Enterprise resource planning software (ERP) was once solely the province of large corporations looking to run their entire operation from a single software framework. Today, the cloud allows small to midsize businesses to take advantage of ERP’s benefits, too.
Enterprise resource planning (ERP) software was originally developed for large organizations to manage their entire operation from a single software console. During their early days, they required loads of on-site servers and lots of individualized software customization.
Today’s ERP implementations, however, are mostly delivered as cloud services, which makes them not only accessible but even attractive to small to midsize businesses (SMBs). Largely for this audience, we’ve reviewed 10 enterprise-level general ledger accounting software solutions from vendors that are also able to extend their product suites to full ERP functionality.
These suites are designed in a modular fashion for the most part, which means you’re able to purchase only the features your company needs. The suites are also squarely aimed at the small to midsize enterprise (SME) market. Typically, we review products that are aimed either at SMBs or enterprise organizations. The SME designator is less an indication of size than of the complexity of the business.
To make an investment in ERP software worthwhile, a business should have a need for custom business processes, multinational commerce, fairly complex manufacturing, or complex supply chain requirements. That’s where SMEs become the better indicator rather than SMBs. An SME can still be roughly the same size as a high-end SMB (figure SMEs will typically grow between 100 and 1,000 employees), but it’s a business with enough complexity and high-end requirements that will make the move to ERP a good investment.
ERP generally describes a modular software solution that incorporates the financial side of the business and then adds closely integrated app modules that address other areas of the business, including business intelligence (BI), customer relationship management (CRM), Materials Resource Management (MRP), and Supply Chain Management (that is, logistics). MRP includes capabilities such as fixed asset management, Just-in-Time (JIT) Inventory, point-of-sale (POS) systems, and project management.
In essence, Enterprise resource planning software is a systemic approach to managing the entire enterprise, not just its finances. By integrating all of these modules into a single, cohesive whole, customers can gain new insights and create new processes that weren’t possible using separate tools.
For example, most ERP systems also enhance accounting and overall management by adding features or capabilities to enhance a basic payroll tool into a more comprehensive human resources (HR) management framework, or to expand inventory management to more closely adapt to the specific type of business the customer operates, such as companies that center around warehousing or distribution.
When looking at a company’s management information systems portfolio, it’s sometimes not obvious that a generic app may not be the best approach. A good example of this is payroll. The payroll for a service organization, for instance, incorporates time and billing and possibly expense management; it’s considerably different from the payroll that should be used for a food and hospitality organization, which requires that the company track employee tips.
And that’s very different from payroll for a construction company, which often requires multiple rates for the same employee depending on what job they’re performing (and also has to report to multiple unions).
Inventory is another area in which needed functionality differs depending on the type of business. For example, the inventory for a manufacturing company might require component tracking using bar codes to identify parts bins as well as Bill of Materials Processing (BOMP) that provides a list of all the parts and subassemblies needed to construct a particular product, or even Kitting, which consists of inventorying and tracking subassemblies rather than discrete parts.
The point is because Enterprise resource planning software (ERP) platforms are (a) modular and (b) so broad in terms of the situations they address and the features they provide, the planning process for choosing the right ERP solution begins at home—long before you actually speak to a vendor. You need to start your selection process by sitting down with the front-line managers of all your key business processes, and mapping out exactly how your company does business.
Exactly how do your web customers go from a credit card transaction to a shipping box arriving at their front door? How are payments processed, orders fulfilled, warehouses managed, inventory moved and tracked, and shipping orders picked up and delivered? How is all of this information used to provide ongoing BI for the organization?
What kinds of information aren’t you getting that you really need? The list of appropriate questions will get much deeper in the real world and extend far beyond the typical IT questions that get asked before installing SMB software (such as servers required, per seat licensing costs, etc.), though those questions still apply to ERP as well.
The reason you need to get a comprehensive understanding of how your company does business is that ERP systems not only run the gamut of business process features (as discussed earlier) but they also provide varying degrees of integration between their various modules. With standard SMB software, it’s rare to find direct feature synergies between warehouse management and the HR framework, for example.
But with an ERP system, not only can that be possible but you can also tweak that integration to work even more effectively for your organization. For specialty warehouses that store specialized inventory (like dangerous chemicals, for example), your HR system can automatically kick in its shift-management capabilities to make sure that, when such chemicals arrive at a particular warehouse, the right staffers who have the skills necessary to handle those chemicals are there to receive and store them.
That’s just one example out of myriad possibilities. What’s possible for your organization is entirely dependent on the capabilities of the ERP platform and how well you understand how your business really runs. Contact Musato Technologies to learn more about our innovative ICT solutions that empower businesses.
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