Realising the benefits of next-generation ERP
Simpler integration and more social media functionality are giving enterprise resource planning added business-appeal
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The business value that enterprise resource planning (ERP) solutions can deliver is now well proven and deployments of the technology are ramping up rapidly, according to market experts.
Gartner estimates that worldwide enterprise software revenue is on pace to surpass $267bn in 2011, a 9.5 per cent increase from 2010 revenue of $244bn. Analyst company IDC is equally bullish, predicting that the global ERP market should produce "steady growth for some time".
A newly published Computing white paper, ERP – Building on the Basics, reveals that, of the 150 UK business decision makers polled, half of the respondents with ERP solutions have experienced a reduction in overall finance costs, and 42 per cent have found that their ERP software enables better cash management across their global infrastructure, by allowing them to establish, for example, individual payment centres.
ERP: delivering savings in departmental budgets
"Some firms use ERP to make savings in departmental budgets; being able to compare cost savings with revenue gains leads to better decision making when setting targets. ERP systems can also make it easier to identify non-productive areas of the business, allowing managers to move staff to where they can better benefit the firm," the Computing study noted.
"Still more savings can be realised by speeding up the monthly close process, in which a firm's books are temporarily closed and analysed to produce a set of financial statements that indicate how well the company is performing."
The report went on to reveal that ERP additionally allows management information and analysis to be made available sooner, giving the organisation more time in which to analyse the figures before producing financial statements.
Respondents reported that full or partial automation of this process by ERP can lead to significant reductions in the close cycle, adding that the boost to business from these CRM-facilitated financial benefits is "obvious". In addition, better cash flow and liquidity is identified as a critically important part of both riding out an economic downturn and taking maximum advantage of the recovery.
Reducing duplication and time wasting
According to the Computing white paper, the largest number of respondents (63 per cent) said their ERP means less duplication and time wasting across the board, and 61 per cent reported that cross-departmental processes are now aligned more closely. Over half reported that ERP has had a particularly beneficial effect on IT budgets, with costs such as maintaining multiple software packages and storage of duplicate data being drastically cut. This in turn was found to be able to free up limited IT budgets for more strategic spending. Forty-one per cent of respondents now experience better communication across departments.
Senior commercial development manager for Sage, Lindsay Boullin, agreed that the benefits of ERP can be compelling:"We think one of the key benefits of ERP is having one consistent view of key business information – customers, finances, suppliers, internal business drivers – because this ensures that marketing, sales, operations and services teams are all working to the same goals.
"With a single ERP solution managing a business, data is captured once and stored centrally, so it is accurate, up to date and consistent. This brings efficiencies too."
According to Boullin, ERP is one of the technologies that companies are turning to in order to deliver strategic business objectives, but they are also leveraging business management solutions.
For example, he noted that Sage customers are increasingly using email management software to help increase the efficiency and effectiveness of their electronic direct marketing, to ensure they are segmenting and targeting customers to inform them about products and services that are likely to be of interest.
Active plans to upgrade ERP solutions
The newly published Computing report shows that forward-looking organisations are looking to upgrade the technology. It notes that 38 per cent of respondents replied that they are actively planning an ERP system upgrade of some type over the short or medium term.
Asked about their plans to upgrade their ERP system or add further modules such as customer relationship management (CRM), 38 per cent of respondents replied that they are actively planning an upgrade of some type over the short or medium term.
"This finding underlines the point that many business organisations are realising a great return on their investment in ERP software and those that have not yet taken the plunge are starting to see the advantages," the report noted.
Looking to next-generation CRM
ERP experts agree that the momentum behind ERP deployment seems to be ramping up as the underlying technology is enhanced to take advantage of next-generation developments such as cloud computing. Sage's Boullin explained that next-generation ERP is easier to use – for example, featuring user-centric user interfaces. Such technologies also harness aspects of browser and social media functionality, such as the ability to collaborate easily, simple search facilities, live data feeds so that users can see immediately what is happening in critical parts of their work.
Another feature of next-gen ERP solutions is simplified enterprise integration – whereby the applications use open standards to read/write/feed data to disparate applications and devices. This often means that ERP data is far more accessible – so users can configure much more easily to a much higher degree.
"Think of an ‘iGoogle' approach to setting up your ERP home page. Implementation times are also coming down with increased simplicity and modular approach to features – so businesses only have to implement what they really need," Boullin said.
"Data that would previously only been available to an ERP user can now be seen by anyone who has a device or web access with permission to access that data. And because they are using a browser or mobile client, the experience they have is familiar so usually takes less training."