Importance and Benefits of ERP System in SME Segment

ERP (Enterprise Resource Planning) is a system which integrates various business data in a single database and provides cross function reporting on click of a single button. Earlier ERP was made for large organizations but, now it is made for medium and even for small organizations. In this global competitive market, organizations need to upgrade with latest technologies. Most of the large organizations are using enterprise resource planning system. To deal with those large organization SMEs (Small and Medium Enterprises) need to work on a similar type of technologies. In this case, importance of ERP system for SMEs increases. Of course, there are lots of business benefits of enterprise software. Apart from all other basic benefits, enterprise software gives an information system with three important capabilities i.e.

1. Consistency and reliability of business data across the organization
2. Streamlined transaction processing within and outside organization
3. Provides operations level reporting on a click of a button

These capabilities, basic and important as they are, ensure that organizations are ready for specific solutions that improve overall performance. The areas that will increase the basic ERP requirements are like supply chain management (SCM) with electronic collaboration between supplier and customer, customer relationship management (CRM), business intelligence (BI), product data management, complete product life cycle (PLC) management, inventory and warehouse management using RFID tools. For these applications, ERP system becomes the substratum, a kind of gateway to expert functions. That is, enterprise software is a sine qua non for other applications.

In fact, the latest trend is that with basic enterprise resource planning software, tailor-made system is given by ERP companies. ERP vendors are speeding-up to integrate most of these additional capabilities. This type of customized or tailor-made enterprise system is easy to install and implement for SMEs. It also takes less time to implement and chances of implementation failure are lesser.

Usually, an organization thinks to implement ERP (enterprise resource planning) software to align business objective with latest technology solutions, to enhance customer confidence and stakeholder commitment, to optimum utilization of organization’s resources and assets. Typically, an organization is looking for good enterprise resource planning software with advance features and functions.

Benefits of ERP Software

ERP system introduces efficiency and improvement of its business processes. Good enterprise software helps you to achieve transparency and availability of data across all business functions. It gives right information at the right time to the right people for effective decision making. This decision would be based on accurate information, which will give positive result and increase productivity.

ERP software helps you to optimize your human resource management and asset management. It also improves financial management. Trail balance, balance sheet, cash in hand, cash in bank, top supplier, top customer, ABC analysis, dead stock, WIP (work in progress) and other important reports are ready at any point of time. It helps in achieving better efficiency in organization reporting. ERP software streamlines the supply chain management and improves customer relationship management.

Enterprise resource planning software ensures data security and data scalability: organization can customize the enterprise software according to their requirements. It adopts systems that address changing technologies. It gives better ROI (return on investment). Organization can increase turnover with same human resource. There is a misconception that, ERP is for IT department and they will get more benefits, but it is not true. During implementation and after go-live, IT department responsibility is higher than other department.

Proper training gives better output from the new system. Lack of proper training to user results wrong entry and create problem. Top management should understand the need of detailed user training. Ultimately, user is going to use this enterprise resource planning software.

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Comments

Fri, 9 Oct 2009 at 7:24 AM, by Nash
To survive and prosper organizations must employ new technologies and techniques at a velocity that may challenge the very fiber of their company. They will be required to establish seamless integration from their customers, internally into manufacturing, and out to their suppliers. In other words, the integration must wholly link all of the finite elements comprising the total supply chain.

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