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ERP systems are a cost-effective way to improve business efficiency and productivity.

Why Businesses Use ERP

Most businesses today rely on some form of enterprise resource planning (ERP) to manage their operations. But what are the benefits of enterprise resource planning? While ERP systems vary in terms of features and functionality, they all share one common goal: to help businesses run more efficiently and effectively through digital transformation. 

ERP systems are a cost-effective way to improve business efficiency and productivity. They group together various functions, reaching across core workflows, such as

  • Human Resources 
  • Inventory 
  • E-commerce 
  • Supply and Distribution 
  • Customer Relations 
  • Accounting and Finance 
  • and more 

In this article, we will take a look at the 6 most essential benefits of ERP systems and how Nestell & Associates can help you make your business more efficient through our ERP consulting services.

stack of Binders for Standardized Decision-making processes

A big benefit of ERP systems is that they can help to standardize decision-making processes across an organization.

 

What are the 6 Most Essential Benefits of ERP

 

1. ERP Systems Improve Decision-Making

ERP solutions give organizations real-time visibility into their operations, which helps managers make better decisions because they have access to more accurate and timely information.  

With an ERP system in place, managers can more easily identify problems and opportunities, track progress toward goals, and make course corrections as needed. A big benefit of ERP systems is that they can help to standardize decision-making processes across an organization, making it easier for managers to collaborate and reach consensus.  

2. Increase Efficiency With Enterprise Resource Planning

ERPs are designed to help businesses overcome challenges by providing a centralized platform for managing all aspects of the business. One of the benefits of an ERP system is that by automating tasks and consolidating data, they can help businesses improve efficiencies and reduce costs.  

3. ERPs Provide Greater Flexibility

As organizations strive to do more with less and drive digital transformation initiatives, they are turning to ERP systems to provide agility, flexibility, and scalability.  

One ERP benefit is that they are designed to be flexible and adaptable, which means they can be easily customized to meet the specific needs of your organization. This allows you to tailor the system to your unique business processes, extending its value well beyond the traditional areas of finance and accounting.  

4. ERP Systems Offer Better Customer Service

ERP systems can help businesses keep track of customers’ orders and preferences, which leads to the next item in our list of ERP benefits, improved customer satisfaction. 

Businesses can use ERP systems to automate their marketing and sales processes.  This means that customers will receive timely and relevant information about your products and services.  

5. Enterprise Resource Planning Can Improve Collaboration

ERP systems can help improve collaboration across an organization by providing a centralized platform for data sharing and communication. Integrating all departments and functions onto a single system enables employees in different departments real-time access to the same information. This increased transparency is a benefit of enterprise resource planning because it can help reduce misunderstandings and miscommunication, fostering a more collaborative environment.  

ERP systems often include tools such as chatbots and instant messaging that make it easier for employees to connect with each other. By improving collaboration across the organization, ERP systems can help businesses achieve their goals more efficiently. 

6. A Well Organized ERP System Will Increased Profitability

A well-run business is a profitable business. By pulling together improved decision-making, increased efficiency, greater flexibility, better customer service and improved collaboration, the essential benefits of ERP systems become clear; this comprehensive suite of information can then be used to improve profitability. 

Drawbacks to Using Enterprise Resource Planning 

The many benefits of ERP systems are crystal clear. However, there are also some disadvantages that businesses should be aware of before implementing an ERP  system.  

These drawbacks may include: 

 – High implementation and maintenance costs: ERP systems can be expensive to implement and maintain. The costs can vary depending on the size and complexity of the system, as well as the specific needs of your organization. 

 – Complexity and inflexibility: ERP systems can be complex and inflexible,  which can make them difficult to use. This can lead to training costs and reduced productivity. 

 – Risk of data loss: When an ERP system is not properly maintained, there is a risk of data loss. This can be devastating for businesses, as it can lead to lost customers and revenue. 

 – Dependence on IT: ERP systems are reliant on IT infrastructure, which means that if there are problems with the system, it can disrupt business operations. 

 – Vendor lock-in. Once a business has invested in an ERP system, it may be  “locked in” to the vendor, which can limit its ability to switch to a different system. 

Despite the disadvantages, ERP systems can still be a valuable tool for businesses.  With appropriate timing and proper forethought, rarely will such disadvantages outweigh the benefits of an ERP system helping run an operation more efficiently and effectively.  

ERP System Selection Solutions and Differentiators 

Once your business or organization has taken the time to research and truly understand all of the enterprise resource planning benefits AND once you have considered the potential downfalls of ERP, it is critically important to consider the specific needs of your organization and select a system that is well suited to your business if you are to realize the full benefits of ERP. 

There are nearly 100 discrete manufacturing ERP vendors on the market today. Some ERP solutions cater to specific industries while others cater across industries.  ERP solutions utilize different models and often cater to different business needs. While some are all-encompassing, others are very industry-specific and cater to a niche market. There are plenty of tried and true ERPs that have been around since the beginning of the ERP era but there are some new and exciting products coming to the market with amazing creativity and innovation.  And there are free and open-source ERPs, and there are proprietary ERP vendors. There are even ERP vendors that focus solely on add-ons.

Whichever type of ERP you choose, it’s important to research and find one that best fits your company’s needs.

*Read about The Core Components of ERP Systems

image of a team of professionals

The “people” element of the triad is the most important, and often the most overlooked ingredient in a company’s ERP success.

Focus on the Human Element to Get the Most ERP Benefits

An ERP triad consists of people, processes, and technology. Beyond the technology and the processes, what really matters and what really makes for a business or organization’s success with ERP is being mindful of how critical the “people” component of the triad (people, process, and technology) is.  

The “people” element of the triad is the most important, and often the most overlooked ingredient in a company’s ERP success. After all, it is the people who will be using the system on a day-to-day basis. It is the people who will need to be properly trained on how to use it. It is the people who will be responsible for inputting data into the system.  And it is the people who will be asked to change the way they have done things in the past to accommodate this new system.  

In order to reap the benefits of an ERP system, businesses and organizations must put as much thought into how their employees will use the system as they do into the processes and the technology.  

ERP systems are complex and can be difficult to implement. But when done correctly, with consideration to an organization’s very specific operations and pain points, ERPs can offer a wealth of essential benefits, helping businesses run more efficiently and effectively and, most importantly, more profitably. 

 

Nestell & Associates Can Help Put the Benefits of an ERP System to Work for Your Business

At Nestell & Associates, we offer a wide range of consulting services that can help you take your business to the next level. Whether you need an ERP project management plan or a full-scale digital transformation, we can put your company on the path to success. Contact us today to find out how.

Related Podcast

TheERPocj Podcast episode 60 with guest Jeanne Anderson

Episode 60: Evaluating & Facilitating Positive Organizational Change Methods

In this episode, we dive into making effective ERP organizational change through effective ERP project recovery, including data-driven change, team engagement, and action, change monitoring, and evaluation with Dr. Jeanne Anderson – Professor Emerita at St. Cloud State University.

 

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About Nestell & Associates

Nestell & Associates is a strategy and management firm. We can help you take your portfolio companies to the next level by demonstrating how to execute a scalable, methodical, and disciplined approach to digital transformation success.

Merger and acquisition ERP digital transformations can be a significant challenge. But a solid framework is built on good practices with proven success. We have a successful track record with integrations, upgrades, mergers, and acquisitions, and we want to share our methods with you.

Our leadership experience in organizational change, information technology, ERP, and digital transformation crosses multiple industries.


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