ERP Functions and Software Requirements List

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There’s definitely a lot of buzz surrounding ERP software these days. You might’ve heard it’s a necessary tool to stay competitive in today’s market. Or, you’ve heard how efficient it can make your business operations. But first, let’s start with something simpler. Enterprise resource planning (ERP) software is a business solution that integrates all your applications and manages your resources. So what can an ERP software do specifically? To answer that question, we need to understand the basic ERP functions.

But first, we’re going to provide you with some introductory information.

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Progression of ERP

History and Trends

ERP software was first introduced in the 1960s, and by the 1990s, it was widely implemented at large enterprises; mainly Fortune 500 companies. Between the inception of ERP software to today, the system saw several iterations. These changes were responses to shifts in how we do business as well as advances in technology. For example, what first started with clunky infrastructure and basic inventory management capabilities for managing assembly lines eventually evolved into mobile-optimized applications and e-commerce integration for controlling an entire supply chain.

With that being said, supply chain management and the rise of e-commerce shaped the ERP software industry during the 1990s. The need for agile, omnichannel-based supply chain capabilities led to functionality such as integrations to suppliers, e-commerce and more. These new tools provide connectivity and visibility, allowing users to always have an overview of their supply chain.

Another shift we’ve seen in the ERP industry is an increase in small businesses adopting ERP software. At this point, the general tide of ERP requirements changed, and users needed more affordable solutions that could work for smaller operations, as all businesses need software to meet modern expectations of shoppers. This shift began in the 1990s and persists today; ERP vendors have responded by offering more flexible, modular solutions. This lands us where we are currently: cloud-based ERP software, or SaaS ERP, is taking over the ERP market.

Today

Cloud ERP software allows users to access their system and their company data anywhere they have an Internet connection. Small businesses today are adopting SaaS (software as a service) ERP because it carries a low up-front cost and little to no responsibility for maintaining and upgrading the system. Similarly, large businesses are following suit because the benefits of cloud ERP are indisputable. In addition to its convenience, cloud computing is cohesive with both the direction of business software and the business world. Cloud software is projected to continue in this direction – the global cloud computing market is set to exceed $330 billion in 2020.

Advantages and Disadvantages

Despite all of these advances, there will always be advantages and disadvantages of ERP solutions. Read on for an overview:

Advantages

  • Focused IT Costs
  • Total Visibility
  • Flexible modularity
  • Improved Efficiency
  • Customer Service
  • Data Security and Quality
  • Improved Collaboration and Workflows
  • Standardized Business Processes
  • Facilitated Regulatory Compliance
  • Improved Supply Chain Management
  • Superior Scalability
  • Improved Reporting and Planning

Disadvantages

  • The Cost
  • Cost of Implementation and Maintenance
  • Customization Process
  • Complexity

ERP Functional Requirements

There are a few things every ERP system should contain. You can think of functional requirements as the benefits and experiences an ERP system provides. Below is a list of key functions of ERP:
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1. Centralized Modules

Centralized modules allow users to manage grouped tasks without switching applications or screens. All information needed for a certain operation should be housed in the same part of the system.

2. ERP Database

ERP systems rely on a central database from which all applications retrieve information. This provides all users with a single source of truth, ensuring all departments and teams work with the same set of information.

3. Integration

ERP applications are fully integrated and should work together seamlessly. This means users should be able to go from one part of the system to another without feeling completely lost or like it’s a different application. This also means the applications should freely share information with one another in real time.

ERP Modules and Functions

In addition to functional requirements, you need to look for the specific features of ERP that will benefit your business. The following are popular ERP modules and functions buyers can seek out when searching for their perfect system.

Manufacturing

Before ERP, there was MRP, or manufacturing resource planning. But businesses realized they needed support for their back-office operations as well. When back-office tools were added to MRP, it started to look more like the ERP systems on the current market. Manufacturing functionality has remained a staple to this day.

Manufacturing helps businesses manage their product development and production. This ERP functionality gives users the tools needed to manage resources, finances and the shop floor. Your manufacturing system should assist with planning and scheduling, budgeting, forecasting, procurement and materials management. Additionally, many manufacturing solutions rely on project management tools to keep track of design iterations.

NetSuite Task Scheduler

NetSuite ERP Task Scheduler provides users with an overview of the manufacturing schedule.

These tools should all work together to streamline your manufacturing process. This gives your team more time and resources to dedicate to product creation, rather than documentation or addressing errors.

Accounting

As mentioned above, ERP came from the need to combine manufacturing and back-office functions. Accounting, as one of those back-office processes, has long been a main function of ERP. Accounting tools support accounts receivable, accounts payable and general ledger functions to manage your finances. Accounting software supports additional functions such as payroll, time tracking and tax reporting.

But accounting software works a little differently when incorporated into an ERP. In this situation, your ERP database automatically provides the accounting module with data from processes company-wide. This means a couple of things. First, it reduces the time your accounting staff needs to spend on collecting financial information. Second, it reduces the chances of redundant entry and errors. Lastly, it gives your team a fully comprehensive look at your finances.
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Human Resources

Human resources is another back-office function modern ERPs facilitate. ERP software covers all HR functions an employee goes through during their time with your company. One especially important ERP function is applicant tracking. Applicant tracking software allows users to keep tabs on prospective employees during the recruitment process. It enables your HR staff to search for the best candidates according to the criteria your team sets.

HR functionality also encapsulates the onboarding process and benefits administration. Additionally, HR deals with functions such as training, payroll and performance management. Performance management is aided in part by reporting and analytical tools. Thanks to the ERP database, all applications within your system pull data from the same source. This can help you recognize patterns in your hiring practices and employee performance.

Customer Relationship Management

A strong relationship with your customer base is the foundation for all your other business functions. Without loyal clients, there simply won’t be a business to run. Customer relationship management (CRM) tools make fostering these connections easier than ever before. CRM functionality helps businesses track campaigns, nurture leads and maintain client information. While there are plenty of standalone solutions that can perform these tasks, an integrated CRM can transform your business.

Without a fully integrated CRM, you may find yourself entering customer data into all your applications separately. Not only is this a waste of time, but it also opens up all kinds of issues. It’s unlikely that each entry is going to include comprehensive data on your customers. Your current team might be used to going to one source for purchase history and another source for billing information. But this gets complicated when you hire new team members. Instead of teaching the quirks and workarounds of your current system, you could simply adopt an integrated CRM.

A CRM as part of an ERP solution provides complete customer data in one place. It allows for quick user access when customer data is needed for shipping, billing or marketing purposes.

Inventory Management

Since ERP systems are predominantly aimed at businesses that manage goods, inventory management inevitably plays a large role in the system. Inventory management solutions give users more control and visibility over stock. But just like the modules above, inventory management works best as part of a larger multi-functional ERP system.

When this is the case, inventory software exchanges data with manufacturing, distribution, sales and customer records. This gives greater visibility of the supply chain and helps users predict issues, such as late delivery due to low inventory levels, with greater accuracy. Inventory management software can also forecast demand with the help of analytics tools. This can assist with determining the best sales tactics for certain products during certain parts of the year.

Distribution

Distribution involves the processes that get a business’s product from the warehouse to its final destination. Like with inventory management, distribution benefits from the other ERP functionalities it’s integrated with. Distribution tools manage functions like purchasing, order fulfillment, order tracking and customer support. Integrating inventory management data is especially helpful during these operations, as it gives users insight into where the product is and how much of it is available.

Further, CRM data is also useful during distribution. These tools provide billing and payment information, but can also provide insight into who is a priority. This ensures your most important customers get the attention they need first.

Business Intelligence

Business intelligence (BI) supplies users with the tools needed to take advantage of the data your ERP already processes. BI functionality collects data from across the ERP and analyzes the information to provide a deeper understanding of your business processes. Analytics can detail patterns in your operations, revealing positive and negative habits. Analytics can also predict future trends so you can see issues coming down the line.

SAP Business Intelligence

SAP Business One leverages BI capabilities to provide users with sales forecasts.

BI uses reporting tools to convey data to users. Basic tools may provide tables, however, there are more advanced options offering custom dashboards, graphs and other data visualizations. Reports enable company leaders to make more strategic business decisions based on data and facts.

Implementation

Now that you understand the requirements and functions of ERP and how they work, we’re going to provide a quick run-through on how to implement an ERP. Otherwise, you can call our software experts at 855-850-3850 or fill out one of our forms for more help in the software selection process.

ERP Software Selection

  1. Software Selection: SelectHub’s easy-to-follow, four-stage process helps you determine your business needs, evaluate and compare solutions, validate your technical requirements and negotiate a great contract.
  2. Planning: Assemble a team and create a plan; project management tasks.
  3. Budgeting: ERP implementations are at risk for hidden or unexpected costs. Once you arrive at a number you feel comfortable with, go a little bit higher.
  4. Data Migration: Do a ‘spring cleaning’ of your data to eliminate any redundancies and be meticulous – data is the backbone of every ERP system.
  5. Training: At this point in the process, it’s time to start training your end-users.
  6. System Testing and Go-Live: The system test should make you feel confident that the software’s interfaces and functionalities are responsive, able to process your company data and ultimately perform according to your requirements.
  7. Post Go-Live Tasks: Analyze ROI, evaluate employee productivity and check client satisfaction post go-live to measure the success of the project.

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Next Steps

Hopefully, you know a little more about the functionality of ERP systems now than you did before. If an ERP solution sounds like what your company is looking for, you can move forward in your requirements gathering. We recommend checking out our customizable ERP requirements template.

An ERP system can take your business to the next level but only if you take your time selecting the right solution. You might discover you need all the ERP functions mentioned above, or maybe you really only want to focus on accounting and supply chain management. Whatever the case may be, a thorough assessment of your business needs and clear requirements are key to a successful implementation.

Madeline ReinboltERP Functions and Software Requirements List

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Join the conversation
  • MiniBigTech - March 13, 2019 reply

    Excellent blog. It is very informative for entrepreneur who is trying to relaunch it business they should see this ERP Software Modules seeing that it will be fruitful.

    Kim O'Shaughnessy - March 13, 2019 reply

    Thanks for reading! We’re glad you found the article informative.

  • MiniBigTech - July 24, 2019 reply

    Industry This type can be tailored to suit the needs of Industry such Retail, Automotive. Web-Based: This type, also referred to as cloud-based, is hosted by a vendor or open source business remote access from anywhere or any device. Small Business: This type is particularly attractive to smaller businesses to help with order management and human resources management. Check it out click on ERP software modules. Please contact us at any time.

  • Levi Armstrong - September 15, 2020 reply

    It’s great that you mentioned that one of the beneficial functions of ERPs is inventory management, which helps business manage their goods or supplies and forecast demand. Dad and I are thinking of starting a hardware store downtown since my godfather is renting a commercial space. If we proceed with our plan, I’ll definitely discuss getting ERP software with my dad. Thanks!

    Madeline Reinbolt

    Madeline Reinbolt - October 12, 2020 reply

    Thanks for sharing, Levi!

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