If you’re on the look-out for a business management software solution to run your business, then you’ll no doubt come across the term ‘ERP (Enterprise Resource Planning) software’. What is ERP software? We explain this and more in our comprehensive overview of ERP software. We’ll touch on everything from evaluating if you need an ERP system to the deployment options available and finding the right software/vendor for your business.
This guide is also available as a PDF which you can download here – What is ERP software? (PDF)
CONTENTS
- What is ERP software?
- What does ERP software offer?
- The benefits of implementing ERP
- Types of ERP software
- ERP software deployment models: How you consume your ER
- ERP Software Examples
- ERP Software Pricing Guide
- How to evaluate your need for ERP software
- Building a case for new ERP software
- Which ERP software product is right for me?
- Considerations in choosing an ERP solution/vendor
- Achieving a successful ERP implementation
- Maximizing your new system
- eBook: Preparing for the Journey Ahead: ERP Implementation Guide
What is ERP software?
What does ERP software offer?
The benefits of implementing ERP
Every business is different. But they all face a similar problem.
To maintain a competitive edge, you need an efficient and reliable way to store, access and control your data. An ERP system is the solution to this and comes in many guises – from industry-specific ERP software to B2B wholesale software, cloud-based or on-premise ERP systems (more on this later).
Understanding your company’s data is akin to finding a goldmine. Being able to act on this information helps you optimise your business operations for the highest cost-savings and efficiencies. Plus, identifying trends and patterns in your data can open up competitive opportunities for your team – and help you increase revenue.
ERP systems also help you realise the value of your data. In particular, ERP for medium/large business is designed to provide efficiency, analytics, intelligence and visibility across your business.
Other benefits include:
STREAMLINED BUSINESS PROCESSES
- Data is available across all functions of your business from one central location giving real-time visibility and control
- Productivity is increased by automating tedious back-office tasks which in turn frees up time
- Maximise efficiency with personalised workspaces
- Decision-makers and budget-holders can monitor operations in real-time
- Decision-making at all levels of your business is greatly enhanced
- Maintain optimum stock levels
- Implement in-depth margin, pricing negotiation & cost controls
OPTIMISE YOUR SUPPLY CHAIN
- Gain real-time visibility of your entire supply chain.
IMPROVE CUSTOMER SATISFACTION
- Provide exactly what your customer wants when they want it
- Enhance the accuracy of your delivery times
REDUCE COSTS
- Save money with automated administration and operational processes.
- Reducing operational costs reduces capital outlay.
- Run your business at a lower cost.
OPTIMISE INVENTORY
- Increase smart management of stock levels.
CONSOLIDATE FINANCIALS
- Eliminate different systems to manage cash flow.
- Keep track of payments in and out much quicker.
FUTURE-PROOF YOUR BUSINESS
- Modern ERP systems will grow as your business grows, keeping up with the latest technologies.
- Facilitates diversification & acquisitions
INCREASE YOUR COMPETITIVE EDGE
- Adapt to market requirements with ease.
- Maintain the highest levels of compliance.
ANYTIME, ANYWHERE ACCESS
Types of ERP software
Given the number of ERP software options out there, choosing the right system for your business is no easy task. It doesn’t help that the industry uses a tiered system to categorise the different software packages available. This can further complicate the situation and make the decision of what to go with (and where to start) harder.
While it is not important to dwell too much on this tiered classification, it’s good to be able to distinguish where various packages sit in the marketplace.
TIER 1 ERP SOFTWARE
‘Tier 1’ level packages like SAP Enterprise, Oracle and Infor are global multi-billion dollar operations designed to service the needs of the ‘big guys’ – large complex businesses that have many departments, a global presence and often complicated operational structures.
TIER 2 ERP SOFTWARE
The ‘Tier 2’ market is the largest of all the tiers in terms of the number of potential customers. Software in this class is often less complex to implement and costly than Tier 1 applications and can go from full, one-size-fits all ERP software packages to very industry specific solutions. Targeted at mid-size companies anywhere from 10 – 1000 users approx., the level of complexity can vary greatly here which is why you’ll find so many vertical market players in this space.
TIER 3 ERP SOFTWARE
‘Tier 3’ level packages such as Intact Xline, TAS Books, Quickbooks, Sage 50 are chosen by SMEs across a wide and varied spectrum of industries. Functionality tends to be reasonably standard and processes are adapted to meet the functionality of the software. They are designed for single site customers, tend to have less than 20 users and in general have less demanding needs.
A NOTE ON INDUSTRY-SPECIFIC ERP SOLUTIONS
The choice between generic solutions and industry-specific options is a major part of your decision-making process.
Traditionally, ERP solutions were created with basic functionalities and features common to a wide range of industries. During the implementation process, IT consultants would conduct a detailed system study to determine the customized solution based on a client’s precise requirements.
These ‘off-the-shelf’ applications were often found to be lacking in valuable information, functionality and flexibility; often leading to budget and cost over-runs.
As technology evolved, ERP solutions were created specifically to match exact industries, saving both valuable time and money. ERP software that has been developed specifically for your industry can handle all of your business processes with minimal to no customization required.
And with systems such as Intact iQ, which is built on modern technology, your consultants rather than the developers customise your system. This includes customising your system to any additional requirements that are unique to you that may even be outside the industry norm. Intact iQ also gives you more autonomy and control to change every view, screen, workflow, alert etc., without being technically advanced.
Perhaps the greatest advantage of industry-specific ERP is that the vendor consultancy and support team will have a deep understanding of your organizations’ needs and can offer expert industry advice to satisfy your individual nuances.
If you still feel confused and overwhelmed by the myriad of ERP software available, our ‘Global Vs Local ERP software’ article outlines the pros and cons of both which you may find useful
ERP software deployment models: How you consume your ERP
The technology ERP systems run on has changed dramatically, and that pace is moving faster than ever.
When selecting a new Enterprise Resource Planning (ERP), one of the most critical factors in your decision will be whether you choose to deploy it on-premise or in the Cloud.
Traditionally, ERPs systems were deployed on-premises, that means the software is installed locally, on a company’s own computers and servers. Today, whilst on-premise is still a popular option nearly every ERP vendor offers some form of cloud deployment option.
It’s so easy to get caught up in buzz-words surrounding the topic of ERP deployment, and there is a lot of jargon and misinformation out there. Hence, in this next section, we want to explain the pros and cons of the various options so you can decide what solution best suits how you and your team need to use, scale and access your ERP solution.
On-Premise is the most common, traditional method of deploying ERP solutions. On-premises ERP is the traditional licensing model where the user acquires the license per user or per company installed in the user’s office site or premises. It is a CAPEX (Capital Expenditure) payment structure with the full cost of the software and implementation fees paid in year 1.
Post-implementation, an ongoing annual payment is required to cover the software support agreement. It provides for ongoing upgrades and support for questions or issues that will arise when the user is live on the system.
Remote users may request complicated and costly remote-access software to use the solution. Data security is in the hand of the organization, and some organizations might not be as adept at practising proper data security protocols.
This type of deployment is generally more expensive than on-demand or cloud solutions because of the hardware requirements, capital investment in software licenses, in-house IT support staff (or equivalent from an ICT service provider) and longer integration periods.
Although considered more secure, as the entire instance of the software remains on the organization’s premises, achieving the so-called “four-nines” availability (99.99% up-time) can be very challenging and expensive. Finally, scalability is limited to the available installed resources and can create inefficiencies when it comes to supporting fast-changing business requests.
WHY PEOPLE CHOOSE ON-PREMISE ERP
- Want complete control – keeping data close and secure
- Servers are located on-site and are yet to be depreciated
- Prefer CAPEX
- Poor Broadband infrastructure
- Require full application access
Hosted ERP or Cloud Hosted ERP is similar to the traditional on-premise ERP deployment in many ways. With a hosted solution (can be cloud-hosted, hosted in a private data centre or a co-location facility), there is very little differences from an architecture point of view. The infrastructure can be CAPEX or OPEX (Operational Expenditure), but the most important element of a hosted solution is that it is a bespoke deployment for a single customer.
In a hosted environment, organisations must buy software licenses, but instead of installing the software in their own infrastructure, the provider will host the software for them.
The cost is still higher compared to cloud-based ERP because the software is hosted on a cloud server and organizations must pay for the full server licenses. Because all users will access the system remotely, the cost of this solution is affected by the remote-access infrastructure.
Security-wise, this type of deployment may require one or more site-to-site VNPs which are sometimes complex to manage. Furthermore, the company and the hosting provider must enter a shared responsibility agreement.
A cloud-hosted solution introduces some advantages compared with the on-premises scenario in terms of availability and scalability but remember it’s still a bespoke environment dedicated to a single customer without all of flexibility available from a modern, true Cloud ERP solution.
Cloud ERP is a subscription-based or SAAS (subscription as a service) model where the user pays for the service annually, quarterly or even monthly per user in perpetuity.
In this model, the ERP software and the underlying infrastructure is owned and managed by the ERP provider and users pay for it on an on-demand basis. In other words, this results in predictable costs over time and cheaper upfront investment.
Security is often the top concern for prospective ERP buyers but nowadays, Cloud ERP vendors have strict standards in place to keep data secure with advanced disaster recovery protocols in place. As a result, many are becoming less sceptical.
Cloud ERPs offer greater stability and continuous automatic updates. It also typically takes less time to implement a Cloud ERP solution compared with the other two options. Cloud ERP solutions support remote users natively and don’t require any complicated and costly remote-access software.
WHY PEOPLE CHOOSE CLOUD ERP
- Lower initial outlay
- No need to build or maintain an internal infrastructure
- Can scale up or down with ease
- Good broadband infrastructure
- Maintenance and support responsibility lies with the vendor
- Seamless remote access
- Advanced security and data recovery protocols may be offered
GET INFORMED
It’s important to interrogate the range of solutions your ERP provider is offering and the SLAs (Service Level Agreements) that support them. Many host their solution in the Cloud and market this as Cloud ERP when it’s not. Don’t get dragged down a path as a result of a provider pushing their own agenda.
For you, the customer, knowledge is power. You need to ignore the hype and look at the various deployment options available through the lens of ‘what are the related benefit/s for my business?‘ Stop and ask yourself why are we, as a business, considering an On-Premise, Hosted or Cloud ERP solution?
How will it help our business? Now, and in the future.
Ultimately, think purpose first and technology second and make sure you are working with an ERP provider who shares this philosophy and can offer you the options you need.
“If your approach is the Cloud is a place and I need to take my software and move it there you are not doing your business justice. Why? Because you are not optimising the way you are consuming the Cloud. Think of the Cloud as a way to facilitate modern IT. Cloud embraces a different way of doing things; sharing resources, applying automation, access to multiple datacentres, improved scalability & flexibility etc. Cloud is a set of capabilities you need to leverage to enable you and your team to achieve your business goals.”, Antonio Pogliani, Head of Managed Services, Intact
ERP Software Examples
Because of the complex nature of ERP systems, it’s not easy to provide examples. But for the purpose of showing you what an ERP software system might look like, we’ve outlined everything that is included in Intact iQ, our ERP software solution. And when we say ‘included’ we mean, fully integrated providing you with seamless 360-degree visibility enterprise-wide; all developed and supported by us. This is an important factor when comparing ERP systems as many solution providers have integrated with platforms to create a ‘complete’ ERP solution. Under the hood, they have been developed by someone else and integrated into their system.
Of course, Intact iQ’s RESTful API also enables you to seamlessly integrate any best of breed software you use or may wish to use in the future. This means your business can utilise and seamlessly integrate the latest technologies in your industry. This is an important consideration that may influence your decision to go with a particular product/vendor. So find out from the outset how easy is it to integrate third party solutions.
A NOTE ON THE TECH STACK AND WHY IT MATTERS
ERP Software Pricing Guide
ERP pricing models can be daunting whether it’s your first system purchase, an active operational upgrade or a holistic migration from one platform to another.
Depending on your preferred deployment option, buying an ERP system is like buying a vehicle. You can get a moped for €/£3k. Or you can spend €/£200k on a top of the range Porsche. And then you have options at every price point in between. As mentioned previously, there are 3 different levels of solution available in the ERP/Business management software market. To give you a guide to ERP software pricing, we again turn to the industry based tiered system.
TIER 1 ERP SOFTWARE
Companies in this tier would expect to invest 7 figure sums into their business solutions. Government agencies, banks, airlines and multi-national companies feature in this tier.
TIER 2 ERP SOFTWARE
Packages in this tier would typical range from 30k to <€1m for a CAPEX solution and include solutions such Intact iQ, Sage X3, MS Dynamics Nav, Sap Business One etc. For SaaS (Software as a Service) offerings, expect to pay anything from €/£120 per user per month.
TIER 3 ERP SOFTWARE
How to evaluate your need for ERP software
Building a case for new ERP software
Without a solid business case for moving to new ERP software it is unlikely that the funding required to select, implement and support a better system will be approved. One of the key drivers for the selection and implementation of any new ERP solution will be the realisation of quantified benefits.
Understanding and evaluating the costs versus projected benefits of each system being considered will enable you to determine which alternative is likely to provide the greatest return for your proposed investment.
We appreciate that the cost of the software, support etc. is easier to measure than the intangible benefits you get from business process automation, ease of use, improved customer satisfaction levels etc. but ultimately they all directly impact your bottom-line. And our customers are testament to this;
Which ERP software product is right for me?
In an ideal world, you should be able to compare like with like but in the world of ERP software, this can seem an impossible task. To make your comparison process less complicated and overwhelming, we suggest you do the following;
Firstly, think about what you are trying to achieve. What limitations are you coming up against in your current system? Consider the improvements you want to make right across your organisation.
And make your objectives definite, specific statements about what you intend to accomplish. Vague statements have no place on your goals list. Make them as quantifiable as possible.
Once your core objectives are established you should supplement them with the augmented benefits you are seeking to achieve.
Some businesses find it useful to document their current pain points and solutions required to overcome them (examples shown below). We strongly advise you to start with a list of your ‘must-haves’ before moving to the ‘nice-to-haves’.
DO I NEED AN ERP RFP DOCUMENT?
Considerations in choosing an ERP solution/vendor
Achieving a successful ERP implementation
Maximizing your new system
Many companies naively believe that once their ERP system is implemented it will continue to operate at maximum efficiency and effectiveness.
Unfortunately, nothing stands still. Staff leave, new employees start and lack adequate training, bad habits develop and new opportunities may arise to diversify, acquire new branches, augment operations etc.
It’s very easy to keep doing what you’re doing. It’s not easy to take stock of what’s happening in your business or to discover the cold hard facts of reality; that your ERP system may not be achieving what you had hoped it would. This doesn’t necessarily mean you purchased the wrong software, it just means you need to work harder to get it to where you want it to be.
It is reasonably safe to say therefore, that ERP projects are never-ending. Once you have successfully implemented your system, a continuous cycle of analysis and improvement should be taken in order to maximise its potential.
Given how critical ERP software is to an organization, it is essential to formalise an annual review of your systems. Depending on the nature of your business you may require more than one review a year but only if it is given the due care and attention it deserves. An evaluation should cover a review of your software, hardware, processes and people.
Here are the key areas you should look into to maximise your ERP system:
- Review your objectives and strategies
- Measure your reporting effectiveness
- Access staff training requirements
- Evaluate current & future functionality and IT requirements
- Budget and set aside time to review your system annually
- Evaluate areas/processes for improvement
In Summary...
As you can see there is a lot to consider if you’re thinking of a move to new ERP software. We hope in this article we have in some way demystified the topic of ERP software – what it is and everything that goes along with it.
We hope it also answers the question, ‘Do I really need ERP software?’. Because you may find that certain business management software systems – ones that aren’t full ERP systems but offer a good cross-section of features and functionality – may amply support your business needs.
Whether you decide to move to new ERP/business management software now or in a few years’ time, be careful not to hold on to old technology. You might find, to your cost that your business can’t begin to keep up with competitors using today’s modern and flexible systems.
Traditional ERP/business management systems have served us well. But their built-in limitations, aging capabilities and difficulties linking to 3rd party applications have often seen them unable to evolve with changing business requirements.
And as software systems continue to develop and modernise, today’s businesses have become unrecognisable from those of ten or twenty years ago. And yours could too with an industry specific, modern and flexible ERP system that’s the perfect fit for your business.
eBook: Preparing for the Journey Ahead: ERP Implementation Guide
HONEST, PRACTICAL ADVICE ON MAKING YOUR ERP JOURNEY AS SEAMLESS AND EFFECTIVE AS POSSIBLE.
Why not download our 30-page best practice preparatory guide to implementing ERP Software
- Learn who you need on your ERP implementation project team
- Understand the scope of work to be carried out
- Prepare for change and the cultural implications
