What is an ERP System?

There are a lot of things to manage when it comes to modern business.

Keeping your finances balanced, your team engaged, your operations moving and more… it’s a tall order, especially if all of these functions are being tackled by different pieces of software.

With this in mind, it’s easy to see why there’s been a surge in demand for ERP software. The global ERP market has grown by 8% since 2022 across geographies, company revenues, and sizes – showing that this is continuing to occupy the minds of business leaders everywhere.

If you’ve never looked into an ERP system, you may be wondering what the fuss is all about. What is an ERP? Do I really need one? And what makes one piece of ERP software better than another?

In this article, you’ll get the answers to those and other common questions about ERP software to help you decide if it’s a good next step for your business.

What is an ERP system?

Firstly, the acronym. ERP stands for Enterprise Resource Planning. It’s a software tool that helps businesses manage and connect their main activities on one platform, working as a sort of central hub.

Why are ERP systems useful for modern businesses?

1. They Increase Efficiency

We alluded to it at the start – tracking all your business outcomes is challenging at the best of times. ERPs let businesses quickly access the data they need, and immediately put it to use for clients, vendors, and business partners. Trimming multiple systems down to one also helps streamline the business as a whole – leading to improved accuracy, response rates, and – most importantly – customer satisfaction.

2. They Make Your Data More Accurate

Whatever industry you’re in, chances are it’s constantly changing. What may have been an accurate picture to give to a client a few days ago could have altered completely. Unless you’ve got a view of all sources of information, you run the risk of giving them something that’s incorrect.

Having an ERP system makes the above outcome less likely. Through it, waiting times for data updates are shorter – even non-existent. You can be sure that, with the ERP working in the background, you’re always giving your clients information that’s correct from all angles, making for fewer headaches in the long run.

3. They Support Business Growth

As nice as it might be, no business has a crystal ball. Growth, like many things, can come when we least expect it – and that’s not always at a time when there’s spare money to put into a new system. An ERP system is more cost-effective, and immediate. Instead of having to install something entirely new, you can add computing power or data storage without having to burn a hole in your budget.

4. They Give A Competitive Advantage

All of the benefits mentioned above can lead to one bigger benefit. Taken together (or even individually), accurate data, increased resources and more efficient processes can give you an advantage over your competitors.

What’s more, ERP systems can make your business more agile – meaning you’re better placed to respond to market trends and customer demands as soon as they arise.

Types of ERP Systems (And Their Uses)

Not all ERP systems are created equal. One of the first steps to reaching those benefits we’ve talked about is making sure you have the type of system that will work best for you.

On-System vs Cloud-Based ERPs

In the beginning, all ERP systems were on-premise. The system was installed directly onto company servers, which is still a popular choice if a company wants to maintain full control of the system and data. However, it can be more costly as it requires dedicated IT resources.

Cloud-based ERPs are a more modern invention – and with their modular, subscription-based models, they’re more reflective of the needs of a modern business. As such, cloud-based ERP can be a better option if you’ve got ambitions of growth which the system will need to accommodate.

How Much Does An ERP Cost?

Cost is, of course, crucial when weighing up your ERP options.

It’s not just the type of ERP system you choose that can influence this. Modules, maintenance, and training can all play a part across the total lifecycle, as can hidden costs like “charge per transaction” instances.

Of course, this should all be weighed against the potential return on investment, especially in the longer term once the system has had a chance to bed in. Getting the figures may take time, but it will allow you to go into discussions with a clear financial view – making it time well spent.

What Should I Look For In An ERP?

Meeting Business Requirements

Whether or not an ERP system matches your business requirements should be the most important factor in your decisions about it. Having these clear in your mind early in the process will mean you can eliminate some contenders right off the bat, and bring other providers to the front of your mind. It’s easy to get overwhelmed here, so a good practice is to break your wish list down into non-negotiables, and those things that would be nice to have but aren’t a requirement.

Data Visualisation

This goes back to the “central hub” idea. Having key information presented in an easily digestible format not only means decision-making is quicker but also more democratic, as even those without in-depth knowledge can pick up on trends.

Automation

Since one of the biggest reasons behind getting an ERP system is to make processes faster, a good ERP should be able to automate your repetitive tasks, while still giving the user enough autonomy to check things manually if they wish to.

Vendor Reputation

A software vendor’s reputation amongst your peers can tell you a lot. One worth its salt will have more than great reviews – look out for specific praise of things like its support service, as this can impact how the usefulness of your ERP system long after it’s been installed.

User Friendliness

It goes without saying that if a piece of software is difficult to use, you won’t get much business value out of it. This is why a good ERP system will have ease of use at its heart. This extends beyond just the features and interface, encompassing more tangible aspects like staff training.

Security

Since your ERP system will be handling huge amounts of data, it’s in everyone’s best interests to make sure its infrastructure is secure. What that means can look different for each ERP system, in each industry, but some baselines are encryption capabilities, access controls, audit trails, and compliance certifications.

ERP systems offer a powerful solution for modern businesses, whether you’re looking to expand, do more with data, or just get that one step ahead of your competitors. Taking the time to choose the ERP system that fits your industry needs will give it an even better chance of being an important tool in your future success.

PKF Smith Cooper Systems has been working with businesses across the UK to implement Sage 200 and Sage Intacct for the last decade.

To learn more about why we’re “The Good Sage Guys to Deal With”, contact us on 01332 959008, or use the enquiry form.