What is an ERP?
Enterprise Resource Planning (ERP) is a system that, when implemented, ties together and automates a number of processes within a given enterprise. More specifically, custom ERP software is a system of applications that helps businesses integrate, standardize, and streamline their internal processes across human resources, finance, supply chain, manufacturing, and other departments.
When implemented properly, a good ERP can:
- cut operational costs through well-established workflow and integrated systems;
- improve business insights through real-time reports;
- strengthen infrastructure with all business operations of the same feel and look from the back office to the front office;
- decrease risks through more effective control levers;
- grow efficiency through improved user experience across a streamlined workflow;
- increase user adoption rates through a friendly ERP system design;
- grow user collaboration through data sharing in orders, contracts, or requisitions.
ERP systems are usually composed of smaller, customized modules. Each module is responsible for completing a particular task within the organization.
Since these modules can be heavily customized and modified to meet a growing organization’s particular needs, ERP software is an invaluable tool that can be tailored carefully to the specifications of any company.
Categories of ERP software
ERP software is categorized according to the industry it can be used in, the set of functions it includes, and the implementation process.
Most ERP software options are general and easy to modify to any business needs by adding sets of tools and ensuring the connection between various departments. Such solutions are featured by strong integration and customization tools to match any industry. General ERP software is popular across different industries, including:
- Food and Beverage
- Professional services
Within these industries, a general ERP system can have various models, depending on specific requirements. And the more modules the software includes, the more operations it can help to cover and automate.
There is also custom industry-specific ERP software built from the ground up to meet the large corporation’s specific requirements: custom manufacturing ERP, ERP for logistics- or finance-based companies.
Usually, a base package includes core financial functions and tools for human resource management cost extra. There’s also a set of modules grouped by industry. This means that a manufacturing company will need a supply chain management module, while a retailer will be looking for ecommerce packages included.
There are three categories of ERP systems by implementation: on-premise, cloud-based, hybrid.
- An on-premise ERP system is installed on the company’s local servers which gives the company total control over the system. The company both owns the system and operates it through their in-house development team. On-premise ERP software is the choice of companies that have their own IT teams that can take care of the system’s maintenance and don’t want to pay vendors.
- Web-based ERP systems are usually chosen by smaller businesses that have no need to hire an in-house team of developers. They prefer the system to be implemented, upgraded, and supported by the ERP vendor. This type of system implementation is usually cheaper if compared to the on-premise option.
- Hybrid ERP is a combination of web-based and on-premise options. This category is preferable when the company has an on-premise system but since the company grows, they need to integrate a few web-based models to enjoy their benefits and flexibility and have control over the core business processes.
Does your company need an ERP?
Just because an ERP can work for any company, that doesn’t necessarily mean that every company needs one. How can you tell if your company does?
#1: Company processes are run using several different pieces of software.
While a small enterprise might be able to work within 5 programs just fine, a growing one is bound to face a number of issues as more needs must be met. Making different software work together cohesively can be a challenge, especially if your company doesn’t have the technical skills required for proper integrations.
By having an ERP, you ensure that every company process occurs within a single space which, if managed properly, can greatly improve your company’s efficiency. You’re also able to save a lot of the costs related to IT management by making use of an ERP. Instead of having to pay for dozens of updates regularly, you’ll get a system that can be updated and customized within your company, all at once.
#2: Data management is getting increasingly difficult.
A common problem for both growing and established enterprises is the continuous creation of data. As a company grows, a larger client base and larger team mean that more data gets generated and this data needs to be managed in an effective way.
An ERP can help improve the overall flow of the internal documentation process and can automate most, if not all, of the associated data management processes.
#3: Interdepartmental collaboration needs improvement.
In a company that has more than two departments, facilitating smooth communication and the effective exchange of information are key to overall success. Being able to look up data from other departments easily can save time and help a company develop in the right direction.
Having an established workflow, complete with all necessary data, that’s accessible through an ERP means that employees are able to perform their duties much faster and with much less stress.
#4: Complex inventory management is required.
A company that sells goods, either to other companies or directly to consumers, needs to have its inventory in check. Enough goods must be in stock and, if a shipment is needed, it needs to happen on time in order to keep customers happy.
With an ERP, management becomes much easier since all departments, locations, and employees are able to track inventory numbers and input all necessary information in real time. A well-implemented ERP helps you keep a constant eye on whatever is going on in your warehouses, allowing you to make better business decisions.
Remember: ERPs aren’t the cure for all maladies.
Before implementing an ERP that unifies and automates all of your business processes, you must make sure that these processes are already organized well. An ERP makes sense only if your company’s workflow is already established, but it takes too much time, resources, and/or effort to manage it effectively.
Implementing an ERP into a company that isn’t ready for one will result in having an automated workflow that relies on a number of poorly designed processes, which is of no actual help to anyone.
Custom vs. out-of-the-box ERP
As you decide that your company needs an Enterprise Resource Planning system, you soon realize that there are two ways to go. You can either buy an out-of-the-box solution or you can start custom ERP system development. And the question is, which of these two options is better? Let’s compare the benefits and drawbacks of both.
Another name for this solution is prepackaged software that is good at handling standard business processes. This system is easy to learn but it won’t cope with everything a particular business requires.
|Cost efficiency: The initial cost is lower than in the case with custom ERP||Hidden fees: Additional upgrades, annual licensing, and support fees take a huge cut from your budget|
|Easy to find: Common businesses in the retail or food industries have no problem finding a suitable out-of-the-box solution||Lack of core modules: Out-of-the-box solutions fail to meet the needs of unique processes since they lack important features and modules|
|Quality assurance and quick support: Out-of-the-box ERP systems come with a backing of a huge customer base, so the vendor ensures 24/7 support||Business infrastructure changes required: Businesses may have to change their infrastructure to make certain out-of-the-box suitable|
|Quick deployment: The system is ready to go. Installation and customization require little time||No growth adaptivity: Ready-made solutions won’t adapt to the business growth|
Considering the above-mentioned drawbacks of out-of-the-box ERP systems, most businesses get in touch with an ERP software development company to build the system that meets their business needs.
|Matching features: The company can develop features for every department specifically||Higher expenses: You will pay more for ERP software development services but you will save more in the long-run|
|ERP’s scalability: As the business’ needs and processes grow, the system is improved with new modules and features||Development time: It’s extensive since the ERP system is about to cover all of the company’s processes|
|Productivity growth: Custom solution improves workflows and increases the accuracy of processes|
|Edge over competitors: Custom-made software enhances user experience and delivers more value, thus placing the company in a better position|
Why SteelKiwi Inc. implemented an ERP
Within our own company, we realized that building an ERP made the most sense once we began to grow and expand into various areas of business. As a smaller team of 20, we were able to manage processes manually or by automating small bits and pieces. However, as we grew to over 80 team members operating in multiple departments and across multiple locations, our workflow got a lot more complicated. To resolve issues that we were regularly encountering as a larger company, we decided to design and build an ERP to help with the overall management of company processes, both internal and external.
As a company with many skilled project managers, designers, and developers, we wanted to create something that fit our needs using the passion and expertise of our team members. Our ERP has become a company pet project that is regularly updated and improved. We have the freedom and ability to try out as many new features as we want, implementing and continuously improving those that work and simply removing the ones that don’t.
This freedom, in combination with the skill and natural curiosity of our developers, has become both a challenge and an opportunity. By doing what we love and by naturally looking for ways to optimize our internal business processes, we’ve managed to design a system that helps us work faster and better.
So, what does SteelKiwi’s ERP do for us?
Our ERP features
The features of our ERP system help us do a number of things, tailored to our company’s needs. The ERP helps us:
- Manage company data
For most organizations, including our own, there is a lot of information that needs to be easily accessible to several departments. Through Puls, another pet-project integration of ours, we’re able to keep track of a number of metrics including the company’s financial growth, new projects, website statistics (visitors, leads, etc.), and other relevant information. The data is recorded in our ERP and is available to our CEOs, heads of departments, and other appropriate employees, helping them communicate and manage the team effectively.
- Create an up-to-date employee database
Our ERP holds a record of all important employee information (contact info, salary, type of employment, etc.). Every relevant piece of information about a team member is held within one space and is easily accessible by both our Accounting and Human Resources departments. When a new employee begins working at SteelKiwi Inc., all the paperwork they need to sign can be found through the ERP right away. Needless to say, this feature saves a lot of time and removes a great deal of the effort associated with onboarding someone new. Every piece of information can be pulled out instantly from any SteelKiwi Inc. office, making employee administration so much easier.
- Provide a digital, personalized filing cabinet
Each employee in our company has their own “Personal Cabinet”, powered by our ERP. Within their Cabinet, they can see and make changes to their personal details (contact information like home address, phone number, email address,taxnumber, etc.). They can also see all relevant work details (such as their job description and position details, trial period conditions, type of salary, salary amount, and so on). The Personal Cabinet allows employees to access their salary history and they can also see and keep track of paid tax records, find a list of their personal rewards and expenses, and manage any other information related to their position within SteelKiwi Inc.
- Manage company finances
Both taxes and salaries are calculated automatically within our ERP. The system pulls and stores data about each employee’s work hours, accounts for any bonuses, calculates associated taxes and exemptions, and displays the final financial amounts. Necessary tax documents and bank invoices are also generated automatically so that our accountants only need to press the “Print” button to have everything ready, making finance management simpler and much faster.
- Track employee holidays
Our ERP is equipped with a separate module in which employees can request vacation time and other holidays or days off. This module is fairly complex because of our flexible work structure (an employee can take a couple of days off and make them up later, without having their salary cut). When a vacation has been requested, one of our HR managers is notified through the ERP. They can then check with heads of departments to approve or deny the request and can send back the final reply to notify all relevant team members, again through the ERP.
- Manage employee workloads
For more efficient management of employee workloads, we’ve integrated a company planner within our ERP as well. Information regarding current projects and employee vacations and days off is automatically loaded into a calendar. This data is instantly available to all of our HR Managers, Project Managers, and Team Leads, helping them plan projects based on the employee resources available at any given time.
- Manage performance reviews
Within SteelKiwi Inc., we’ve got a system in place for employee performance reviews which occur biannually and affect staff positions and salary adjustments. By having this module added to our ERP, we’ve made sure that employees can always follow their progress and adjust their efforts to meet their professional goals within the company.
- Keep track of birthdays
As a little bonus feature, we’ve included a list in our ERP that has every employee’s birthdate. The list is accessible to everyone within the company and helps our HR department make celebrating a team member’s special day easier.
- By building and implementing an ERP at SteelKiwi, we’ve created a customized platform that securely holds all of our company’s most important information, while also performing many of our more time-consuming managerial and administrative tasks within seconds. Judging from the feedback and reviews from our team, the ERP has made a lot of things easier for employees and has greatly improved the overall management of all company processes.
In need of an ERP of your own?
If you’re interested in finding out more about what an ERP can do for you or you want to develop an ERP for your own business, please contact one of our sales department representatives for more information. Also, feel free to go check out our case study of Snaapy - a promotional app with ERP features for small and midsize businesses.