Government organizations. There are tons of reasons that emphasize the importance of ERP platforms in the current business scenario. ERP software eliminates redundancy and automates routine tasks to save time, effort, and money.
ERP solutions should be on the wish list of every organization striving to make a mark in the competitive business ecosystem! So let’s go ahead and understand why ERP is important in the current scenario.
1. Robust Supply Chain Management
A question that managers are facing for decades is what ERP can do for the supply chain management. In the initial years of technology, ERP solutions were non-customizable & hence never meets every industry’s unique supply chain demands. But today, things are different. These days ERP software can be customized up to that level which can meet every firm’s requirements. Moreover, it allows the manager to connect with suppliers, customers, and every person involved in the supply chain.
ERP tools allow real-time data to be easily exchanged, which is very much helpful when customer demands are dynamic but suppliers are not flexible. This ensures that your inventory management system remains accurate and there is no shortage of stock that can lead to unnecessary delays.
The importance of Enterprise resource planning facilitates last-mile transparency, reduces lead time of inventory management, and enhances customer satisfaction. The concept of just-in-time inventory has been aptly supplemented by the inclusion of ERP in a company’s business model.
2. Real-Time Business Intelligence
One of the uses of ERP systems is to collect data from different sources such as sales records, inventory, marketing, customer service, supply chain, etc. If these data sets are studied individually, they do not provide a complete picture of consumer trends and preferences. One needs an ERP system to have a comprehensive insight into consumer preferences and real-time business information.
Source: Wikipedia
Traditionally, a manager used to export different sets of data into excel to analyze them. Now, with the use of ERP, the system itself generates customized, which leads to on-spot analysis. Moreover, it also provides up-to-date business intelligence, resulting in faster and more accurate decision-making. Senior leaders and managers can utilize real-time data provided by ERP systems to tweak marketing strategies, product offerings, and pricing.
3. Standardize Workflows
ERP impact on business that duplication can be eliminated. ERP technology can be used by organizations to standardize complex business processes and lead to uniform and structured output production. This can stop discrepancies in customer experience across locations and lead to streamlined workflows.
ERP is especially helpful when it comes to businesses that operate in multiple countries. Moreover, there are different ERP modules available to automate processes such as accounting, customer resource management, distribution, finance, human resources, inventory, manufacturing, payroll, sales, and many more. This enables companies to manage all crucial functions in a holistic manner and boosts operational efficiency.
4. Streamline Operations
Most modern businesses have extremely complex and diverse business operations. The importance of an ERP system is the perfect way to automate your business processes seamlessly and minimize repetitive, time-consuming tasks. Uses of ERP increase the cross-departmental flow of information, provides real-time reporting, and help users navigate complicated work procedures with ease.
In manufacturing firms, ERP systems help a great deal by streamlining the entire production schedule, order fulfillment, and delivery by ensuring all processes remain right on track. This improves the efficiency of routine operations and ensures you have access to real-time information to make informed business decisions.
5. Reduce Operational Costs
One of the reasons why ERP is important? The ultimate objective of every firm is profit maximization. Automated workflows reduce overall costs by streamlining tasks and removing bottlenecks created due to delays in information sharing among employees. This leads to year on year reduction in operating costs, which could be very high in certain industries.
Moreover, since worker productivity improves, overtime costs can be reduced. Also, ERP in production manages wastage to a minimum and can reduce production costs.
Since the bottom line improves, product decisions are more accurate which leads to higher revenues and return on investment. For example, historical sales data combined with real-time demand can be used to determine future demand trends. This can help in reducing overproduction and losing money in the form of inventory carrying costs. Also, from an IT perspective, the customizable feature that an ERP system offers reduces the costs incurred to modify IT systems over a period of time.
Source: Medium
6. Business Mobility
Another importance of ERP systems is that your team members can have access to a centralized database from anywhere in the world. It is the best platform for teams with highly mobile workforces, as all they need is a working internet connection to access to ERP system from their mobile, personal computer, tablet, or laptop.
There is no requirement for your employees to remain restricted to the office as the company ERP database can be logged into from any remote geographical location. This enables employees to conduct tasks on the move and ensures they can work from anywhere, anytime without any hindrances.
7. Strengthen Data Security
The privacy and security of sensitive organizational data is a huge challenge and managers have to take precautions to make sure that company information is not misappropriated. Modern ERP systems utilize advanced user-permission settings, ensuring that only authorized personnel has access to vital company information.
The settings can also be customized to make sure that specific users can only access what they need from the system. Modern ERP tools have sophisticated features such as password protection, data encryption, and layered user access control to ensure no unauthorized personnel can misuse important company information. The use of ERP systems is a sure-shot way to boost the overall security of your unified organizational database and prevent information from landing in the wrong hands.
8. Better Managerial Decisions
If we talk about the importance of ERP solutions the one aspect that we cannot ignore is its contribution to better managerial decisions. Using non-standardized and disintegrated data often does not give top management all the requisite information they require to make good-quality decisions. Cloud-based ERP systems are well-equipped with a diverse range of business applications that provide forecasts, comparisons, reports, and graphics for team members to make better business decisions.
Enterprise resource planning tools have user-friendly and highly visual dashboards, thereby enabling managers to get information updates through a quick glance. It enables you to drill down deep into organizational data to understand key performance indicators and improve performance through proactive actions.
9. Regulatory Compliance
The business environment is dynamic and fast-paced with all legal regulations changing at regular time intervals. It is often difficult for companies to keep track of new laws and regulatory changes, which leads them to default unknowingly. One of the key reasons for enterprise resource planning is that companies do not default on mandatory regulations; hence they do not need to worry about any legal penalties that may be expensive and time-consuming.
Why ERP needs in business? ERP systems have the advantage of keeping track of regulatory policies in the industry to make sure that your company is keeping on the right side of the law. There is no need to worry about governmental hurdles, as your ERP suite will automatically update the latest changes and make sure that your organization complies with all requirements.
10. Scalability
ERP is the biggest asset for companies that are growing or diversifying at a fast speed. One of the main reasons why ERP is important is the fact that it is scalable and can accommodate the business requirements of expanding operations. ERP software has the facility to allow new users and functions that can increase the level of an implemented system. Users can also purchase specific new modules that they require at a later stage for business requirements.
It is important to choose a vendor that will allow for easy scalability of ERP systems, so as to avoid a major system change when your business grows in size. When your business increases, ERP software can easily expand resources and seamlessly fit into your new business model – boosting up productivity and yield!
11. Accurate Forecasting
One of the primary reasons for the need for ERP is its accurate forecasting powers. It provides users with a suite of tools that they need to make accurate forecasts to help them think ahead and plan for the future. Organizations can use powerful analytics to forecast sales, inventory, and finances to chalk out strategic objectives and make better business decisions.
Many startups also use ERP systems to plan budgets and improve financial management. With accurate forecasts, companies can reduce operating costs dramatically, provide realistic estimates to various departments, and obtain important business intelligence in real time.
12. Improve Organizational Communication
One major challenge for business organizations is to maintain the flow of communication between hierarchies and departments. Investing in an ERP system is a smart way to help your employees connect and collaborate on important projects. It enhances the seamless flow of information and allows team members to share documents, reports, images, and files with the click of a button!
Most ERP software has a host of features that enable employee communication through group chats, project management applications, and file sharing. This empowers teams, especially those with remote members to stay connected, communicate regularly, and create a healthy work environment.
Closing Thoughts
Any organization can completely transform its bottom-line results by implementing ERP systems – they are sure to notch up all performance parameters in the long run that’s why ERP is important.
So make sure that your jump on the ERP bandwagon before it’s too late – invest in a comprehensive ERP software suite to witness a revolution of positive change in your organization!
Supriya is a senior content writer with vast experience in writing about technology for various industries. Interactive, synergetic, and influential content is what she believes can make a positive difference in our daily lives!
