Top-10 ERP Benefits

The selection and successful implementation of a good ERP Solution brings many benefits for the user organization. Although it is difficult to enumerate all the benefits that accrue from an ERP implementation, we have tried to put together a list of Top-10 Benefits that we feel are relevant for an organization of any shape, size or location.

1. ERP Encourages Rapid Decision Making: An effective ERP Software ensures availability of consolidated and meaningful information to the Senior Management of an enterprise in real time. Coupled with the vast experience that the Management has in their line of business, they can quickly capitalize on this information to do a SWOT Analysis of the current situation and initiate remedial measures wherever necessary.

2. Drastic Reduction in Human Errors: Humans are prone to making errors from time to time. Imagine the total number of errors being made inadvertently in an enterprise employing 100 people. An ERP Software seeks information from the user in a standardized format and does not permit saving an incomplete document till such time that the mandatory fields have not been updated by the user. For example, a Purchase Order cannot be generated until all the mandatory fields have been entered by the user and the ERP will continue to prompt the errors till such time that all the shortcomings have been eliminated. Independent research studies have found that the reduction in human errors is as high as 60-70% with the deployment of an ERP Software.

3. Enhances Customer Satisfaction: Among various customer-centric features, a contemporary ERP Software also provides Sales Force Automation Functionality which seamlessly connects the Sales Force to the Head Office. This allows the organization’s Sales Force to keep abreast of inventory levels of various products and the various promotional deals in real time. They can therefore offer the best deals to their customers and fulfil their orders in quick time. This leads to a dramatic ramp up in the customer satisfaction levels and makes the customer relationship more valuable over time.

4. Improves Data Security: An ERP Software has multiple security and access control mechanisms which ensures almost negligible incidents of data theft, unauthorized access, etc. Moreover the entire transactional data is stored securely and is backed up frequently to eliminate chances of data loss.

5. Exposure to Latest Technology: An ERP Software exposes the employees to the latest technology and best practices in their daily functions that eases their job and makes them feel good. This “feel-good” factor improves employee engagement which has many inherent benefits for the enterprise.

6. Reduction in Inventory: Maintaining high levels of inventory locks up the cash of an enterprise and also exposes them to the possibility of inventory obsolescence. Increasingly, organizations are becoming acutely aware of the need to constantly monitor and maintain only the optimum levels of inventory. This improves the cash flows of an enterprise. An ERP Software aids an enterprise in determining and maintaining optimum inventory levels thus reducing inventory costs by as much as 30-40%.

7. Better Resource Planning: As its name suggests, an ERP (Enterprise Resource Planning) Software enables an enterprise to plan and manage its resources more efficiently. Manufacturing a complicated product like an automobile requires excellent planning of raw material and component level sourcing, production, testing and finally, order fulfillment. An integrated ERP system automates and manages all functions seamlessly. For example, it can monitor and track component level inventory in real time. As and when the stocks for a particular component dip below the optimum level the ERP can automatically release orders on the vendor and track the orders from the suppliers. An ERP Software also helps in reducing Bill of Material (BoM) errors by as high as 75-80%

8. Business Intelligence & Analytics: A good contemporary ERP Software has power Business Intelligence and Analytical functionalities built-in. This makes creating complex reports about sales, inventory, growth and other departmental functions easy and quick. Standard Financial Reports like Balance Sheet, Cash Flow, Income Statement, etc. can be generated at the click of a button.

9. Enhances Management Productivity: To focus on their team’s performance and conducting “what-if” analysis, senior and middle level managers spend a substantive time in gathering data and creating reports for the corporate management frequently. An ERP Software makes available this data and the option of creating user-friendly reports at the click of a button thus freeing the middle management from doing tis time-consuming and mundane work.

10. Reducing Burden of the IT Department: Once an ERP is implemented, the onus of maintaining the ERP Software rests with the ERP vendor thus reducing the burden on the in-house IT Department. Also, good ERP vendors keep upgrading their software regularly with new functionalities, modules, etc. which ensures that the ERP system is in tandem with the latest business needs.

About the Author:

Samudra Gupta is Chief Consultant with Eastern Software Systems and has been associated with ESS for 10+ years. He is a B. Tech. in Electrical Engineering from IIT-BHU, Varanasi and has an industry experience of over 22 years of which 18 years have been in Information Technology. To check his LinkedIn Profile please click here or to connect with him on Facebook please click here.