How do I use ERP software
What actually is an ERP system? Everything you should know about ERP systems
ERP systems as all-rounders in everyday business
What is an ERP system? If you have already asked yourself this question or are looking for a more in-depth overview of the functions, areas of application and information on introduction, then you have come to the right place. Because ERP systems are increasingly popular with small and large companies due to their centralized approach to business processes.
With ERP software solutions, data from different business areas recorded, stored, managed and interpreted become. ERP is also used to carry out administrative tasks automate and cross-departmental workflows too optimize. With the optimized business processes, ERP systems can increase efficiency in the company, reduce costs and at the same time increase profitability.
However, by no means all companies have an ERP system in use. Many simply do not have an overview of the various functions and do not know what to expect when implementing it. Therefore, we want to give you a brief overview of the Functions, Types and advantages of ERP software solutions. This will give you a better idea of how much time and budget you should invest and why you should use such a system in the first place.
The ERP provision, updating and maintenance used to be very complex - it is different today
In the past, ERP was only accessible to very large companies because the complex provision, updating and maintenance required special hardware, servers, workstations and a lot of know-how.
Today, however, thanks to SaaS technologies, you can also use it as a small and medium business benefit from ERP solutions. While modules are sold separately or offered as a package, the hardware and technical maintenance are managed by the providers. The functions of the ERP solutions can therefore be reduced or limited to a few functions. This way, companies of all sizes can benefit from the advantages of ERP software!
Reasons why ERP platforms are implemented are primarily to improve business performance (64%), position the company for growth (57%) and reduce human capital (57%), according to an ERP trend study by Accenture 2019 .
Scalability is another reason why ERP as SaaS is becoming increasingly popular with companies of all sizes. ERP systems no longer necessarily have to be used completely, but one can Choose a combination of certain modulesthat corresponds to the respective requirements. The modules are mostly aimed at a main business area, such as accounting, payroll, human resources, inventory management, marketing or product planning. CRM modules can also be selected in more complex systems.
If you are still wondering whether you need an ERP system, please read on!
What actually is an ERP system?
A Enterprise Resource Planning System (ERP System), or resource planning, is an amalgamation of several applications that Manage business processes. This includes sales, purchasing, accounting, human resources, customer service, CRM and warehouse management. It serves the Bundling, support and control of all necessary Business processes in the company. An ERP system digitized the process of resource planning and helping companies get through automation and Data management and therefore more accurate information make better decisions.
Why should one use such a solution?
Why should you use an ERP system at all? In addition to answering the question of what ERP is exactly, you should consider the advantages know when you are using such a solution. First of all, an ERP system is used for Business process improvement in the company. The main advantages are that the Increased efficiency, Processes streamlined and the internal and external Communication promoted can be. This ultimately leads to a better business results. But here now to the individual advantages of the software:
1. Increase in efficiency:
By integrating business processes such as sales, marketing, accounting, production and inventory into one platform, collecting and accessing data across the company is made much easier. This way, cross-departmental workflows are optimized. It also automates everyday tasks such as entering data or generating reports. This allows teams to concentrate on their core tasks again, because repetitive processes are no longer necessary. For example, sales can instantly access sales statistics from the last month without having to request a report. Another important advantage is that important decisions can be made much more efficiently on the basis of quickly available data. This is particularly important for decision-makers in the company.
2. Promotion of cooperation:
This point is actually also part of efficiency: ERP systems promote cooperation between departments. Teams can work together wonderfully thanks to data silos and a process highway that connects the various workplaces. Improved communication through fewer misunderstandings promotes the climate of the entire company and increases efficiency. An invaluable asset for any company.
3. Increased data security:
A centralized point of contact for sensitive data makes strong firewalls and restriction controls essential. ERP systems therefore have particularly strong safeguards to prevent data breaches. This also means that the access points are strictly monitored and security is concentrated in a centralized place. The administrator has the flexibility via user authorization rules to lock sensitive data while simultaneously accessing other information.
4. Promote compliance with industry regulations:
Many ERP solutions contain integrated process standards and compliance regulations to help companies meet numerous industry regulations.
5. Accurate predictions:
Using a centralized database enables companies to make accurate predictions faster. Various reporting tools contain filters and analyzes to check data for inconsistencies. In addition, business intelligence and big data play a major role in many ERP software, which companies can use to secure many competitive advantages.
6. Increase in operational flexibility:
As a modular solution, ERP has the advantage that additional modules can be added at any time as the company grows. This means that the system no longer has to be replaced with new software. This gives you maximum flexibility. SaaS ERP also offers high mobility, as you can access the software from any device on the go, provided you have an Internet connection.
7. Reduction of operating costs:
Cost reduction is another advantage of ERP solutions. If you can streamline processes and monitor important key figures, then interruptions, delays and failures are anticipated or the effects are better absorbed. Production, trade and sales are prone to failure. Centralized databases enable the various business areas to work more closely with one another on the basis of real-time data and solve problems that arise more quickly. This allows you to reduce operating costs.
What are the benefits of an ERP system?
An ERP system is used for technical support of standardized processes in all areas of a company. Since there is a central point for everyone in the company Data there, tasks such as payroll, which were previously laboriously calculated manually, are now automated taken over by the software solution. The data is stored at any time, always current and Completely. This saves you a lot of time and makes good use of your employees' working hours.
The timeliness of the data means that at any time immediate information can be obtained via important key figures in the company. The data can also be clearly evaluated. Internal communication in the company is also significantly improved because all employees access the same database. This means that all information is always up-to-date and fewer errors occur.
Which modules and functions should ERP systems have?
Of course, not every company needs a huge system with all the functions that have ever been developed. ERP systems can fully integrated or as Modular solution can be used. The requirements for modules differ depending on the size of the company and the industry focus. However, the following functions have established themselves as standard
- Merchandise management (Purchasing, materials management, order processing, warehouse management, shipping)
- Production planning (PPS, CRP)
- CRM / XRM (Business partner relationship management)
- Finances (Accounting, bookkeeping, cost accounting, etc.)
- human Resource (Payroll, payroll, vacation management, etc.)
What ERP software is there?
There are different types of ERP systems. This can be subdivided according to functional level, company size or provision. To simplify matters, ERP systems can be categorized as follows:
- Cross-company ERP systems for large companies: These systems are characterized by the full range of functions and their suitability for many locations, divisions and areas of application (e.g. SAP, Oracle)
- Open source: Systems that are freely available on the market, without license costs, but costs for support and implementation (e.g. Odoo, Metasfresh)
- Vertical ERP systems: Typical industry systems (e.g. plastics, wood, chemical industry) with industry-specific solutions (e.g. Axavia)
- ERP for small to medium-sized businesses: Cross-industry ERP systems that cover both the trading process and production coverage and are typically offered in a modular manner (e.g. ERPframe, Navision, Sage)
What does an ERP system cost?
The cost of ERP systems differ depending on the customer specific requirement. They are based on factors such as Number of users, modules, installation, maintenance and training. Therefore, a precise analysis of the company and its structures is required in advance.
Generally arise three types of costs when integrating an ERP solution:
1. Internal costs:
Internal costs amount to a potential decrease in productivity during the implementation phase. This can arise through necessary training or familiarization periods for employees. These costs can be reduced through close cooperation between employees and providers.
2. Direct costs:
Direct costs are to be equated with the actual acquisition of the software and can be determined by two factors:
- Number of users: The more users an ERP software needs, the more licenses are required.
- Range of functions: The more modules are used, the higher the investment costs.
3. External costs:
External costs are training, maintenance, adjustments and support by the provider and therefore differ greatly.
Should you buy, rent or lease an ERP system?
ERP systems are available from a wide variety of providers with a wide variety of business models. There are systems for purchase, leasing or rental.
- purchase: The advantage of buying an ERP solution is that the rights of use, modules and user licenses are completely owned by the buyer. So you can use the software indefinitely and without restrictions. Additional modules or features can be purchased later. The disadvantage is the high investment amount that has to be made at the beginning. In addition, there are regular maintenance and service fees.
- leasing: As with leasing a car or other item, a monthly sum must be paid as a leasing installment to the bank or a special leasing company. This means that the total amount does not have to be made in one go. However, the overall costs are usually higher in the end than with a purchase. The rights of use are transferred to the company when the leasing contract expires.
- rental fee: When renting an ERP system, there are usually periodic rental payments that also include maintenance costs. Usually such rental models are offered as SaaS products (Software-as-a-Service) or cloud solutions. This of course goes easy on the wallet. However, the company never enjoys ownership of the rights of use and the total costs are even higher than with leasing or buying.
What is the advantage over other IT systems?
ERP systems have many advantages over other systems such as CRM solutions. Especially in smaller companies are often Island solutions used, i.e. different programs for different areas of responsibility in the company. Purchasing, for example, needs an inventory management program, while sales use a CRM system in which customer data is saved.
The disadvantage of this variant is that these software programs no data connection among each other use. Due to the lack of communication, no data can be exchanged within the programs. This easily creates data differences and the risk of incorrect information being passed on is high. Processes are slower and more cumbersome.
Here is the one Advantage of ERP systems, because these are tailored to the respective business processes and data processing. Your employees can feed data into modules as required, which in turn can be used by employees from other departments. Management and every employee have access to the same data at all times. In this way you can make your business processes more efficient and increase the profitability of the company in the long term.
Which companies are ERP solutions suitable for?
In principle, ERP software is suitable for every company. The criteria as to whether an ERP investment in your own company is worthwhile does not depend on the size of the company or the industry. What is more important is how the data structure is structured. Because the more departments are networked with each other are the more makes more sense is the use of software for data management and processing.
Since the cost factor usually plays a bigger role, especially in small and medium-sized companies, you should carefully consider which ERP system is the right one before investing. Because a changeover to a new system becomes more and more expensive and time-consuming as the company grows. You should therefore analyze exactly which functions you currently need and which functions may still be relevant in the future. For this reason, they are particularly suitable for small and medium-sized companies modular ERP systems depending on your needs and budget expanded can be.
Basically, an investment in ERP is worthwhile for every company, precisely because it is an invaluable one Competitive advantage compared to less well-organized companies. This is especially true for small businesses and start-ups. The internal processes in every company should be as efficient as possible. If the data is maintained in an ERP system right from the start, there will be fewer costs later when converting to a uniform system.
Large companies and corporations consistently use ERP systems because in large companies almost all branches of the company work closely together. Many corporations use very comprehensive solutions such as Microsoft, SAP or Oracle. Established companies are dependent on efficient business processes and know about the competitive advantage over less well-organized companies. Despite mostly high investments such as license costs, training and familiarization times In the long term, it is worth investing in an ERP system.
When does it make sense to invest in such a system?
Investing in an ERP system makes sense right at the start at. Then still are few dates present and it must fewer resources can be used. Here offer themselves modular Systems such as GSD ERPframe can be used as the company grows expanded can be.
If you invest in an ERP system later, the costs for data transfers and staff getting used to are higher.
How does the introduction of an ERP system work in my company?
Before introducing an ERP solution, a good preparation the nuts and bolts. You should be precise about the process to plan and worry about that aims do so that the project can be successful.
1. Goal definition:
What do you want to achieve with the system? Savings, optimization of lead times, streamlining of internal processes, better transparency, ad-hoc information on business development. These goals must be specified by the management and demanded again and again.
2. Requirements analysis:
Before choosing a provider, you should carefully consider your requirements and resources. An ERP implementation is a larger project that cannot be completed within a month. Therefore, think carefully in advance whether you have the necessary budget, the necessary employees and the necessary resources. In the meantime, you should be clear about your requirements. The goals mentioned above, which can be generic, are divided into manageable sub-projects. What does the ERP system have to be able to do? So you can decide later which ERP system is best for your company. Include your employees or the various departments in this.
You should now formally record these considerations in your specifications. The specification sheet provides the basis for the later selection of the ERP system. In addition to technical and functional requirements, it also contains further information on the company and the market environment, an overview of the technical infrastructure and the schedule of the desired ERP project. The specification sheet therefore contains the wishes and requirements of each department in a condensed form. The relevant department heads should therefore be included in this step.
4. Selection of the ERP provider:
You can now make a well-founded selection of an ERP provider based on the specifications that have been drawn up. Above all, you should concentrate on the requirements that you have defined in the specification sheet. Which provider offers the modular solutions you need? Find out about it on the Internet, for example. Next, ask the ERP providers for their assessment of your project. If you have a good feeling, have the system introduced to you in the form of a personal presentation. So you can get to know the provider personally and get a better picture.
Usually in workshops lasting several days, the specifications are discussed together with the ERP provider and those involved from the company. The aim of the task is to develop a common perspective and to clear up any misunderstandings. The specifications ultimately result from the workshops. This document sets out how the provider of the ERP system would like to technically implement the specifications from the specification sheet, and processes are also defined. Seen in this way, the requirement specification is the answer to the requirement specification. At the end, the specifications should be approved by both sides.
6. Installation of the test system:
A test system is installed in order to be able to carry out the necessary adjustments and developments. This should give the company's employees the opportunity to familiarize themselves with the ERP system as early as possible. Company-specific test data must already be installed so that the adjustments to be made can also be tested with the company data.
7. Preparation of the data for the transfer:
This step normally includes the transfer of the master data (contacts, customers, suppliers, quantities, articles, etc.) to the new system. The transfer of transaction data (purchases, sales with item and customer references, etc.) is also often desired, in order to be able to understand the history of business transactions, for example. Ideally, this step is used at the same time to clean up the master data of the previous system. The effort involved in data transfer should not be underestimated.
8. Implementation of the ERP system:
On the basis of the processes set out in the specification sheet, the ERP provider now begins setting up and adapting the ERP system. You can support the process by providing the necessary information in a timely manner.
9. Training and documentation:
In the basic training, specified key users are trained in how to use the most important functions. The training takes place at the beginning of the implementation. Employee training only takes place towards the end of implementation, when the system is up and running. These training courses are usually carried out internally. This allows ERP knowledge to be better anchored in the company. With this option, however, additional internal costs arise from the training of employees. Know-how is also lost. However, this way is cheaper. The training should be documented so that it can be called up by employees who later join the company. Exact process documentation is created by the provider.
10. Complete data transfer:
Before the start of real operation, a complete data transfer must be carried out, which should be checked randomly for the accuracy of the data. The system is then ready for real operation.
11. Start of real operation:
When the ERP system goes live, the implementation of the system is complete. The previous system should ideally be switched off because parallel operation would cause unnecessary effort. The provider and key users should now be available to answer any questions. The system conversion / introduction project should be completed with real operation. You should organizationally record the following activities as part of a follow-up project. The main project is now completed in terms of time and functionality and subsequent changes no longer burden the main project.
12. Support after the introduction:
It is normal that many questions remain unanswered after the introduction and can only be answered after the system has gone live. It is also normal that further change and adaptation requests arise in real operation that were not previously seen in this form.
What obstacles are there in ERP projects?
In ERP projects, there are always obstacles that you can avoid if you know what to look out for. Because difficulties in implementation usually lead to Time delays and higher cost. Here the most common obstaclesthat we were able to observe and experience in projects:
- The company management does not support the project enough
- The project staff are not given sufficient time off from their other tasks for the project implementation
- Technical difficulties with the legacy data transfer
- The schedule is chosen too tight
- The adjustment budget is too narrow
- There is not enough documentation
- The guidelines are not precise enough
- The original specifications can be expanded at will due to constant change requests and thus go beyond the scope of the project
When introducing ERP software, make sure to avoid these problems. This way, there are fewer delays and problems that cost time and money and your project becomes one huge success all along the line! If we can help you with your selection, please do not hesitate to contact us.
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