Running a business in today’s market has become quite challenging. To meet customer demands and stay ahead of the competition, businesses need to use up-to-date latest tools and techniques to ensure that their operations are efficient and can run smoothly.

This is where Enterprise Resource Planning (ERP) systems come into play. ERP is a one-stop solution that integrates various business processes, such as financial management, supply chain management, human resources, customer relationship management, and more.

However, before these businesses decide whether or not to implement ERP systems, they must clearly understand the benefits of ERP systems and how they can help them achieve their business goals.

Core Features of ERP Systems

According to statistics, 64% of global businesses plan to shift to ERP systems to manage their day-to-day operations within the next three years. This shows the growing popularity and importance of ERP systems in the business world.

Following are the top three features that businesses need to look for in an ERP:

Integration

Businesses with different departments and functions, such as accounting, sales, inventory management, and others, have different software systems to manage tasks for each department. This hinders cross-collaboration between departments and results in data silos leading to delays, errors, and inefficiencies.

The essential role of an ERP system is to integrate all these different functions into a single system. When business stakeholders have all the data from various functions displayed in one place, they can understand a clear picture of their business.

This can also help them make informed decisions and identify missing opportunities.

Automation

ERP systems automate repetitive tasks such as sending invoices, creating reports, and updating inventory levels.

This avoids manual data entry and reduces the chances of errors. For example, when a customer places an order, the ERP system automatically updates inventory levels and sends notifications to relevant departments.

Moreover, it saves time and effort for employees, who can then focus on other tasks and become more productive. Automation also helps maintain data consistency and accuracy, leading to better decision-making.

Data Analysis

Data coming from different functions is of no use if it is not being analyzed. Business stakeholders can greatly benefit if the data is used to gain valuable insights and make strategic decisions.

Most ERP systems come equipped with business intelligence tools that provide in-depth analysis of data, such as sales trends, customer behavior, and inventory levels. These tools help businesses better understand their operations and identify areas for improvement.

Apart from this, data analyses help improve business operations and avoid any fraudulent practices. For example, businesses can identify discrepancies and potential thefts by analyzing inventory levels and sales data.

Key Benefits of ERP Systems

1. Improved Efficiency

One of the major benefits of ERP systems is that they improve the efficiency of business operations and increase productivity. Stats reveal that businesses can reduce 36% of their decision-making time by implementing an ERP system.

As all data is integrated, it eliminates the need for manual data entry and reduces duplication of work in different departments. This leads to quicker decision-making, faster response times, and improved collaboration among teams.

When Walmart implemented an ERP system, it significantly enhanced its operational efficiency and managed its supply chain and inventory management processes. The ERP system helped the business improve collaboration between different departments and reduced delays.

2. Data Security

Data security is very important for every kind of business, whether small or large. In order to avoid unauthorized access, misuse of data, cyberattacks, or theft, it is very important that businesses use software that has strong data security features.

One of the benefits of ERP systems is that they use state-of-the-art methods to keep data secure and free from misuse.

For example, Lockheed Martin, a global leader in the aerospace and defense industry, faced the challenge of securing highly sensitive data related to national security projects. To tackle this, they implemented SAP’s on-premise ERP system to meet the stringent security requirements of the defense industry.

3. Cost Savings

One primary concern businesses planning to shift to an ERP might have is how implementing such a system into their operations can help them increase their profits. However, they don’t need to worry about this because cost-saving is one of the key benefits of ERP systems.

An ERP system can help a business reduce operational costs in several ways. One way is by eliminating the need for multiple software systems and the cost of maintaining them. As all departments use a single system, businesses can save on software licensing fees and other costs associated with managing multiple systems.

4. Scalability

The much-needed benefits of ERP systems are that they are scalable and can be customized according to the needs of the business. This means the system scales up when the company grows and scales down when it faces challenging times.

An ERP system’s scalability can be defined in different ways. For example, if a business wants to expand globally, an ERP system will not only offer a multilanguage feature but also help the company comply with the laws and regulations of the countries it enters.

Moreover, ERP systems facilitate the consistent, real-time data flow from a central database into various applications. Businesses use technologies such as the Internet of Things (IoT) and artificial intelligence to stay competitive. Integrating these technologies within an ERP system enhances operational efficiency.

5. Mobility

The primary purpose of an ERP system is to reduce time delays and make the business perform more efficiently. To achieve this, service providers seek ways to offer their customers more benefits of ERP systems. One such benefit is offering mobility. This means employees can get instant updates on their mobile devices and make quick decisions from anywhere.

It breaks the limitation of using software only when employees are in the office. With mobile ERP, all business stakeholders can access real-time data and easily communicate with other team members and even customers.

Delays in work occur when employees don’t have access to relevant and accurate data when necessary. Also, some tasks need approval or feedback from higher authorities. With mobile ERP, it is possible to get data whenever required and get approvals faster.

6. Compliance Support

ERP systems won’t make your business compliant with laws and regulations; however, if your business wants to achieve compliance, ERP can be a great helping hand for you.

Starbucks uses Oracle ERP, which automates daily business activities. One feature of this ERP is risk management and compliance, which helps Starbucks abide by laws and regulations, including the Sarbanes-Oxley Act (SOX) and the Health Insurance Portability and Accountability Act (HIPAA).

These features help businesses manage risk efficiently and establish internal controls, which can be easily monitored through the ERP system.

It also shows how the benefits of ERP systems go beyond just providing a single unified management system. ERPs genuinely become assistants managing every aspect of the business.

7. Customized Reporting

Every business has its way of analyzing its data and set of metrics that it uses to assess its performance and identify loopholes. To tackle this, one of the great benefits of ERP systems is that the business can customize reporting and analytics features.

Custom ERP solutions enable you to create reporting dashboards based on your business needs and requirements. You can create KPIs and metrics you want to track and measure using these dashboards.

Customized reporting allows a business to access accurate and relevant data that will help it make informed and timely decisions. Hence, if you are looking to shift to an ERP system, it’s important that you find a solution that will help you create customized reports.

8. Customer Service

One of the best competitive advantages a business can gain is an edge in providing a better customer experience than its competitors. Guess what? Enhanced customer service is also one of the myriad benefits of ERP systems.

An ERP can streamline logistics and shipping processes and improve customer delivery times. It can also strengthen supplier relationships and automate all manual processes.

When backend processes perform perfectly, the user experience is enhanced. This is because the customer service team can get a picture of each customer and respond to queries accordingly. The response time of queries decreases, and the chances of customers getting frustrated are also reduced.

Disadvantages of ERP

Despite the various benefits of ERP systems, businesses still need to consider certain factors when considering a switch to an ERP solution.

The following are three primary disadvantages of an ERP system:

High Implementation Costs:

The implementation costs of ERP systems might differ based on the size of the business, its particular needs, and the type of ERP. Even then, it is a fact that ERP systems have high implementation costs.

The ERP software you choose for your business accounts for only 15-30% of the total implementation cost. The remaining 60% goes to consultation, onboarding the right service provider, training, and ongoing support of the ERP system.

On average, ERP software costs around $150,000-$750,000. Hence, it is always advisable for a business to conduct a cost-benefit analysis and then decide whether to implement an ERP.

Increased Complexity

Initially, the idea of using ERP software can be exciting for businesses. However, if the business doesn’t make a proper ERP implementation plan, it might be too complex to manage later.

Businesses can underestimate the complexity of an ERP system and fail to provide enough time and resources to train employees on how to use it. It can lead to resistance from employees in adopting the system and make the implementation process challenging.

For example, in 2018, Revlon was using Microsoft Dynamics AX as its ERP and decided to shift to SAP, which offered more functionalities. However, the complex implementation process didn’t go well, resulting in an approximately $70.3 million loss for the multinational cosmetics company.

Business Disruption and Change Management

Implementing an ERP system requires significant change within business operations. All the departments integrated into the system need to be aligned with the new processes and procedures that will be implemented.

The change management process can often cause business disruptions as employees take time to adjust and learn the new system. It can lead to decreased productivity, increased workload, and employee resistance.

In 2022, the University of Washington migrated to a cloud-based finance platform, which disrupted established processes for core functions like payments and payroll. While core processes were implemented, critical areas like vendor payments and research grant funding faced massive delays.

How Folio3 AgTech Helps Businesses in Successful ERP Implementation

Businesses face many challenges during ERP implementation, and if they are not well prepared for such a shift, it might result in financial losses. Here’s why choosing the right service provider and getting the right consultation can help the business avoid these losses and make the implementation process smoother.

When choosing the right service provider, businesses can rely on Folio3 AgTech, which has provided software solutions to the agriculture industry for over twenty years.

Folio3 AgTech offers customized ERP solutions catering to each business’s needs. They provide end-to-end consultation, from choosing the right system to training employees and providing ongoing support.

Moreover, Folio3 AgTech understands the complexity of implementing an ERP system and provides proper change management plans that help businesses minimize disruptions and manage change effectively.

With their vast experience in providing ERP solutions, Folio3 AgTech can help businesses avoid potential risks and make the implementation process efficient and successful. While ERP systems offer numerous benefits for businesses, they also have some drawbacks that must be carefully considered before implementation.

However, with the help of a trusted service provider like Folio3 AgTech, businesses can successfully navigate these challenges and start using ERP systems without any major disruptions or losses.

How a Leading Poultry Products Provider Capitalized on the Benefits of ERP Systems with Folio3 AgTech

Arabian Farms has been in the poultry business for more than 40 years, operating in the UAE. The company faced the challenge of communication gaps and process delays, which led to inefficient business operations.

As a result, they contacted Folio3 AgTech, which helped implement NetSuite ERP, migrate data, and integrate the system with existing applications.

The customized solution provided by Folio3 AgTech helped Arabian Farms achieve the following major benefits:

Enhanced Reporting and Visibility

With the implementation of NetSuite ERP, Arabian Farms had better visibility into its business operations. The system provided real-time information on sales, inventory, procurement, and other metrics that helped improve reporting.

Reduced Inventory Costs

Inventory management was a major concern for Arabian Farms, but the implementation of the ERP system reduced inventory costs through better tracking and forecasting. The system also streamlined processes, reducing manual errors and increasing efficiency.

Better Supply Chain Management

The integration of NetSuite ERP with Arabian Farms’ warehouse management system allowed them better control and visibility over their supply chain management. It helped minimize production bottlenecks and improve order accuracy.

Conclusion

The benefits of an ERP system can be significant for businesses, but successful implementation and adoption can be challenging. To make the process smooth, tech experts’ consultation and proper planning and execution are required.

Folio3 AgTech’s customized solutions and experienced team can help businesses successfully navigate the implementation process and achieve their desired goals. If you are in the process of shifting to an ERP solution and are still confused about how to make it work, then Folio3 AgTech is the right choice for you.

FAQs

What Makes ERP Unique Over Other Systems?

The core function of ERP, its ability to integrate all the different departments and functions of a business, makes it unique among other software systems.

This feature allows access to real-time information and improves collaboration within departments.

What are the Three Advantages of Using Enterprise Software in an Organization?

The three advantages of using ERP in an organization are:

• Improved Efficiency
• Better Collaboration
• Access to real-time data

What is ERP in Simple Words?

In simple words, ERP is enterprise resource planning software that integrates different business functions into a single unified system. The software helps automate processes, improve workflows, and reduce reliance on manual processes.