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What Is ERP Software, and How Can It Increase Efficiency?

Jamie Johnson
Jamie Johnson
business.com Contributing Writer
Updated Aug 11, 2022

ERP software lets you manage the most important operations of your business with a single solution to increase efficiency.

We’ve all heard the saying “time is money.” That statement is more true today than ever. For small business owners, time and money are precious resources. Fortunately, the right technology can improve the efficiency of your company’s operations and the effectiveness of your workforce. Once your enterprise is operating at its maximum potential, you’ll have more time to focus on increasing the profitability of your business

One way you can achieve this is by using enterprise resource planning (ERP) software. ERP software gives you the tools needed to overcome daily workplace challenges and ensure your business continues to grow. 

What is ERP software?

ERP software is technology companies use to manage the most essential operations in their business. This can include activities like project management, accounting, inventory management and human resources. These applications are important because they allow companies to manage many different aspects of a business within a single platform. This can improve company communications and create more accurate data reporting.

Did you know?Did you know? If you’re not looking for a single solution, you can purchase separate platforms. Consider the best project management software, top accounting software and highly rated inventory management software. We even have recommendations for the best HR software.

How does ERP software work?

ERP software uses a central dashboard to monitor various business processes. It ensures data from multiple departments can easily be shared and viewed, and it cuts down on siloes within your business. This helps improve your company’s workflow and reduces time-consuming manual processes. 

For instance, you could use ERP software to manage your company’s inventory and finances. ERP software can keep track of your existing inventory, account for changing costs and update your company’s financial statements. Those are three different tasks you can accomplish with one solution.

What are the benefits of ERP software for small businesses?

Let’s look at some of the biggest benefits of integrating ERP software into your business. 

Monitor employee progress.

ERP software allows supervisors and other managers to easily follow the progress of every phase of a project to ensure benchmarks are being met. Being able to track a project step by step means management will be able to identify when an employee needs additional reinforcements to ensure the project is delivered on time. [Learn more ways to monitor employee workflow.]

Keep team members on the same page.

Creating team sites and employee portals through ERP software can help all of your team members work together productively across your organization. This is true regardless of where your employees are located or whether they work in different departments. Ensuring all team members are on the same page will eliminate obstacles that can cut off communication or slow progress. ERP software gives a project’s team members the ability to reach out to others within the organization and provides additional help or insight.

Foster communication and problem-solving.

When a company places performance information in a virtual location that can be easily accessed by everyone, managers can more effectively communicate the organization’s business strategy. In addition, they can set measurable goals that support the company’s overarching objectives. 

Having this information available in a centralized location with ERP software allows for a more open environment and greater visibility. This enables employees to understand the business’s larger vision and how their work fits into it. That creates synergy, making it easier to avoid or solve problems as they arise, and drives employee engagement, which increases productivity across the company. 

Analyze business performance with greater ease.

The ERP software available today features advanced reporting options and business analysis capabilities. This can help you better understand how your business is performing, market trends and customer preferences. By accessing analytical reports and performance metrics, you and your management team can work together to tweak strategies that aren’t working and come up with new ones. ERP software can also play a vital role in inventory management, tying together key metrics across your organization. 

FYIFYI: The components of the best ERP system for your company will depend on the needs of your business. It’s important to identify your organization’s biggest challenges before looking for ERP software.

How do I choose and implement ERP software?

ERP software isn’t one size fits all. Rather, there are various types that are tailored specifically for certain functions or industries. This includes ERM software for tasks like accounting and customer relationship management and industries like manufacturing and healthcare. Here are the steps to choose the right ERP software for your business.

1. Identify your current business processes.

Before you can know which ERP software would be best for your business, you need to analyze your current processes. Which operations could be streamlined? Where could your organization be more efficient? Figure out what your company is doing well, and identify areas where you could improve. This will make it clear what you should be looking for when you meet with software vendors. 

2. Research various options.

Research a wide variety of software options before deciding which one you’ll go with. Ask your colleagues and employees for recommendations, and do your research before meeting with any sales reps. When talking with vendors, insist on demos of how the software works. Online reviews are a great resource too.

3. Figure out how you’ll implement the new software.

Once you’ve chosen a software solution, you should develop an implementation plan. A good implementation plan accounts for how you’ll install the software and ensure that it’s fully functional and can be used by everyone. You will want to offer training so that all employees know how to use the software.

Tip: Implement ERP software in stages, getting your team’s buy-in and giving them plenty of training time. If your team doesn’t understand the software, the problems it creates could outweigh the benefits. 

4. Keep track of the benefits.

If there’s a specific goal you’re trying to meet through ERP software, like cutting costs, track and measure your progress once the new system is implemented. That way, you’ll know whether or not the solution is a success. 

What are examples of ERP software?

AbbaDox

AbbaDox is a healthcare IT platform designed by IDS that provides responsive and intelligent applications that help healthcare operations run smoothly and more efficiently. Its customizable workflow solutions are designed and built using an IT ecosystem with modular “building block” applications. These applications can interface with other information systems, including proprietary software and mobile devices.

SAP

SAP offers ERP software that incorporates the key business functions of an organization. It helps companies keep the damaging effects of complexity at bay and generate new opportunities for growth and innovation. SAP provides real-time information across a company, reducing the possibility of redundancy. This helps create a more efficient work environment for everyone.

Microsoft Dynamics 365

Microsoft Dynamics 365 is a family of business solution software that brings together data, business applications, documents and devices to help employees make the most of their time. This platform allows you to automate functions within your business, enhancing collaboration and increasing sales.

SalesWarp

SalesWarp is an omnichannel commerce management system designed to help retailers manage all of their operations in one place. This makes it easier to get products to market quickly, helps increase sales across all channels, and improves operations – all while reducing costs. SalesWarp helps maximize resources and delivers a great return on investment by integrating, consolidating, and automating processes and systems across a company’s departments.

These solutions are only a small sampling of the ERP software available. No matter your business goals, ERP software will ultimately help you and your company run as efficiently as possible, both from a cost perspective and a time-management perspective. If you haven’t invested in this type of technology yet, you are missing out on an opportunity to improve your workplace and help your business succeed.

Seth Rand contributed to the writing and research in this article.

Jamie Johnson
Jamie Johnson
business.com Contributing Writer
Jamie Johnson is a Kansas City-based freelance writer who writes about finance and business. She has also written for the U.S. Chamber of Commerce, Fox Business and Business Insider. Jamie has written about a variety of B2B topics like finance, business funding options and accounting. She also writes about how businesses can grow through effective social media and email marketing strategies.