Why a Business Needs an ERP system? Here are top 5 Reasons

"Errors using inadequate data are much less than those using no data at all” ~ Charles Babbage In the fast moving business world with accelerated pace, taking a decision, or should we say, taking a very informed decision is very imperative. With scenario changing at every second in the globalized village of the transaction, having up-to-date data is essential; and what, is even more, necessary is to have a centralized location of data which can be easily assimilated. In words of William Pollard, “Information is a source of learning. But unless it is organized, processed, and available to the right people in a format for decision making, it is a burden, not a benefit.” Often it is touted that ERP is a tool for big daddy's of business while small businesses are better off spending their scarce capital. However, a business small or big, have a common necessity to grow; and hence needs a common tool, centralized information structure or, in other words, ERP, obviously with necessary customization based on the size of the company and industry in which it is operating; along with any company- specific requirement. Midsized companies who implement modern ERP systems are able to support change and grow operating margins by 21%, reduce administration cost by 22% and operational cost by  23% ~ Aberdeen Group. ERP, even though, has been around for quite a while, it’s still the flavor of the season, as per Panorama Consulting ERP report – 2015, in the survey, of all respondent organizations, reported having a recent ERP experience. reason to implement erp Approximately 47% of organizations are either in the process of implementing ERP software or have completed implementation. Of the remaining respondents, 22% of organizations are in the process of selecting software.

Top 5 reasons why A Business Needs an ERP system

1. An Effective Cost Reduction Tool

ERP system offers the chance to get the actual and real-time data about daily operations that help companies to plan their strategy professionally. ERP is a wonderful system that not only saves on operational cost & administration cost, as we mentioned earlier but very effectively systematizes the operation. One thing that needs a special mention here is that with the modern ERP, distributors deliver complete and on-time shipments 97% of the time, thus it has become a comfortable tool for the distributors.

2. Increases the Productivity

There are no doubt that any company would like to work on reducing the cost and time consumed in doing a particular job. And, ERP is one such system that consolidates all the information fed into its system across the multiple departments, thus acting as a safe storehouse. The employees can use this wholesome information for various activities and expedite the process and make a faster decision that would be in the interest of the company. You wouldn't want your staff to run here and there, or call each and every colleague across different departments until they have found their exact piece of information, which could-have-been- easily maintained in the system.

3. Reinforce Customer Service

No company can just go on selling until and unless it has maintained the old customers and believes in adding the new ones. ERP, here too, acts as a guide that comes to the rescue of the company that wants to focus on the growth and customer service. Whether it is a simple query of a customer regarding the product availability OR managing the inventory accurately, ERP system has the entire information ready on what-to-do-now-or-next. This is an impeccable way to move ahead in the competition.

4. Consistency and smooth functioning

Panorama Consulting Solutions has come out with the 2015 ERP report that says that more organizations are going Multi-site. An increasing percentage of organizations are implementing ERP across multiple offices, warehouses and sites. This  year (2015),  85 - percent  of  respondents  implemented  ERP at  two  or  more  locations. A well-informed player is always confident and this applies to the business too. A common system enables the decision maker to receive information and holistic view of the operations spread across various location and come to quick conclusion and take better and quicker decisions. ERP squashes need of various software like CRM for different departments (as at times reporting the data transfer and amalgamation is a huge problem). So it's better to have a centralized arrangement those stores and updates the information and is helpful to each and every department for the planning purpose.

5. Nips the problem in the bud

With the constant flow of data being transcended into information for management, any aberration or issue can be quickly and in real time highlighted. As per panorama 2015 report - This year, an overwhelming majority of organizations (63%) customized their software to some degree. Although most organizations begin their ERP initiatives with the expectation that they use the “vanilla” software, organizations are clearly still making changes to the way the software was intended to be used. Which further smoothens the process and helps to identify the problem quickly? Thus, companies planning to implement the ERP system for their day to day business should, first of all, undergo an evaluation to understand why and how they can use ERP at its best. The businesses should consider the technology and make a move in that direction so that they have a competitive edge over others. Using ERP can prove to be a healthy deal if used to its maximum.  

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