What is ERP? The Complete Guide for Businesses

ERP (Enterprise Resource Planning) systems integrate a broad range of core business processes and functions into one central system that acts as a single source of truth for an organization. 

An ERP system consists of a wide range of integrated applications, each one dealing with a particular function. These could include, for example, finance, operations, marketing, human resources, customer relationship management, supply chain management, and more.

Table of Contents

• The Three Types of ERP Implementation

• The Business Case for ERP: 9 Benefits Businesses Receive

• Implementing an ERP System

• Implementing an ERP System Is Easier With DreamFactory

Typically, the interconnected applications that make up the Enterprise Resources Planning system use a shared data structure and a common database, enabling data to flow easily between them. This eliminates the need for duplication and improves the integrity of the data.

Originally only installed on-premise at vast expense, ERP systems are now available as on-premise, hybrid, and cloud solutions. The introduction of cloud technology, in particular, has led to a decrease in price, bringing them within reach for most SMBs. 53% of IT leaders see ERP as a priority area for investment, and as a result, the industry is seeing fast growth. The global ERP software market is growing fast, with a CAGR of 10.2%, and by 2026 is expected to reach a value of $78.40 billion. 

There are now many different ERPs on the market, many of them specialist products for businesses of a particular size (SMBs, enterprises) or targeting the specific needs of particular industries, such as service organizations, manufacturers, or healthcare providers.

The Three Types of ERP Implementation

There are three ways to implement an ERP system: On-Premise ERP, Cloud ERP (which can be public or private), and Hybrid ERP.

On-Premise ERP

With on-premise ERP software, a business leases or purchases ERP software and then runs it on its own servers. The organization controls both the hardware and the software and has responsibility for the security and maintenance of the system.

On-premise solutions used to be the only way to use ERP software. They require significant investment and expertise and are typically used by large businesses with extensive on-site IT capabilities.

Public Cloud ERP

When using public cloud Enterprise Resource Planning software, the system is hosted on remote servers and provided as a standardized service. Typically, businesses can pick and choose which applications they use, enabling them to only pay for what the business needs. The cloud can be either public or private, wh

With Cloud ERP systems, the provider takes responsibility for security, maintenance, and (often) support. They are typically updated multiple times a year and easier to keep up-to-date with the latest best practice than on-premise solutions. Cloud ERPs are quick to deploy, cost-efficient, and easy to integrate with other services.

Private Cloud ERP

A private cloud ERP uses the same tools as a public cloud ERP, except that the system is housed on servers leased or owned by the business itself. The business gets to use the same tools and resources as public cloud users, but retains a greater measure of control over security. This puts a greater burden on IT and is more expensive.

Hybrid ERP

A hybrid ERP solution is a combination of public cloud with on-premise and/or private cloud systems. The business retains greater control over particularly critical business applications while also getting to access the benefits of services hosted in the public cloud.

The Business Case for ERP: 9 Benefits Businesses Receive

As businesses grow, systems and processes that once worked become inefficient and limiting. It becomes hard to get answers to common questions, employees spend too much time keeping up with daily administrative tasks (and not enough on decision-making & strategy), and decision-making becomes slow and difficult. 

It is these challenges that necessitate either investing in a first ERP system or upgrading to new ERP software that enables the business to better achieve its goal. In doing so, businesses access a wide range of advantages:

Increased Productivity - Employees spend less time inputting data and creating reports and more time using data to make key decisions. Improved collaboration allows users across different business functions to work together to ensure a business makes better decisions faster.

Improved Business Insights - By holding all data in a single database, businesses can get superior insights into where their business is succeeding and failing. Businesses can access a global view of their operations and understand better how previously siloed processes impact each other.

Real-Time Reporting - Without ERP software, most businesses are 'looking in the rearview mirror,' always basing decisions on historical data. With an ERP system, up-to-date data becomes easily accessible, enabling key leaders to make decisions based on the most recent data and improving the overall accuracy of decision-making.

Exceed Customer Expectations - Enterprise Resource Planning systems help businesses to provide great customer service by tracking interactions across different touchpoints. Reps have all the information on communications and billing they need to provide better support.

Make Quicker Decisions - Pulling information together from siloed systems takes time and resources. By implementing an ERP system, decision-makers are able to access the data they need immediately. This means businesses are able to act quickly to take advantage of time-limited opportunities.

Reduced Operational Costs - ERP software can reduce operational costs by enabling your business to deliver the same processes with fewer software licenses, reduced errors, better decisions, and ensuring the business has an efficient supply chain and inventory.

Improved Compliance Reporting - ERP systems can help businesses to improve their compliance reporting whilst simultaneously reducing risk through the use of key controls.

Easier Training & Improved User-Adoption Rates - Adopting an Enterprise Resource Planning system reduces the number of different systems each employee needs to be trained on. This reduces training costs and time, and improves the user experience, resulting in better user-adoption and fewer employees using improper processes.

Receive The Benefit of Regular Updates - Cloud ERP systems enable businesses to take advantage of the latest tools and best practices through regular updates.

Implementing an ERP System

ERP implementation projects are complex, time-consuming, and difficult. Most businesses underestimate the time and cost of completing the project, and sound management is essential.

The typical project can be broken down into seven stages. It is expected that many of these will overlap, with, for example, Stage 4: Training, running concurrently with almost every other stage:

Stage 1 - Project Planning

In this initial stage, a business must define a budget and timeline for the project. It is also important to form a project management team and define roles both internally and with the ERP vendor and any external consultants.

Stage 2 - Check & Move Data

Begin moving data over to the ERP software earlier in the implementation process. Begin by choosing which data is most valuable, validating it, and checking it for errors or duplicates. This stage happens early in the implementation process because a) it takes significant time and resources to complete, and b) having real data loaded into the system improves testing and training.

Stage 3 - Process Mapping & Reengineering

In this stage, businesses must examine existing processes and work out how these will look in the new system. While recreating processes in an ERP system can result in improved efficiencies through connectivity and automation, this is also a key opportunity to examine if these processes and be updated or chanted to deliver additional improvements. 

This process may be more complicated if legacy systems are involved. If so, DreamFactory can help. DreamFactory enables you to generate a fully-featured REST API in just minutes. Sign up for our free 14 day hosted trial to test how DreamFactory can help your ERP implementation project.

Stage 4 - Team Training

A new piece of ERP software requires extensive team training to ensure a smooth rollout. Not only do teams need to adjust to the new software, new workflows, and new processes, but this is also a valuable opportunity to receive feedback. Where possible, companies should use real-world data (see Stage 2) to ensure the training reflects the real-world actions employees will be taking.

Stage 5 - Testing (Conference Room Pilot)

At this stage, it is critical that businesses test typical processes and run through them with users. This is an opportunity to test both the processes themselves and the training users have received. Ideally, users will successfully and easily complete their tasks with limited reference to the documentation. This should shed light on how ready the business is to go live.

Stage 6 - Going Live

With the hard work done, businesses just need to load transaction-based data (up-to-date inventory, orders, etc.) to be able to go live.

Stage 7 - Ongoing Support & Iterative Improvements

After launch, the business must continue to check that processes are being followed correctly and provide ongoing training to ensure the software is being used effectively. In many cases, real-world use and the new data teams have access to will reveal many iterative improvements that can be implemented to further improve efficiency.

Implementing an ERP System Is Easier With DreamFactory

When implementing an Enterprise Resource Planning project, businesses frequently need to connect legacy software or risk lacking visibility in key areas. Unfortunately, these legacy systems rarely have supported APIs. 

Hand-coding a custom API takes the average engineer weeks of work. For businesses with multiple legacy systems, this becomes the key bottleneck in the process. Instead, thousands of businesses around the world trust DreamFactory.

Click here to find out how E.C. Barton & Company used DreamFactory to enable their ERP system to talk to their legacy systems.

DreamFactory enables businesses to create fully-functional, fully-documented REST APIs in just a few minutes, with no coding experience necessary. Contact the DreamFactory team to discover how the DreamFactory platform can help you complete your ERP implementation project quicker and easier.