Benefits of ERP Software: Advantages, Disadvantages & Selecting an Enterprise Resource Planning System

 You may have heard "Enterprise Resource Planning" (ERP) before but never really knew what it meant. You're not alone. A quick search for what an ERP system software does yields pages on accounting, analytics, and even an in-depth Wikipedia article.

This post is designed to help you make sense of your options when selecting a new ERP system for your business by outlining the process and understanding how much work it will require. Ultimately this research should help you decide whether or not investing in a new enterprise resource plan will be suitable for your company and if there are any limitations that may prevent its adoption at the present time.

First things first: What is an ERP System?

According to the experts at IDC, an ERP system is "a set of software applications used by a company to gain real-time access to accurate, up-to-date information. This information is generally related to the firm's financial activities, operations, and supply chain. The term also refers more broadly to any enterprise application that brings together a company's key business processes as a single integrated system." (IDC, 2010)

In short, it's a massive and complex suite of software programs that cover every single aspect of your business, from accounting to manufacturing. It's used to manage the entire lifecycle of your business.

To help you differentiate between ERP system for small business and other software programs, let's take a quick look at the differences:

ERP System: An ERP is a larger project that encompasses not just one system but multiple parts to make up an entire company operating system. It covers every single aspect of your business, from shipping and receiving inventory to tracking sales and purchase orders to payroll management, accounts payable, and more. The focus is on the integration of all aspects of an organization, from human resources to manufacturing.

Other System: Other options like Quickbooks are just specific piece of software that may have some very unique features but still doesn't provide all the functionality that ERP system online do.

Why Do business owners spend millions on upgrading their ERP systems?

With the enormous cost of moving to an entirely new system, most business owners feel like they're making a significant investment in their future. These companies are chasing after their competitors, making the jump from a traditional notebook computer-led business to an information-driven, computerized system. But even as important as these companies want their data and information to be integrated, it's what they can do with it that really counts.