When it comes to optimizing the processes of your organization, explore ERP systems and decide which one can best meet the growing demands of your company!
The economy may look uncertain at the moment, but don’t let that be a reason to put the brakes on your ERP investments. Forrester’s research group found that corporations still invest in ERP while cutting back on other areas.
It’s easy to see why. Even in a recession, ERP systems represent a financial investment for any competitive company. But before you start shopping for the perfect ERP solution, it’s helpful to understand what the market offers. Which type of ERP system could best fit your business?
Read on as we provide an overview of the ERP market. We’ll explain what’s on offer and the differences between some ERP solutions you might choose to put on your shortlist.
What Is an ERP System?
ERP is short for Enterprise Resource Planning. It encompasses software businesses use for their day-to-day operations. That might include finance, HR, procurement, risk, and many other critical activities that help a business.
The idea is that having all these components together in one system (the ERP software) will help a business control and manage their operations throughout their organization. It provides efficiency and data intelligence, two things any business nowadays needs to stay ahead of the competition.
Who Uses ERP Systems?
Don’t let the word enterprise fool you. Big organizations might have traditionally used ERP, but that’s changing. Small and mid-sized businesses can expect plenty of benefits from investing in an ERP solution for their operations. And with many software providers on the market nowadays, you can find an ERP solution that’s perfect for any size of business.
ERP also spans a range of industries. You’ll find it in places as diverse as manufacturing, engineering, IT, consulting, hospitality, healthcare, and other professional service organizations. If you have many departments with information to store and share across your organization, you’ll benefit from an ERP solution.
A PwC report found that only 23% of respondents believed their organization had the right technology to maintain continuity and 76% identified technology transformation as an important area if they were to remain resilient in the market going forward. This tells us that it’s more important than ever to invest in the ERP systems that are best suited for your organization’s needs and goals.
Types of ERP Systems
Though there are a variety of ERP Solutions on the market, there are a few ways you can break these down into categories to help narrow down the right fit for your business.
Doing so will help you find the type of ERP System that’s best for you. Let’s look at cloud ERP systems and compare them to on-premise ERP systems.
Cloud Vs. On-Premise
The difference between cloud and on-premise ERP solutions mainly comes from implementation. You install on-premise systems locally at your business premises and they are managed by your company.
However, as the name suggests, cloud-based systems sit elsewhere: it’s a remote infrastructure that many businesses use and that you access on-demand. Often they are known as SaaS, or Software As A Service. That means buying a software service for as long as you need it rather than paying for one outright. It’s akin to renting a home instead of buying one.
In addition to those two groups, some systems provide a hybrid model. You buy and install a base software system using the on-premise model and operate extra modules using the SaaS cloud-based model.
You may also set up integrations between your ERP solution and other critical platforms you need for your business. That will give you a more streamlined IT setup across your organization. For example, an ERP is a part of a business’ daily life, and so is checking your balances and transactions through their banking portal. Integrating your banking capabilities into your ERP system is what we here at FISPAN strive to do. You can learn more about how our integration between banking and ERP platforms works and why you might need that integration for your financial operations.
Benefits of Cloud-Based Systems
Many businesses will tell you they like the flexibility that cloud-based solutions offer. It means you can use what you need when you need it (and even pay as you go, sometimes depending on the pricing model).
Cloud-based systems also offer a fast setup. You don’t need to wait to have software (and sometimes infrastructure) installed on your business premises. That means you can get benefits from your ERP solution from day one. However, most systems require in-house staff training, so expect a lag between your setup and when the system is operational.
One of the biggest benefits of a cloud-based system is it can bring more value through additional integration options to other software platforms, or even to your bank itself. With APIs, you can use these integrations to enhance your workflows and bring more value to your cloud-based ERP system.
Lastly, cloud systems can offer a more cost-effective solution. That’s because you aren’t covering the expense of installing hardware and software on your premises (including all the necessary security and maintenance).
That’s particularly advantageous for smaller businesses that don’t have a big budget to get systems installed.
Disadvantages of Cloud-Based Systems
Most cloud-based pricing models are via subscription, so you’ll still pay for cloud software years into the future. Therefore, you’ll need to consider whether these long-term recurring costs are the best option for your business.
Another aspect to consider is what sort of customization and integration you need. While you can often customize a cloud-based platform, it doesn’t always offer the heavy customization you might achieve if you buy an on-premise platform.
Examples of Cloud-Based Systems
Let’s look at some examples of cloud-based ERP systems. Here are some of the top names in the world of enterprise software.
Oracle Netsuite is among the most well-known names and popular with all-sized businesses, including large multinationals. It’s a cloud-based solution, and features include supplier management, project management, finance, and accounting.
Sage Intacct is a financial management and accounting ERP solution. It integrates with other systems to connect your financial information with business-critical data like HR and payroll.
Acumatica is a platform that targets small and mid-size businesses looking for a flexible ERP solution. Features include a financial accounting platform and a CRM (customer relationship management). It also offers procurement features such as orders, inventory, and fulfillment, including packing and shipping.
SAP’s cloud solution is called SAP S/4HANA. It’s a modular system. That means you can choose only the features your business needs rather than paying for an all-encompassing ERP solution that includes software you don’t want. Modules in this system include asset management, finance, R&D, manufacturing, sales, procurement, and many more.
Benefits of On-Premise Systems
Perhaps you prefer to choose the on-premise route instead of the cloud-based. Some businesses do because it has some notable advantages over the cloud.
First, depending on the provider’s pricing model, an on-premise platform can sometimes be the best financial option over the long term. You have more sizeable initial costs to buy and install the software. However, you may not incur expensive ongoing monthly charges per user (though you’ll probably pay a support and maintenance fee). That’s useful if you have a large growing organization because a per-user or per-seat cost could become expensive over time.
On-premise ERP solutions are typically more customizable than their cloud-based counterparts. That’s because the software sits in-house, and you aren’t using something standard from a central location shared by thousands of businesses. Customization may often be necessary if your business has particular and unique processes that you want to build into your ERP solution.
Disadvantages of On-Premise Systems
Time is a fundamental consideration if you intend to buy an on-premise solution. Big ERP solutions might need infrastructure, and you might have to get your IT team to tweak your internal network as part of the installation. All this takes time and planning, so it could be weeks or months before you get that ERP solution up and running.
Another factor you’ll need to consider is your in-house expertise. Most ERP solutions have a degree of complexity, and you’ll need people internally with the expertise to handle the software.
That’s not just for the setup but any customization, enhancements, and maintenance.
Although you can often outsource this to the software provider or a third party, larger organizations find hiring people internally to manage the platform is more cost-effective.
Examples of On-Premise Systems
There are lots of ERP solutions that use the on-premise model. Here are a few names you might have heard.
The All-In-One platform from SAP is typically for businesses with over 50 staff.
It’s a comprehensive platform that includes many features, such as financial and production management, sales orders, supply chain management, and CRM. SAP also designed this as a multi-site solution for large multinational organizations.
Cetec is an enterprise-level ERP solution. While they offer on-premise setups, they also offer a subscription model. Features include financial management, sales management, ordering system, supply chain management, and CRM.
Syspro is the final on-premise solution we’ll cover in this part of the guide, and it’s worth noting that this system offers both cloud and on-premise models. The features available to customers of Syspro include production management, finance, accounting, supply chain, CRM, and materials management.
Which ERP System Is Right for Your Organization?
ERP systems are a prime example of how one size does not always fit all in the modern IT world.
Thankfully, you can find the best ERP system depending on your budget, timeframe, size of your business, and the breadth of functionality you need from day one.
Don’t forget to consider what integrations you need before choosing your preferred platform. If you’re interested in learning more about how you take advantage of ERP banking, read our blog on the subject here.
Do you want the convenience of integrating your banking system and ERP solution? If so, head here to book a demo to discover more about FISPAN’s integration software.