Main Functions of ERP Software
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.
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.
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.
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