8 Reasons Why ERP Is Important in 2020


With the global ERP software market expected to be worth $41.69 billion by the year 2020, the impact of these systems is evident. While that number is impressive, those who’ve never used the software may find it difficult to understand why ERP is important to their business. But as globalization squeezes the market for many industries, it’s essential to seek out any and all tools to give your business a competitive edge. For many companies, this is achieved through the use of ERP.

What are the Uses of ERP?

Enterprise resource planning (ERP) systems are used by organizations looking to manage their business functions within a centralized and integrated system. ERP is commonly used by companies working within the supply chain to help keep track of all the moving parts of manufacturing and distribution. However, ERP can be utilized by a number of different industries including those in healthcare, nonprofit groups, construction and hospitality. Organization needing to manage their staff, customers and inventory can all rely on ERP benefits.

ERP stores all entered data into a single database, allowing all departments to work with the same information. Additionally, all this data can be organized, analyzed and made into reports. ERP brings together customer management, human resources, business intelligence, financial management, inventory and supply chain capabilities into one system.

Get our ERP Requirements Template

Why Use ERP?

Enterprise resource planning software is used to manage a number of business functions, but how is it any better than other solutions? Even though ERP may have similar goals to other solutions, its unique features make it a distinctive competitor in the software market. Here are the eight reasons why the importance of enterprise resource planning (ERP) systems should be considered by any organization:

1. More Money Saved

Although many vendors have introduced flexible pricing in recent years, ERP packages are still a big investment. For many, the large costs alone can make it seem unlikely that the program would end up saving your organization any money at all. But once you get past the sticker shock, it’s easier to see how ERP can provide an excellent ROI.

First, ERP unifies many of the systems that may currently be fragmented in your organization. From product development to accounts payable, your staff will be able to access all the necessary tools for their job from one centralized system.

By unifying systems, you help your staff utilize their time more efficiently. With ERP, users don’t have to hunt down a piece of information across multiple systems. With the central database, information is much easier to retrieve. Moreover, your organization saves money with ERP by eliminating the need for users to be trained on several systems. This not only reduces the amount of money spent on training but also reduces the logistical effort involved. Instead of scheduling several training sessions with several different vendors, you only need to communicate with one.

2. Improved Collaboration

The features of ERP applications can vary slightly depending on the program you are using, but generally, all systems improve collaboration in some way. As mentioned before, the centralized database is an integral part of what makes an ERP unique. With this database, you provide your company with a single source of truth to work from. This reduces any errors brought on by working with the incorrect data, further reducing costs.

Moreover, a central database reduces any hesitation or stalling during projects, since all team members have access to the company-wide data they need. Additionally, there’s no need to merge information across various systems or sources. Because all of the data is compiled, stored, shared and accessed through a single system, there is no concern about how accurate, complete or secure the data files are.

This isn’t as easy to say if perhaps your team is entering the same client information over and over again into several different systems. Without an ERP, you invite human error into your processes when it could easily be avoided.

3. Better Analytics

A central database of information also aids in improving your analytics and reporting. Since an ERP records and stores all the data users input, it makes for an excellent business intelligence tool. As long as your vendor provides strong functionality, ERP software makes it easier and faster for your team to generate various reports. Reports that could take days of research and compilation without an ERP takes just minutes.

Most ERP solutions provide a customizable dashboard so executives can see reports when they first log into the system. These reports may include everything from income and expense statements to custom KPIs that offer insight into certain functions. The ability to have access to these reports quickly enables you and your team to make better decisions more quickly. You no longer need to rely on your IT staff to generate the reports that you need. Lastly, reports typically come with access levels, ensuring only relevant staff see valuable company data.

4. Improved Productivity

With traditional methods, tedious tasks are completely unavoidable. Tasks like generating reports, monitoring inventory levels, timesheet tracking and processing orders have historically taken employees hours to accomplish. In addition to taking up time, these processes lower employee morale and open yourself up to human error. After the umpteenth hour of entering the same line of data into different forms, even the best staff members are bound to make a mistake.

If you choose the right solution, an ERP can automate your most tedious tasks. The database within ERP software eliminates redundant tasks such as data entry and allows the system to perform advanced calculations within minutes. This frees up your team members’ time to do more thoughtful work, increasing your ROI when it comes to labor. From this, ERP increases your organization’s productivity, efficiency and profitability.

Compare Top ERP Software Leaders

5. Happier Customers

Managing your customers has never been so important. In our digital age, more and more people are turning to the internet to receive advice on what clothes to wear, what food to eat and how to live their lives. And with 84 percent of consumers trusting online reviews as much as they would a friend, previous customer opinions are more impactful than ever.

The best way to improve customer satisfaction is to provide client-centered goods and services. ERP provides this in a few different ways. First, most ERP are equipped with a customer relationship management (CRM) tool or can be easily integrated with one. With an ERP, your CRM has access to data across business functions.

Along with contact information, an integrated CRM can show you details such as order history and billing information. This enables your team to see your clients more holistically to gain a better understanding of their wants and needs. The increased customer visibility helps you formulate your sales strategy for improved lead generation.

6. Simplified Compliance and Risk Management

As companies grow and do business in different countries, it can be difficult to keep track of all the different regulations imposed on your business. Even local companies need to worry about various environmental, information security and human resources regulations.

Luckily, many ERP offerings are built with these regulations in mind to help you maintain compliance at every stage. Moreover, ERP software provides built-in auditing tools to assist with documenting things like chemical use and tax provisions. This makes it incredibly easy to formulate reports and send them over to the relevant governing body.

Additionally, ERP often provides tools to manage risk. This solution’s enhanced reliability and accuracy improve overall financial management since there’s less chance for errors during accounting. Forecasting tools also allow users to predict events when it comes to demand, labor and budget. With this information in hand, you can create more secure budgets, schedules and product development plans.

7. Improved Inventory Monitoring

A major challenge for growing companies is tracking and monitoring their expanding inventory levels. ERP utilizes barcoding, RFID tags and serial numbers to keep tabs on your inventory at every stage during the supply chain. These tools help you keep track of inventory levels at different warehouses, which items are in transportation and which items are on the shelves ready for consumers. The increased warehouse visibility optimizes the pick, pack and ship process greatly, removing all the guesswork.

Inventory monitoring also bolsters reporting, as tracking technologies provide more accurate numbers. Users can configure custom KPIs to see which products move the fastest — showing greater demand — and which increase carrying costs. With the greater precision provided by ERP, warehouse managers can get real-time data on their inventory to make more accurate business decisions.

8. Improved Production Planning and Resource Management

Along with managing your inventory, ERP also manages manufacturing. ERP provides insight into all manufacturing operations including the shop floor. This enables users to optimize production schedules, equipment and labor to maximize capacity.

Additionally, ERP manages your Bill of Materials (BOM) and fixed assets. With this software, users can easily create and edit BOMs along with keep track of all previous changes. Fixed asset management allows users to schedule equipment maintenance to reduce unexpected downtime, improving your profitability and supply chain relationships.

ERP Research and Reports

Bottom Line

The importance of ERP far outweighs the initial cost, time and effort involved in implementation if you choose the right solution. See our ERP Buyer’s Guide for more information on features and functions, implementation goals, and questions to ask vendors. With enough careful research and thoughtful consideration, you’ll find ERP uses that provide all the benefits listed above painting a picture for why ERP is important to a company.

What benefits are you looking for in your next ERP? Let us know in the comments down below!

Kim O'Shaughnessy8 Reasons Why ERP Is Important in 2020


Join the conversation
  • Job - July 22, 2016 reply

    Yes erp its ok but l think it kills employment instead of creating.why?Because where there is manpower the system will cut down that will make other employees to become redundant.

    William Hays - May 8, 2020 reply

    that’s not how that works

  • Aditya - October 8, 2018 reply

    Awesome! Very nice explanation on this topic, I Really liked it,

    Pranay - November 14, 2018 reply

    The growth of ERP & CRM is driven by increasing adoption of ERP cloud solution among many organizations, to reduce the cost and facilitate the real-time decision-making system. ERP system is benefiting not only large but smaller organizations too and that’s why we are seeing a huge growth in demand of ERP software. Although being an ERP software development company it is also our responsibility to understand the problem area & requirement of the client before developing the ERP solutions so to provide them with an appropriate solution which can help them in business growth.

  • Ella Brown - January 2, 2019 reply

    Thanks for giving all these reasons that why should we use ERP software. According to my point of view, nowadays ERP software became necessary for a healthy business.

  • Prachi Kalra - June 18, 2019 reply

    Highly Commendable blog! Keep up the great work.

    Lindsey Jenkins

    Lindsey Jenkins - June 19, 2019 reply

    Thanks for reading, Prachi! We’re glad that you find our posts helpful.

  • Vikram Singh - August 5, 2019 reply

    Thanks for posting content related to ERP which helps to make efficient decisions for managers.

  • Herbert Anyanwu - August 25, 2019 reply

    We are a transport company in Nigeria with about 700 buses and Sienna cars, with many branches allover. What kind of Sage Pastel Evolution, etc., solutions do you recommend and the cost, kindly respond asap.

    Kim O'Shaughnessy - August 26, 2019 reply

    Hi Herbert,

    We strongly suggest you get in contact with our team of Community Managers, as they can provide your business personalized recommendations for free. Reach out to them by email at [email protected] or by phone at 877.692.2896

    Let us know if we can help you in any other way!

  • arthi - September 19, 2019 reply

    The post is absolutely fantastic! Lots of great information and inspiration both of which we all need! Also like to admire the time and effort you put into your blog.

  • Amit Agrawal - September 20, 2019 reply

    Utilizing ERP software can be a learning curve, especially for those who are unfamiliar with utilizing an enterprise solution, or those who aren’t as technologically-savvy as others. There are initial costs associated with training your employees on in-depth tactics and ways in which to use the system. There’s also costs associated with continuing training, specifically on-site training when needed.

  • agaraminfotech - October 23, 2019 reply

    Thank you for taking the time to provide us with your valuable information.
    Manufacturing ERP

  • John Lee - November 18, 2019 reply

    Nice article! For me the importance of ERP is all about the intelligent future.

  • Maxnsiva - December 4, 2019 reply

    Eight reasons you are mentioned were important. Each one makes ERPUnique importance. Nice blog.
    Thankyou for posting. Logistics Software

  • Ducont Systems FZ LLC - January 1, 2020 reply

    People looking to implement ERP on their businesses and want to know the reasons why ERP is essential will surely find this blog worth reading. Keep sharing such valuable blogs.

    Madeline Reinbolt

    Madeline Reinbolt - January 7, 2020 reply

    Thanks for reading!

  • Rajesh Rai - January 22, 2020 reply

    This is an awesome blog post for the benefits of using ERP software. Thanks for sharing such a piece of useful information. Please keep sharing the useful post for ERP software. I will be very thankful to you.

    Purushottam Rijal - April 3, 2020 reply

    How can the use of ERP software be cost effective even for the general enterprise? Especially for those who are unfamiliar with the use of enterprise solutions, or who are not technically knowledgeable like anyone else. How can they reduce the initial costs associated with training their employees in intensive strategies and methods of using the system? There are also costs associated with continuous training, which the specific market size the entrepreneur must bear.

    Purushottam Rijal - April 3, 2020 reply

    How can the use of ERP software be cost effective even for the general enterprise?

  • Akash Patel - February 7, 2020 reply

    Thanks for posting such a great. This blog cleared all my queries and giving lots of information.
    ERP Software

    Madeline Reinbolt

    Madeline Reinbolt - February 10, 2020 reply

    Thanks for reading, Akash!

  • Zeta - March 12, 2020 reply

    Great post. ERP has the ability to revolutionize companies by streamlining manufacturing and boosting customer engagement.

    Madeline Reinbolt

    Madeline Reinbolt - March 17, 2020 reply

    Thanks for reading, Zeta!

  • Lucia - April 15, 2020 reply

    What about the cons of implementing an ERP system? Certainly, there are some…for example, ERP systems can be best in class addressing certain functions but not others. Most companies where I have worked have a balanced jumble of ERP system functions working alongside other off the shelf or custom solutions.

    Madeline Reinbolt

    Madeline Reinbolt - April 21, 2020 reply

    You can read about the disadvantages of ERP software here: https://www.selecthub.com/enterprise-resource-planning/erp-advantages-and-disadvantages/

  • Pixalive - April 25, 2020 reply

    The post is absolutely fantastic! Lots of great information and inspiration both of which we all need! Also like to admire the time and effort you put into your blog.


    Madeline Reinbolt

    Madeline Reinbolt - May 5, 2020 reply

    We’re so glad our article was helpful to you. Thanks for leaving a comment!

  • Levi Armstrong - June 2, 2020 reply

    It’s interesting to know that enterprise resource planning (ERP) software can eliminate tedious redundant tasks from your employees and let the system complete advanced calculations within a short period of time. By using this software, you can improve the productivity of your business. I’m planning to start an online shopping business soon to generate more income for my family. A few articles online have good reviews about NetSuite, so perhaps I’ll look for a NetSuite ERP provider in town once I start my business. Thanks!

  • Rasoul - June 4, 2020 reply

    Thanks for the informative information. I have a question. Is it applicable to construction projects? If yes, is it possible to integrate it to project management?

    Madeline Reinbolt

    Madeline Reinbolt - June 18, 2020 reply

    Hi Rasoul, thanks for reading our article. ERP software can be used in the construction industry and there are even ERP systems designed specifically for the construction industry. Depending on the vendor, it can be possible to integrate an ERP system to a project management system.
    It sounds like you’re interested in ERP software — you can browse ERP vendors and compare them here: https://pmo.selecthub.com/top-erp-software-site-vers/. If you don’t think you’re ready to compare solutions, you can begin the software selection process by gathering your requirements: https://pmo.selecthub.com/erp-requirements-template-site-vers/. Feel free to reach out to us by calling 855-850-3850 if you have any remaining questions or would like to seek assistance in selecting an ERP system.

  • Albert Chibaya - June 13, 2020 reply

    Simplifies consolidated financial reporting

    Madeline Reinbolt

    Madeline Reinbolt - June 18, 2020 reply

    Thanks for your comment, Albert!

  • Abrar Khan - June 28, 2020 reply

    Thank you for sharing this understand this amazing blog, It is easy to learn and understand. I have learned many things about why erp systems are important from your blog and from the ready business solution.

    Madeline Reinbolt

    Madeline Reinbolt - July 1, 2020 reply

    Hi Abrar, thanks for reading. We’re so glad our blog has been helpful to you.

  • Muhib Beekun - July 19, 2020 reply

    Always happy when the importance of ERP is stressed, but I would love to see a bit of info about choosing the right ERP for your business, the right packages, and the capabilities one should look out for. Do you have any content like that?

    Madeline Reinbolt

    Madeline Reinbolt - July 21, 2020 reply

    Sure thing, Muhib. I think our ERP Software Selection Process and Criteria article, our ERP Requirements Template and Checklist and the Top ERP System Examples article would serve you well.

  • Levi Armstrong - August 14, 2020 reply

    It’s good to know that having ERP software can improve my business’s analytics and reporting since there would be a central database for all the necessary information. My husband and I are planning to franchise a supermarket next year since we’ve saved enough money to start a business. I’ll take note of what you said and consider getting ERP software for our business if everything falls in place next year. Thanks! https://garyolsonassoc.com/dba-classic%2Fevo-erp

Leave a Reply

Your email address will not be published. Required fields are marked *