Main Functions of ERP Software

by Ziyah Wahab Marketing Professional

While any business may have different uses for ERP, there are six key functions that are found most commonly in the ERP software.

Human Resources

An HR module should be able to process tasks related to managing your employees, including payroll, timesheets, benefits, onboarding and offboarding. The HR module should automate payments, including deductions so, for example, an hourly employee's wages are automatically calculated based on her timesheet, benefits and taxes are deducted and the net pay is automatically deposited into her bank account.

Customer Relationship Management (CRM)

A CRM module stores data related to customers and prospects, giving employees insights that can improve sales and marketing processes. For example, CRM can track customer buying habits, so you can see what types of products you may be able to upsell and when the best time may be to offer these products. CRM is especially useful for an e-commerce business, allowing you to target prospects with ads that are meaningful to them. A CRM module can also track when prospects have been contacted and what was discussed, eliminating additional sales calls that may not be appropriate.

Business Intelligence (BI)

A BI module can help business leaders make well-informed decisions based on meaningful and timely data from any department as needed. This module can analyze practically any business process and provide reports without any excess information. Reports can be in a visual format or presented in tables, depending on the manager's preferences.

Supply Chain Management (SCM)

An SCM module usually works with an inventory management system to improve the efficiency of a company's supply chain by using real-time data to optimize manufacturing and distribution processes. This can give you the ability to intervene when a problem happens, rather than waiting to find out the next day or later. More than that, today's SCM software can track and analyze these processes to predict when a problem is likely to occur. An example of this is the ability to notify customers when orders are being processed and shipped in real-time.

Inventory Management System

An inventory management system module processes order fulfillment and tracks warehouse inventory, greatly reducing the need to track inventory manually. This is very useful to manufacturers or companies with their own distribution centers where tracking inventory can become extremely complex. Features can include real-time inventory on the company's website to inform customers what is and what isn't in stock.

Financial Management

Just about every business with an ERP will use a financial management module. It works in conjunction with the other ERP components to track the flow of money, from the purchase of new supplies to paying employees and issuing invoices to customers. Financial management software in an ERP can also help you budget, produce financial forecasts and give you insights into where costs can be reduced.

Small Businesses and ERP

While the first word in ERP is still Enterprise, this is quickly beginning to lose its importance. Until the 21st century, ERP solutions were usually found only in companies with enterprise (i.e. large) computer networks with dedicated servers and the budgets required to manage them. Today, more and more small businesses are tapping into the benefits of ERP. This is primarily for two reasons.

First, cloud computing solutions, still often known as SaaS (Software-as-a-Service), have made ERP system extremely inexpensive. Any small business can sign up for a monthly or annual subscription and select the functions they want to use. The software company runs the ERP systems on its own servers and takes care of the maintenance, upgrades and backups for all of their customers with its own technicians.

The second reason more smaller companies are using ERP is because of the increasing amount of data they now have access to and, consequently, need to manage this data so they use it effectively.