Enterprise resource planning (ERP) systems and software connect an organization’s functional areas, processes and systems. Business functions such as human resources, finance, manufacturing and inventory control can be linked by one platform that ideally increases efficiency and quality, lowers costs, and provides greater organizational flexibility and decision support.
A 2015 study by Allied Market Research predicts the ERP software market will top $41.6 billion by 2020, with manufacturing and services as the largest sector. North America and Europe are considered the highest adopters of ERP, although the Asia-Pacific region is expected to generate nearly $10 billion in sales by 2020.
ERP Functional Areas
ERP is designed to facilitate the sharing of information across functions to eliminate inconsistency and duplication of effort. In selecting an enterprise resource planning platform, organizations should consider the various ERP modules that align with their strategic, economic and technical goals. Let’s take a closer look at some of those functional areas:
- Marketing/Sales – Sales and marketing departments can track the customer experience from presale activities, which begin with contacting the customer, through the actual dispatch of the customer’s order. Tasks related to customer visits, expenses, shipping, invoicing, forecasting and competitor analysis can be automated and/or enhanced through an ERP system. Employees can contact customers, follow up on invoices and track orders. Additionally, sales and marketing personnel can monitor their individual goals, which also can be collated and analyzed by managers and business partners.
- Customer Relationship Management – ERP platforms also can incorporate customer relationship management (CRM) modules to focus on how a business communicates with its customers. This may include departments such as sales and marketing, and call center support, as well as functions such as customer interaction data, sales pipeline management, lead prioritization and customer retention.
- Supply Chain Management – ERP modules supporting supply chain management may feature functions for purchasing, product configuration, supplier scheduling, goods inspections, claims processing, warehousing and more. There are also related modules to manage order processing and distribution tasks.
- Manufacturing – Engineering, scheduling capacity, quality control, workflow and product life management are among the core functions that can fall within an ERP system’s manufacturing module.
- Accounting/Finance – By automating and streamlining tasks related to budgeting, cost and cash management, activity-based costing and other accounting/finance functions, ERP systems can provide businesses with real-time data and insights on performance while also ensuring compliance with relevant financial regulations.
- Human Resources – Human resources modules within an enterprise resource planning system may include tools and dashboards to gather and interpret data on training, recruiting, payroll, benefits, 401(k), retirement and diversity management. HR managers also can monitor and measure key performance indicators (KPIs) for individual employees, job roles and departments.
As technology trends such as mobile, cloud computing, big data and the Internet of Things continue to reshape the marketplace, ERP systems are evolving to provide businesses with the competitive intelligence necessary to drive success across a variety of functional areas.