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What is ERP? Guide to enterprise resource planning

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ERP is an acronym that stands for Enterprise Resource Planning. It is used by numerous businesses to manage their sales, Customer Relationship Management (CRM), supply chains, and finance, all within one efficient solution.

By integrating various datasets, businesses can maximise their productivity and efficiency levels while also gaining new insights into their business to plan their business growth strategy.

What is an ERP system?

An ERP system is backend software that provides a real-time overview of a business’s resources — including cash, raw materials and production capacity — and the status of its business commitments, such as orders, purchase orders, and payroll.

A typical CRM will integrate different components of computer software (instructions and operations) and hardware (physical systems you can touch) to create an iterative database that is capable of storing and adapting data for various system models.

Different types of ERP systems

When deciding which ERP system is best suited to the needs of your business, a critical factor will be choosing between a cloud ERP or an on-premise ERP.  We’ve outlined the specifications of each, to help you decide the best match for your business.

Cloud ERP systems

  • Hosted on the provider’s server, accessed through a browser
  • Typically priced under monthly subscriptions, with added bolt-on fees for extra features or training
  • A cheaper upfront investment than on-premise ERP systems
  • Data protection and security is the concern and duty of the provider
  • Businesses can collaborate with the provider to make custom features
  • On average, requires less time to implement than an on-premise ERP
  • Provides access to several hundred users at once

On-premise ERP systems

  • Businesses will host the ERP themselves, as opposed to the provider
  • Paying a larger upfront sum for the system can reduce the initial price
  • The organisation will manage data security and protection
  • There is a greater ability to customise the system without contacting the provider
  • The business has a large input and control over ERP implementation and request for changes

Mobile ERP systems

Mobile ERP, also known as ERP hosted services, is crucial in maintaining the smooth operations of a business, outside of the four walls of the day-to-day environment. This is now more crucial than ever, as new research shows that more than half of employees in the UAE work outside of their office at least one day each week.

Mobile ERP implementation helps:

  • People continue working on projects remotely from any location, at any time.
  • Prevent inaccuracies, as employees are able to enter data as and when they receive it directly.
  • Add additional value for customer management, especially for those within the retail environment who can work iteratively with their point-of-sale system to scan inventory and make transactions.

What are ERP modules?

Enterprise Resource Planning software comprises different modules that work in unity when the programme links them all together. For example, it can link your HR software with your payroll software. Each module works together to build the full system, meaning that it’s highly customisable and can be tailored specifically to the needs of your organisation.

Different modules will represent a different area and necessity of the business. The most rudimental ERP systems will include:

  • Human Resources
  • Inventory
  • Sales and Marketing
  • Customer Relationship Management (CRM)
  • Finance and Accounting
  • Purchasing
  • Supply Chain Management (CRM)

Depending on the scale of your business and operations, you may choose to have more or fewer modules set up, which will consequently impact the implementation time. One example of this, is that a large company may need several modules just for its project management (e.g. Gantt charts, time tracking, document control, etc) whereas a smaller business may only need one or two modules to keep track of projects.

The benefits of ERP systems for small businesses

Introducing an ERP system to your business can improve efficiency considerably. Some of the benefits for small businesses include:

  • Integrated data that allows departments to work collaboratively while minimising the errors and time associated with re-keying in important datasets.
  • Single view of the data that lets managers manage business processes, spot inefficiencies and find new ways to make improvements.
  • Sole supplier to avoid issues with incompatible data and time needed to generate reports.

ERP implementation for your business

Switching to an integrated ERP system is a big step for many businesses, but it’s also a sign of success. Here are helpful steps to follow before starting ERP implementation in your business:

  • Ensure your business has the development staff to implement an ERP system successfully;
  • Appoint a project leader to take responsibility or hire an experienced ERP expert to provide consultancy;
  • Identify the business data required to migrate from any existing systems;
  • Allocate your employees enough time (both before and after the ERP has gone live) to identify and adjust to their new business processes, while balancing their normal duties. Training time is best split across the week, rather than bulk given in one day;
  • Assess whether the software needs customising to allow you to meet your business objectives;
  • Draw up timelines for each stage of the implementation and set a realistic launch deadline; and
  • Define a set of Key Performance Indicators (KPIs) that you can use to measure the success of the ERP system once it has been implemented.

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