Enterprise resource planning (ERP) is business process management software that allows an organization (typically a manufacturer) to use a system of integrated applications to manage the business and automate many back office functions related to technology, services and human resources.
What is the benefit for a manufacturing company to implement an ERP system? Think of the old LP record disks with 10 songs to a side. Consider each song a group of business processes which need to be managed. Starting with accounting nearest to the center as the core, these are the easiest to manage as all the modules are integrated. The next “song” out would be distribution modules, starting with inventory. The next ring would be manufacturing modules. The TRUE ERP systems don’t stop here, but continue out to shipping, warehouse control, shop floor scheduling, regulatory and industry specific modules. What makes all of this an “ERP System” is that all of these independent modules are linked, automated and tightly integrated to give management a complete picture of the company’s processes. In today’s highly competitive environment, having this information could be the difference between your doors staying open vs. not.
Each manufacturing company is unique in their needs, growth cycle, and budgetary considerations. Thus, this can become a complicated question to answer. As ERP advisors it is our duty to sit down with company management to consider all of the above. As a general rule, a combination of the number of concurrent users and modules selected are the biggest contributors to the ERP software cost. The implementation of the ERP is even more complicated due to the human element considerations.
With today’s hosting options nearly any software can be “cloud enabled.” However, with true ERP solutions there are many “on premise” parts of the puzzle which have significant impact on whether it makes sense to move the accounting software to the cloud. These puzzle pieces might include shop floor inputs, warehouse management items, and labor time tracking.
Ok, that’s like asking why a Mercedes cost so much more than a Yugo. If Quickbooks is working well for your business, why are you researching to find a replacement? Something has changed. More than likely, you’ve outgrown the reports, or the single user conditions which can be very frustrating with an Entrepreneur software product like Quickbooks or Sage 50.
Consider you’re purchasing a complex piece of machinery. One you’ve never seen run, or worked with yourself. Would you really base your purchasing decision on whether you understood all the controls without training? Nor should you with ERP software. In software there are fewer standards than there are quirks. We’re lucky most systems map the F1 function key as the Help key. But much of the other shortcut keys are different by solution. Granted, ease of use should be a consideration. Generally, you’ll recognize whether the user interface appears easy to use or cumbersome during a live demonstration.