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Top 7 Reasons Why it is Important to have an ERP System

HomeTechnologyTop 7 Reasons Why it is Important to have an ERP System

Here are the Top 7 reasons of ERP software that will help you to outweigh the initial cost, effort, and time involved in implementation.

The impact of these systems can be seen with the global ERP market estimated to reach $41.69 Billion by 2021.

Although this is a staggering number, it may be difficult for those unfamiliar with ERP to grasp why it is so important to their businesses.

Globalization is reducing the market for many industries. Finding all possible tools to help your business stay competitive is important. Many companies can use ERP.


Organizations that want to manage their business functions in a centralized and integrated system can use ERP. Companies working in the supply chain often use ERP to keep track of every step of manufacturing and distribution.

ERP can also be used by other industries, such as healthcare, non-profit groups, construction, and hospitality. ERP can be used by any organization that needs to manage staff, customers, and inventory.

ERP stores all data entered into one database. All this data can be organized and analyzed, making it possible to create reports.

ERP combines customer management, human resource management, business intelligence, financial management, and inventory management capabilities into one system.

Why ERP is Important?

ERP software can use to manage many business functions but how does it compare with other solutions? Although ERP has similar goals to other software solutions, ERP’s unique features make it an attractive competitor in the market for software.

These are seven reasons why enterprise resource planning (ERP) systems are so important for any company:

1.   You can save more money

Even though many vendors offer flexible pricing, ERP packages can still be a significant investment. Many people find it difficult to believe that ERP will save your company money because of the high costs.

Once you can get past the sticker shock, it becomes easier to see how ERP could provide a great ROI.

ERP unites many systems in an organization that might be scattered. Your staff will have access to all tools they need to do their jobs, from product development to accounts payable.

Unifying systems will help you and your staff make more efficient use of their time. With ERP, users no longer have to search for information in multiple systems. Information is easier to find with the central database.

Your organization can also save money by using ERP. Users no longer need to be trained in multiple systems. It saves money and makes it easier to manage the training process. Instead of scheduling multiple training sessions with different vendors, you only need to communicate with one.

2.   Better Collaboration

Although the features of ERP programs can differ depending on which program you use, they all improve collaboration. The centralized database, as mentioned above, is an integral part that makes ERPs unique.

This database provides your company with one source of truth from which to work. It eliminates errors caused by incorrect data and further reduces costs.

A central database also reduces hesitation and stalling in projects because all team members have the same access to company-wide data. There is no need to combine information from different sources or systems.

All data is stored, shared, accessed, and compiled through one system. It eliminates any concern about data files’ accuracy, completeness, or security.

It’s not as simple to say this if your team repeatedly enters the same client information into multiple systems. You invite human error to your processes if you don’t have an ERP.

3.   Analytics that works better

An ERP central database helps you improve your reporting and analytics. An ERP stores and records all data input by users, making it a powerful business intelligence tool.

ERP software can make it much easier for your team and vendor to create various reports. Without an ERP, you can quickly compile reports that would take many days to research.

Many ERP systems offer a customized dashboard that executives can use to view reports as soon as they log in.

These reports can include income and expense statements and custom KPIs that provide insight into specific functions. These reports are available quickly so you and your team can make faster decisions.

You no longer have to depend on IT staff to create the required reports. Reports are often provided with access levels that allow only the relevant employees to see company data.

4.   Increased Productivity

Tough tasks are almost impossible to do with traditional methods. Employees used to take hours to complete tasks such as generating reports, tracking inventory levels, timesheet tracking, and processing orders.

These tasks not only take up time but also expose employees to human error. Even the most skilled staff will make mistakes after entering the same data in multiple forms for the umpteenth time.

An ERP solution can automate the most tedious tasks if you choose the right one. ERP software can automate repetitive tasks like data entry.

It also allows advanced calculations to be performed in minutes. It allows your team to spend more time on their work and increases your labour ROI. ERP can increase your company’s efficiency, productivity, and profitability.

5.   Happier Customers

It has never been more important to manage your customers. More people turn to the internet for advice about what to wear, eat, and live.

With 84% of consumers trusting online reviews just as much as they would their friends, past customer opinions are more important than ever.

Providing client-centric goods and services is the best way to increase customer satisfaction. It is possible in several ways with ERP.

ERPs are often equipped with customer relationship management (CRM) or can easily be integrated with one. Your CRM can access data from all business functions with an ERP.

An integrated CRM software will show you information such as order history, billing information, and contact information. It allows your team to view your clients holistically and better understand their needs and wants.

It increases customer visibility and allows you to formulate your sales strategy for better lead generation.

Simplified Compliance and management can be hard to keep up with all the regulations imposed as companies expand and do business abroad. Local companies must be aware of various regulations about information security, human resources, and environmental issues.

Many ERP solutions are designed to comply with these regulations. ERP software also includes auditing tools to help document things such as chemical use or tax provisions.

Creating reports and then sending them to the appropriate governing body is easy. ERP can also help to manage risk. Because there are fewer errors in accounting, this solution is more reliable and accurate.

It improves overall financial management. Forecasting tools allow users to forecast demand, labour, and budget events. This information will allow you to create more secure schedules, budgets, and product development plans.

6.   Improved inventory monitoring

Growing companies face a major problem in tracking and monitoring their growing inventory. Barcoding, RFID tags, and serial numbers are all used by ERP to track inventory throughout the supply chain.

These tools allow you to keep track of inventory levels in different warehouses, what items are in transport and which items are available for consumption. This visibility improves pick, pack, and ship efficiency greatly.

As tracking technology provides more precise numbers, inventory monitoring can improve reporting.

You can create custom KPIs to identify which products are moving the fastest, which indicate greater demand, and which have higher carrying costs. Warehouse managers can use ERP to get more precise information about their inventory to make better business decisions.

7.   Improved Production Planning and Resource Management

ERP can also use to manage manufacturing. ERP gives insight into all manufacturing operations, including the shop floor. ERP allows users to optimize production schedules and equipment to maximize their capacity.

ERP also manages your Bill of Materials and fixed assets. This software allows users to create and edit BOMs and track all changes.

Fixed asset management lets users schedule maintenance for equipment to minimize unexpected downtime. It will improve your profitability and supply chain relationships.

Bottom line

If you choose the right ERP solution, the importance of ERP will outweigh the initial cost, effort, and time involved in implementation. For more information about features and functions, goals, and questions for vendors, see our ERP Buyers Guide. If you do enough research and take the time to consider all of these benefits, ERP can use in a way that makes a company’s life easier.

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Foram Khant
Foram Khant
Foram Khant is a writer and serial entrepreneur at Techimply, with covering IT strategy and trends. She’s keen to share her knowledge on a few ERP Software technology-related topics with readers that can assist any kind of business. Her passion for helping others keeps her motivated.


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