How an ERP system can improve a company’s performance

Over the current decade, the effectiveness of ERP programs has grown diametrically. And the level of influence on all business processes has become so great that it initially implies the existence of an automated control system. So how can an ERP system improve a company’s performance? 

A full-fledged ERP system gives the company undeniable benefits:

  • ●        Control and synchronization of processes – ERP systems make it possible to exercise full control over all important processes of the organization both at the operational level with rapid changes and at the strategic level requiring analysis and planning of all divisions of the organization. Due to a single ERP infobase, the program synchronizes information flows from different departments. Due to this, even in the information about the activities of the department, an error can be found that would not have been found without ERP.
  • Reporting standardization and automation. The functionality of the ERP system allows you to combine disparate reports and Connected IT Consulting, which improves the quality of management. Reports are generated in real time allowing you to quickly keep your finger on the pulse of the enterprise.
  • Suppliers and customers are now cooperating with you more closely. ERP allows you to transfer tracking and control functions to the side of the contractor / customer, namely, to form and track purchases, loading of goods, stock availability, location of delivered goods and much more).
  • Adaptation to the influence of the market and the flexibility of the enterprise processes. ERP allows you to work both as a single system and with individual modules that are inactive until they are needed. The composition in each module is customized according to the needs and goals of the enterprise.
  • Data protection. For each employee, his own account is created in the system, according to which the user receives an access level and rights corresponding to his powers. The work of each user can be monitored. Data leakage due to human factors is technically impossible. All operations and actions performed by the user can be controlled by means of the ERP system.

The advantages of ERP systems can be enumerated for a long time. Let’s look at the main directions from the point of view of direct benefits for the enterprise Full automation and Connected IT Consulting, standardization and documentation of all enterprise processes

The first and foremost thing that ERP affects is the documentary processing of all internal procedures of the enterprise: planning, receiving and shipping goods, exchanging data, processing a customer order, integrating with the website and other services, and more. In this connection, ERP can be mistakenly called a system for processing documents. This is partly true, but this definition is incomplete. For example, in the BAS product line, such a solution is presented as a separate BAS document flow product and is positioned as a DOCFLOW system (electronic document flow) for enterprises that use a large volume of document flow in their work. An ERP solution, unlike DOCFLOW, penetrates and automates all levels of the enterprise and is a broader program.

The ERP system programmatically accompanies all stages of the work of both internal and external processes of the enterprise, for example, accompanies the entire sales process: accepts an order, creates a fully automated action script, shows the balance in the warehouse, customer history, adds data to statistics.

ERP management capabilities

Modern ERP systems are presented as holistic information systems. This approach opens up wide opportunities in the field of enterprise management, for example, the possibility of operational international management. Modern ERP systems have mechanisms for managing multinational companies, including support for different time zones, multilingualism, multicurrency, accounting and reporting systems. This is very important for large companies and corporations, where individual structures and divisions closely interact with each other, while being in different countries and even continents.

They are used to promptly provide the management of the enterprise with the information necessary for making management decisions.

In fact, an ERP system allows you to use one solution that integrates all disparate solutions into itself. A unified system will allow you to comprehensively manage processing, logistics, distribution, inventory, delivery, invoicing and accounting. ERP-systems are aimed at maximum satisfaction of the needs of companies in business management tools.

Increased efficiency

The use of a fully functional unified resource management system for a company can provide enormous benefits to an enterprise in organizing effective company management, increasing the responsiveness to changes in the external environment, and improving the quality of customer service. Since the creation and implementation of an ERP system requires significant investments. Accordingly, the urgent issue of reducing labor costs and increasing efficiency arises. Justification of general requirements for an ERP system should be based on an assessment of the expected economic consequences of automation of management functions.

Since the goal of most enterprises is to maximize profits, the main advantage of ERP systems is to increase the efficiency of sales processes and transactions with a client.

To calculate the efficiency, such coefficients are used as:

  • Return on Investment (ROI)
  • Total cost of ownership (TCO)
  • Cost-benefits analysis

The return on investment in an ERP system does not come from the system itself, but from improving the efficiency of the business processes that it supports. By itself, an enterprise resource management system, no matter how good it is, has little impact on increasing the company’s productivity. If you continue to follow the old business processes after implementing the new system, you can only expect the same, or most likely worse, performance. An ERP system can provide and support many new types of processes, but it is up to the company itself to decide what these business processes should be and make a decision on their subsequent use or rejection.

 The efficiency of the system, which must be calculated to obtain a cost efficiency indicator, depends primarily on from the implementation of a successful business strategy. It is impossible to talk about the correct and effective implementation of information technologies designed to fundamentally improve the company’s market position, without considering the achievement of one or another level of the company’s key performance indicators. The system must be tuned to achieve the strategic and tactical goals of the organization.

ERP systems are widely used by enterprises in various sectors of the economy: industrial enterprises, educational institutions, banks, insurance companies, medical institutions, etc. To focus on industry-specific problems and specific customer requirements, ERP system developers offer various configurations, sets of functional modules to maximize the needs of the organization.

When choosing the required software products, it is necessary to realistically assess the functional areas and types of industries that need automation. There are different techniques for implementing an ERP system. But the most successful is the phased implementation of the project. Installing all components at the same time carries high risks. This method is advisable only for those companies that have a simple structure and uncomplicated production.

Christophe Rude
Christophe Rude
Articles: 15874