There’s a reason why 96 percent of the top 20 percent of businesses rely on enterprise resource planning (ERP) software, according to Aberdeen research. ERP system is at the center of the modern digital business, the nerve center that allows an organization to monitor, automate and manage operations end-to-end unlike what came before.
Whether you are a startup or a business that has not yet embraced digital transformation, there are dozens of reasons why you should consider ERP. Here are four of the most important reasons why ERP is critical for business today.
Where do I start my ERP evaluation?
1. Increased Visibility
Once a business moves beyond a handful of employees, staying abreast of operations and the numerous considerations that go into a business become a challenge. A strong management structure and good processes help, but there’s still the challenge of keeping tabs on the many details of daily operations.
ERP significantly improves operational visibility both for management and employees. That’s because all aspects of a business flow into a single, unified system. From sales transactions to employee hours, shipping, inventory, and real-time manufacturing details, everything is captured within a company’s ERP system.
With this centralized data repository, businesses can establish real-time dashboards that track key metrics and automatically generate custom reports that give a full picture of the business on an as-needed basis. When there’s a need to drill down and discover specific dynamics, ERP also enables management and authorized employees to see exactly what’s going on all the way to individual transactions.
The average business goes from 6 percent real-time visibility of business operations to 48 percent after installing an ERP system, according to Aberdeen research. And that number can go much higher with ERP, as well.
2. Data-Driven Decision-Making
The pace of business has increased thanks to the cloud computing revolution. But business not only moves faster now but it also typically is informed by better data.
Every business from NFL football to retail sales is now deeply informed by hard data and analytical insight. While some businesses still rely on fuzzy metrics and guesswork, market leaders do not. More than half of all of the best-in-class businesses now use analytics software for decision-making.
ERP makes a big difference when it comes to data-driven decision-making. Businesses that use ERP are more than 4 times as likely to be able to forecast and accurately plan for demand swings, according to Aberdeen research, and the average business using ERP spends 36 percent less time making decisions.
That’s because all data is centralized in an ERP for a complete, real-time picture of the factors that go into good decision-making and planning. ERP also assists with the process of making sense of the numbers, enabling even those without a data science background to make informed, data-driven decisions.
Business is more reliant on data than at any previous point in history, and the accessibility of the data as a result of ERP is a big part of that.
3. Strengthened Processes
Standardized processes are at the heart of successful businesses. There are fewer errors, fewer exceptions, and less inefficiency when a business establishes and enforces consistent business processes.
Yet, 89 percent of businesses that rely on a patchwork of backend systems cannot accurately track their business processes, according to Aberdeen, and only 22 percent of businesses are able to standardize their processes. The goal and reality are far apart.
Except for businesses that use ERP. With an ERP system in place, businesses not only connect all departments in the company to a single, centralized backend system for standardized process management, but firms that use ERP also can track processes in real-time.
Further, ERP systems such as SAP Business One and Business ByDesign come with best practices built-in by default. So businesses can implement their specific processes within the system or rely on standard business processes for the areas that don’t differentiate their business.
Roughly 77 percent of businesses that use ERP are able to standardize their business processes.
4. Better Integration
Software and cloud platforms are slowly taking over operations. A patchwork of both on-premise and cloud-based software solutions typically helps today’s business run, from financial management software and online shopping portals to backend team management solutions, inventory management platforms, and industry-specific software.
Connecting these systems together for unified operations is often tricky. Nearly 83 percent of business systems cannot talk with each other, and 78 percent of business data is redundant according to Aberdeen research. Integrated systems matter.
Integration is one of the original and key selling points of ERP, and there are two reasons for this.
First, ERP reduces the need for a range of software solutions because much of what a business needs is built into an ERP system. Data and systems already are connected for the business that runs on ERP.
Second and increasingly important, modern ERP system are built for connectivity and integration. ERP solutions are only as strong as they can connect with a company’s full range of data, so ERP comes with many standard ways to connect outside software solutions with the system. Plug-ins and third-party integration solutions further deepen integration options, and businesses that need custom integration also can code what they need.
This is part of why businesses that use ERP are more than 633 percent more likely to be able to share data with suppliers, customers, resellers, and regulatory bodies, according to Aberdeen. ERP is built for data integration and connectivity.