Business data is rapidly changing, and technology has changed with it. Today, spreadsheets aren’t enough for growing companies to track their data. Instead, businesses are increasingly turning toward ERP systems. While most business professionals have heard of ERP software, many wonder exactly what it means and what these solutions can do for business. Here, we’ll explain what ERP solutions are, how they work and how to decide if you need an ERP, along with the numerous functions, benefits and applications of ERP solutions.
ERP stands for enterprise resource planning. This type of business management software integrates applications across business departments. Originally designed for manufacturing businesses, ERP software has now expanded to a range of industries, including hospitality, healthcare and financial services.
While ERP software for specific industries features functions tailored to that industry, all ERP software solutions are built to automate business processes and data collection for core business practices. Those practices include everything from human resources and accounting to sales and marketing. The result is a more streamlined and efficient business with increased visibility.
What Do ERP Systems Do and How Does an ERP Work?
The term ERP was first used in 1990 to define the procedure of applying manufacturing resource planning concepts to other divisions like HR and finance. Since then, ERP systems have rapidly advanced to more comprehensive systems.
In its most basic form, an ERP solution is an application that automates business processes, provides insights and offers internal controls. But how do ERP systems work? The core feature for every ERP solution is a centralized database.
The ERP solution’s centralized database collects and stores data from every module across the company’s departments. Each module can pull information from this database, allowing each department to gain greater visibility of their own department and utilize data from others for process improvements. Authorized users in leadership can also use this database to compare and evaluate departments and company performance metrics. The database powers other functions of ERP software, too, including automation services, business intelligence and internal controls.
Key ERP Software Features
The functions and features of ERP systems vary depending on the specific solution. Most solutions share the following key ERP functionalities:
- Centralized database: ERP solutions feature a common database, which enables data from different departments to be collected, stored and shared through a centralized information hub. While the database may be physically split to improve performance, the database operates as one, eliminating data silos and facilitating cross-department communication and functionality.
- Company-wide integration: ERP solutions support and integrate processes across a business, connecting workflows to improve productivity, visibility and efficiency. For example, if a new order is placed, the ERP solution will support and integrate the process from order initiation to distribution to invoicing.
- Real-time operations: In an ERP solution, data is pulled and processed continuously, providing real-time operational data and insights. For companies, this means problems are identified quickly for fast remediation.
- Consistent UX and UI: Another feature of ERP software is the use of a single user interface (UI) with similar user experience (UX) across multiple departments and roles. Whether a staff member is working in inventory management or financial services, their interface will look and work the same as it does in another department. With this shared form and function, users across the company can quickly find and understand information no matter where they are in the business.
- Automation: Another main ERP feature is automation. ERP solutions can automate repetitive tasks, including payroll, invoicing and reporting.
Common ERP Modules
ERP software is characterized by some key ERP features, but they also offer a range of modules businesses can deploy across various departments. Some common examples of modules offered in ERP systems include the following:
- Accounting: The accounting and finance teams are usually early adopters of ERP solutions. ERP software can help automate and integrate various operations in the accounting department, including generating reports, sending invoices and inputting data from receipts. This module also presents significant analytical benefits for financial teams, as they can turn data into reports and forecasts for essential decision-making operations.
- Inventory management: Another commonly used ERP module is automated inventory tracking and management. ERP tools can track inventory and use data to predict when items will run out of stock and proactively place restock orders.
- Human resources: Human resources modules in ERP solutions can help augment HR operations through automated tracking and process management. An HR module can help track applications, manage PTO and benefit information and allocate bonuses. These modules can also assist with monitoring metrics, including retention statistics and pay scales, drilling down by department and role to provide a comprehensive overview of the company.
Other modules ERP solutions may offer include manufacturing, distribution, marketing, sales and even compliance management modules.
Types of ERP: On-Premise, Cloud and Hybrid
When looking into ERP solutions, one of the biggest differentiators is the deployment type. ERP systems may be cloud-based, on-premise or a hybrid model. Some vendors offer multiple deployment options, but with cloud-based ERP solutions becoming more popular, many are switching to cloud-only deployments. All three solutions offer unique benefits to meet different organizations’ needs. Consider the features of different types of ERP system deployments to decide what could work for you.
An on-premise ERP system is run by a business on its own servers. The business is primarily responsible for the security and maintenance of the software, usually performed by its own in-house team of IT staff. On-premise ERP solutions were the only option available for many years, and many businesses still choose to use these solutions. Companies may choose to use on-premise ERP solutions for the increased control over security and configuration, which can be important for highly regulated industries like the medical field.
Cloud-based ERP solutions are run on remote servers managed by a third party, not the business using the solution. The company gains access to its cloud ERP solution through a web browser or application. These cloud solutions may be private or public. In a private cloud, companies have their own dedicated server space, while in a public cloud solution, the server space is shared with other companies.
The primary benefit of cloud-based ERP solutions is that the third party manages the application and its infrastructure. This management format frees up a business’s IT team to focus on other functions and ensures the company is using the latest, most secure version of the ERP software.
Of the ERP solutions, cloud-based options are gaining the greatest traction due to their flexibility, scalability and accessibility and their lower operational costs compared to other deployment options.
A hybrid ERP solution is a combination of an on-premise and cloud deployment. In a hybrid approach, a user company keeps an on-premise ERP but augments it with a cloud-based ERP. These solutions are integrated to work as one, allowing the company to scale its ERP solution up and down as needed to meet its needs.
While this solution is highly flexible, it relies on a thorough integration between the two ERP deployments to work properly. That integration requires thorough and detailed management by internal IT teams and the third-party service provider.
Industries That Use ERP Software
Companies across a range of industries use ERP software, from small businesses to massive enterprises. The flexible solutions and excellent functionality of ERP solutions have made them a go-to for companies of all types. Just a few industries that commonly use ERP solutions include:
- Advertising, media and publishing
- Aerospace and defense
- Energy and utilities
- Financial services
- Medical and pharmaceutical
Certain vendors may offer solutions tailored to a single type of industry. But you’ll often find general ERP solutions that offer a range of customizable modules to meet the needs of various industries.
Benefits and Business Value of ERP Software
ERP systems have become an invaluable solution for businesses looking to improve their operations and resource usage. Some ERP benefits for businesses include:
- Visibility: One of the major benefits of ERP is the increased visibility it offers. Data and analysis give company leadership an in-depth view of the health of their company and provide valuable insights into specific processes. Even better, ERP solutions update data in real time, allowing decision-makers to track processes and make decisions based on the latest data.
- Automation: ERP software can automate various processes, especially repetitive numbers-based tasks that are vulnerable to human error. By automating tasks like billing, order processing and data entry, companies reduce their risk while freeing up their staff to focus on other value-added tasks.
- Collaboration: ERP solutions help promote collaboration by sharing data. With more accessible data, company leadership across departments can gain a greater understanding of the company and other departments. That accessibility encourages collaboration and helps improve decision-making processes. Improved access and collaboration also allow individuals to spot errors and areas of improvement more quickly.
- Analytics: ERP systems provide a range of analytical capabilities, including advanced reporting and data visualization options. These features help turn data into valuable information that can help identify trends and opportunities, allowing leaders to make more informed and insightful decisions.
- Efficiency: Through automation and process management, ERP systems can help unify and streamline a range of operations throughout an organization. Unified financial reporting, integrated order management and insightful HR data management can enhance the organization’s efficiency as a whole, leading to greater productivity.
- Agility: Through improved efficiency, ERP systems also enhance the agility of a company. The standardization, simplification and centralization of existing systems let companies adapt more quickly when making changes, helping them easily change with evolving markets and customer needs.
- Accessibility: Instead of shuffling through papers or scanning spreadsheets, employees have easy access to data through an ERP solution. A cloud-based solution enhances this accessibility, which allows users to log in from practically anywhere in the world.
In total, ERP solutions can help businesses build more efficient processes and reallocate resources to reduce costs without sacrificing performance.
How to Decide When Your Business Needs ERP
ERP software was originally designed for enterprise-level businesses, but today’s solutions are available and valuable for companies of every size and industry. So how do you know if your business needs ERP? Signs your business needs an ERP include:
- Company growth: If your company has grown and is finding limitations in your existing software, you’ve outgrown your existing technology. An ERP solution is an excellent next step for any business that has reached this point, especially if it’s expecting further growth in the future. Cloud-based solutions, in particular, will allow ERP scalability as the company continues to grow.
- Inaccurate data: High error rates in your data indicate that your company needs an ERP system. If your company’s audits are regularly identifying incorrect data, you need a different data management solution that can mitigate or eliminate those errors. An ERP solution can help with automated data collection and input, mitigating or even eliminating the chance for data errors.
- Lack of integration: Analyze your business and identify processes that span departments. Do some steps in those processes require manual inputs? Are departments regularly switching between software solutions? Is there some information that needs to be manually duplicated across systems? These are indicators that your company lacks integration processes, which an ERP solution can help you address.
- Process failures: Are you having trouble delivering products and services on time? With ERP software, your data is easier to access, and processes are streamlined with automation and integration, making it easier to collect reports and fulfill obligations in a timely manner.
If your business has one or more of these issues, you should look into implementing an ERP solution. While the initial cost of deployment can be daunting, your company will quickly experience returns on investment.
Choosing the Right ERP Solution for Your Business
Choosing an ERP system involves careful consideration. ERP solutions are critical business systems, so it’s essential to choose one that will support your company’s operations and goals. In reality, there isn’t one “best” platform for every business — each solution offers its own unique features and benefits that may fit one company better than another. So how do you choose an ERP solution for your company?
The first and most crucial step to choosing an ERP solution is to analyze your business and identify what it needs. Make a clear list of your company’s needs, wants and goals, as well as the main processes involved in your business structure. Be as specific as possible and identify the areas where your company cannot compromise, such as compliance and security requirements. With this list, you can evaluate different ERP solutions based on your core requirements.
Once you have identified potential solutions for your core requirements, you can assess your options according to their relative benefits. Some important areas to consider when comparing possible platforms include:
- Experience: It’s essential to pick an ERP vendor with experience working in your business’s industry. Collaborating with a vendor who knows your industry saves you time and ensures your ERP services will meet your industry’s regulations. Look at vendors that specialize in your industry or otherwise have a proven track record of success working with other companies in your industry.
- Support: You should also consider available customer support for ERP solutions. Investigate the support options available for deployments, updates and day-to-day problems. Make sure these support options align with your company’s needs and expectations.
- Customization: Consider the customization options available from a vendor and how they align with your business. If the solution requires extensive customization to deploy it in your company, it may cost more to implement and upgrade. If your company ends up needing customization, be sure the vendor you’re considering can effectively support custom builds.
- Reporting: A common area overlooked when assessing ERP vendors is reporting and metrics. Ensure the ERP solution you’re looking at offers the reporting options you want for your business based on the data you need to track and analyze.
- Functionality: Make sure the ERP solution will work with your existing office systems and software solutions. If the solution cannot integrate with what you already have, you’ll need to account for time to rework your current setup.
- Continuity: Look into how an ERP vendor is planning on taking their solution into the future. Consider the provider’s roadmap for implementing new technologies that are quickly rising in the business world, such as the Internet of Things (IoT). If your business is interested in mobile capabilities, be sure to ask about their mobile integrations and plans for future mobile updates.
- Scalability: Consider how scalable a solution is and how it will grow with your business. Are there modules available that your company may be interested in down the line? Will the infrastructure of the solution support your company’s growth?
During this evaluation process, be sure to include key decision-makers in your company. The more people on board with the decision, the better the integration and adoption process will be after you’ve made your selection.
Why Choose Multiview Financial Software as Your ERP Solution?
If you’re looking for an ERP option for accounting and other processes, Multiview is the solution you need.
Multiview Cloud ERP is a solution built by accountants for accountants. Our software goes beyond traditional accounting solutions, adding sophisticated ERP capabilities to help your company meet evolving demands. Our software offers capabilities in four areas:
- Core accounting: The Multiview ERP is a financial information powerhouse, providing core accounting processes and bringing your financial information within easy reach. Our modules in this area include a general ledger and accounts payable and accounts receivable management modules.
- Business insights: Our ERP solution offers an advanced business intelligence module with a powerful reporting environment. Business insights also include budgeting and forecasting capabilities along with project and document management functions.
- Business automation: The Multiview ERP solution automates workflows to streamline processes and maximize accuracy, especially in expense and time management functions.
- Inventory management: Manage your inventory and materials easily with our ERP solution. Our software assists with purchases, work orders and order management, simplifying processes so you can focus on your customers.
On top of our core capabilities, Multiview is a cloud-based solution with excellent scalability and top-notch security. Multiview ERP is powered by a secure cloud infrastructure of Amazon Web Services (AWS) and regularly tested for security. Our service offers a virtual private cloud for each of our customers, ensuring your data is isolated from other customers’ information.
Request an ERP Demo From Multiview Financial Software
We provide trusted ERP solutions across a number of industries. Multiview ERP is designed to meet the financial needs of your company, whether your organization is in the healthcare, education, utilities, financial industries or another field.