How does an ERP system work?

ERP, or Enterprise Resource Planning, is an essential part of running a successful business. Every company, no matter how big they are or what vertical they are in, must have a way to plan, track, and analyze the use of their business applications, resources, and core operations. But despite how integral Enterprise Resource Planning is to modern business, many companies don’t think about their core system functions strategically. Right from inception and in each year that follows, disparate systems are implemented department by department. This creates information silos and legacy processes that are time-consuming, manual, and too entrenched in the company's way of doing things to be questioned. The lack of a global view makes it difficult to accurately assess inefficiencies and suggest areas for improvement, an ERP system solves this widespread problem 

Types of ERP Systems

While ERP might refer to all the various elements of your business from finance, commerce, supply chain, HR, and so on, an ERP system is the way you bring all these things together. An effective ERP system takes the core processes of your business and integrates them. It can be implemented as an on-premises solution or created in the cloud. Many businesses choose a hybrid model with some solutions on site and others online, but industry trends are pushing more and more decision-makers to go all-in with a cloud solution. The goal of this integrated approach is to give you a global view of the activities in each department so you can gain data-driven insights that will allow you to make better business decisions.  

This may sound like an obvious outcome to work towards—after all, who wouldn’t want a global view of operations that could lead to an improvement in efficiency and profitability and a reduction in costs and waste? But the fact is that a truly integrated ERP system isn’t a given for most businesses. Reaching this level of integration and transparency requires significant planning, time, both internal and external resources and know-how, and an ongoing investment in the implementation and maintenance of the digital tools and solutions that can help you achieve this goal.  

What does an ERP system consist of? 

As you might imagine, an integrated ERP system considers every core aspect of your business bringing together reporting and data insights from across departments. To accomplish this level of integration, you need to implement digital tools like machine learning and artificial intelligence (AI) technologies that can provide you with the insights you need to maximize efficiency. The software you use will depend on the industry you’re in and your business needs, but the goals are always the same. 

The benefits of a modern ERP suite  

Business applications and ERP systems are not the big, black boxes they used to be. Modern technologies and cloud based platforms allow you to prioritize the business applications and capabilities you need, standardize and automate day-to-day processes, while maintaining visibility and adding functionality for long-term growth. Some of the benefits of a modern, cloud-based ERP include: 

  • Increased speed and agility  
  • Ability to innovate and compete 
  • Enhanced security and compliance 
  • Increased ROI 
  • Real-time intelligence 

The main goal of any ERP implementation is to integrate various operational functions into one complete system and streamline business processes across the entire organization. It is only then that you can gain the insights needed to assess what is working and what’s not and make a plan for moving your business forward. But with the right tools and solutions in place, you’ll be able to achieve your goals faster than you thought possible and establish a solid foundation for future growth. If you need to implement a modern ERP in your business, Thinkmax is here to help. Contact us today to learn more.