Enterprise Resource Planning (ERP) is the process that aids the companies to integrate and manage the different parts of their business. An ERP software system streamlines the purchasing, planning, sales, inventory, marketing, human resource and finance. In brief, it automates all the manual process of a company and increases productivity.
A company not only needs to bear the licensing fees to set ERP but also so many other costs in the form of the following factors:
1. IMPLEMENTATION
Implementation cost comprises the cost of hiring a professional to install and
configure the ERP system. Since it is a complex arena to deal with, a company
needs to spend a hefty amount on changing the operating system, upgrading or
changing servers, hardware and other software, to smoothly run an ERP system.
You also need to set up a test environment as an essential part of the implementation process to know whether the ERP system is affecting the real data of your company or not.
2. TRAINING
ERP system is not easy-to-use or intuitive like an accounting or any basic
software like Peachtree or Quick Books. For this, your company needs to invest considerable
time and money to train the employees. Often, the ERP seller provides the training to its clients by charging a
standardized hourly rate.
3. DEVELOPING CUSTOMISED REPORTS
An out-of-the-box functionality of an ERP system is not enough to effectively
run a business. A business needs to allocate budget for drafting customized
reports to enable the employees to perform their work with ease.
An ERP system is capable of storing substantial data and information, but employees cannot use the access that information and data easily. So, a company needs a dedicated IT staff to develop customised reports for the concerned department, so that the work is on time.
4. REDESIGNING
A company needs to redesign the entire process while upgrading its software
program to an ERP system. For example, a business using accounting software
needs to perform a task either manually or applications like MS EXCEL.
5. MAINTENANCE
ERP finance cost includes network, hardware, and other labour costs from IT or
another department to run the system properly. On average, the maintenance cost
of an ERP system hovers between 15-20% of the initial cost of purchasing.
6. UPGRADES
Every software needs frequent upgrades to enhance productivity. It is crucial
for a business to estimate the cost in advance of upgrading the ERP software.
Many times, you will need altogether a new software to run the system, if your
business does not run on a mirrored-set up for data transfer or updates.
7. TECHNICAL SUPPORT
You should ensure that your ERP vendor is providing technical support or not
for fixing the bug the ERP system. Ask
your vendor if he is including technical support fee or additional cost for
tech support or not, as it can disrupt the bottom line of your company.
Every company has some objectives in mind for setting-up an ERP, some of the objectives which are common across the businesses are as follows:
1. SHORTENED CYCLE TIME
ERP system removes all the redundant task. Once the information process into
the system, it distributes the information to the concerned department. It
eliminates the duplicate information that helps in abating the data errors.
It reduces the overall cycle chain of all the departments, and automates them to avoid delays.
2. REDUCES MANPOWER
Inputting the data manually requires an army of employees and administration,
which heightens the chance of human error. With an ERP system, you can easily
access the data and information in less time with fewer errors.
It automates and simplifies the task, which gives the employees more time to concentrate on important tasks.
3. IMPROVED CUSTOMER SERVICE
Happy clients mean better business! ERP
system helps the employees in easily accessing the client’s information via a
client screen. You can keep the track record of billing information, sales,
order, etc.
4. DATA SECURITY
ERP software allows you to easily access information, but it does not hamper
the security of the data. Its software is well equipped with restriction
control, firewalls, ransomware prevention to protect the confidential
information by limiting its access. It also gives the facility of pinpointing
the unscrupulous or unauthorized activities within its system and provides
insight on how to proceed ahead.
5. ACCURACY
ERP software is geared with robust machine learning capabilities and advanced intelligence tools to ensure the consistency and accuracy of the information stored in the database.
It offers real-time analytics and advanced filter to find out the inconsistency, analyses the data, and enables to make the necessary changes.
CONCLUSION
It is better to implement a robust ERP system to effectively and efficiently deal with dynamic global scenario. Keep in mind that no two businesses are same, so as their needs, therefore, consult an ERP expert or service provider to better understand the demand of your business.
It is extremely important to constantly evolve the business strategy with time otherwise, you will lose a large chunk of your potential customers to your arch-rivals.
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