What is ERP and Why You Should Consider It for Your Business

The global ERP software market is expected to reap $47 billion in revenue from 2017 to 2022 at a CAGR of 7% (ERP Software Market 2018 Global Trends).

9 min read, Nov 5
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The more business becomes customer-oriented the higher the level of services and their speed and transparency are demanded. The only way to conform to such high requirements is to start or proceed with the digital transformation of your company to accelerate it within the whole field as it goes in logistics, retail, etc.

These market conditions stimulated to integrate more systematic enterprise resource planning and namely digital approaches. It drastically changed the strategies and operations of various companies that resulted in workflow optimization and the improvement of its results.

What is ERP system and why do you need it

It’s a modular solution that allows maintaining core company processes by uniting maintenance of them within a single environment and taking care of each of them and considering the factors of others. It covers internal and external enterprise operations to raise the level and proficiency of their management.

The system consists of an application suite, functional and operational modules. Each of them is responsible for a certain business aspect. Each type of submodules include:

Functional. Production, Inventory, Sales/Marketing, Purchase, Finances, and HR,

Operational. Basics, Security, ISM, APIs and Networking.

App suite. The set of connected common and scope-specific solutions and namely:

General use

  • Customer relationship management (CRM)
  • Product life-cycle management (PLM)
  • Learning Management System (LMS)
  • Human Resources



Supply chain

  • Supply chain management (SCM)
  • Supplier relationship management (SRM)



Healthcare

  • Pharmaceutical manufacturing management (PMM)
  • Hospital management system (HMS)



ERP system definition

ERP development technologies include AI and machine learning approaches to simplify as possible operations for users and automate processes that don’t require manual control. With the proper integration into the workflow, it’s able to bring in or raise the efficiency, visibility, and intelligence of every aspect of your business.

However, it’s a complex system it doesn’t mean that the SME sector can’t benefit from it. The decisive point here is the evaluation of the efficiency of workforce efforts to handle routine and specific operations to keep the business on the appropriate level and their total productivity.

Surely there are multiple tools for CRM, accounting, etc. and classic approaches like Excel sheets to handle diverse company processes separately and an advanced system might not be a necessity. But if you started noticing the following signs it’s time to reconsider:

Unbalanced workflow

If routine activities are taking too much time leaving not enough time for more important projects it means that employees don’t have appropriate tooling to speed up the process.

Unorganized analytics

If you aren’t aware of all important metrics that measure your success and its potential on a regular basis it means that the processes aren’t properly set to provide reports timely.

Uncovered issues

If you feel that you can’t handle manually or with the current software some processes properly it means that used approaches don’t meet your business requirements.

Universality lack

If you see that some tasks like certain data entry are constantly repeated and ergo too time-consuming it’s a sign that the internal company system isn’t enough centralized.

Unused opportunities

If you have to work nights and weekends and still can’t move your business from your current point it’s time to optimize the workflow to be able to chase emerging possibilities.

How to choose an ERP system?

Once the deliberate decision is made you can start researching your options. There are three types of resource planning systems that differ on the business choice on the hosting solution: on-premise (running in your own data center), cloud and hybrid.

Your preferences here should be dictated by the availability of the data infrastructure and its conformity with your needs whether you decide for ERP app development or purchase. You should also consider the required level of security, access specifics, and control requirements. Your choice is:

On-premise if ultimate data administration and advanced security are your priorities and you’re ready for additional operational expenses and the remote data access isn’t necessary.

Cloud (SaaS) if you need an affordable solution that ensures fast and straightforward data access and sharing and doesn’t demand a technical proficiency from the staff.

Hybrid if you want to minimize the number of compromises you need to make on important aspects. and require a system that unites the benefits of two other types.

Another choice that should be made is if you need a unique or customizable system.

Ready-made vs custom ERP system development: what to choose

The more scopes become data-driven the more off-the-shelf solutions appear to handle such a powerful flow. You can assume that on the market that is led by top international companies like Microsoft, Oracle and SAP you can find the perfect fit for your company.

However, the majority of available software is created with the focus on a large enterprise needs of certain scopes making the smaller business put significant efforts into their adjustment. Besides the more specific field, you represent than more likely you won’t find the required module to maintain the operations.

The way around all the limitations of ready-made solutions is custom ERP application development from scratch. This problem solution usually rolled out basing the decision on the assumption of its complexity, price, and maintenance.

But all of these factors are significantly vary depending on the requirements that’s why it’s better to research the market before the ultimate rejection. They are defined by:

  • Dedicated company size, status, and industry;
  • The uniqueness level of the requested solution.
  • The contractor’s rates and development speed;
  • Maintenance and upgrades complexity/cost;
  • Resources required for integration, staff training;
  • Platforms available: desktop/web/mobile/two/all;
  • Risks like overdue, budget excess, etc.

    Besides, you shouldn’t focus just on the efforts the custom ERP development will require. You should compare how your company can benefit from fully-controlled flexible tailor-made software and ensure that it’s worth some extra financial and time contributions.

Take into account that 31 percent of custom ERP development cost is exceeded the initial value to complete the project (Panorama Consulting, 2018). But nevertheless, the interviewed business representatives were satisfied with the accomplished results.

The development contractor’s expertise isn’t the only key success factor. According to CIO magazine, the market research and talent acquisition aren't enough to raise the odds of a satisfactory result. The company should be prepared for the workflow changes on all levels. The steps to do are:

Process optimization. Yes, it’s the main reason for ERP product development but basically, it’s a framework your business routine should fit in. No matter how custom it is it has a structure and that can’t be integrated into loose running.

Overall decision. Excluding employees who will actually use the solution from the decision-making process just because of the position level can result in difficulties during its integration and failure of its purpose.

Task prioritization. The system should be reasonably complex. By chasing all the goals and trying to resolve all the issues available you won’t likely get not only the thing that you want but worthless software that you’ve spent a lot of time and money on.

If your business is ready to develop, grow and progress you can start working on the solution outline.

ERP development process

If you still want to begin the process you can review the following guidelines to embark with the implementation of custom software. You can also seek professional consultancy (for instance, in a form of Discovery phase) especially from the chosen contractor for further concept development and definition of the requirements.

1, Outline project goals

Determine specifically including KPI and other metric readings you’d like to achieve by application of the solution as well as the period for the attainment. Ensure that the objective is correlated with your current and future business strategy.

2. Describe the current situation

Provide a detailed description of the workflow, currently applied solution, etc. to ensure the background for the solution it should be built on. That’s why startups considering the lack of operational history would better benefit from more focused automation tools.

3. Form a development team

Considering the system complexity you should reach out to experienced developers or an ERP application development company that can the project of your enterprise-level and grade. Considering the stakes and initial risks you can rely just on talent and tech expertise.

4. Complete the requirements

Choose the required platforms (ERP web development, as well as mobile, has its specifics) modules and itemize each one specifics. Try to actually accomplish the list since the more addons you’ll have the more it will negatively affect the implementation workflow and the resulting quality as well as prolong the project on the undermined time.

5. Make sure you can afford it

If your business already needs optimization you shouldn’t put an additional burden on the company that it wouldn’t be able to handle. Considering the mentioned statistics related to the budget excess you should be prepared to invest in the project more than expected.

6. Ensure efficient collaboration

Whether you decided for in-house or remote development team you should trust them and be open to suggestions concerning whether technical aspects like the choice of the stack or functionality considering that they have the experience of building similar systems.

7. Set reasonable deadlines

Rushing out the product development as well as being overly flexible on delivery can be equally harmful to the result. Request the detailed time and budget estimation from the contractor and make sure that it sticks to it applying control tactics of agile or other development methods.

To successfully accomplish all steps you should perform quality research and efficiently communicate within and outside the company. If you want to attain the set goals be prepared to make extra efforts from day one.

So is it worth it?

According to ERP Focus Failure statistics of such projects is quite high that’s why you should actual ERP development plan based on proven tips and experience of others before you fully engage in the project.

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