ERP systems integrate otherwise fragmented business processes. leading to increased efficiency and better data management. Many companies understand the benefits of this and opt to implement an ERP system to manage their business processes.
Modern day ERP implementations are a costly affair. Over time, the investment cost can grow from the tens of thousands in the beginning to the hundreds of thousands or even millions as time goes by. That’s quite an investment!
So why do so many companies decide to implement ERP systems? Put simply, because of the long term savings!
How ERP systems lead to savings over time
According to a recent study, ERP systems reduce operational costs by 23% and administrative costs by 22% on average. Here are a few ways in which ERPs do this.
1. ERPs improve efficiency
The primary function of an ERP system is to remove the need for multiple systems across different departments and geographies to manage a business (especially one which is spread out). This means that information exchange and operations require less work, less time and fewer resources as well. Automation creates savings which add up significantly over time, which alone makes ERPs a worthwhile investment.
2. Better Collaboration
ERPs bring an entirely new work environment with them. Information, data and resources flow between employees, departments and other stakeholders in a far more streamlined fashion. A lot of the tedious manual processes are automated and many stubborn silos are broken down immediately. This allows for decision makers to think much more clearly and make better decisions in real time.
3. Monitoring, Analytics and Dashboards
The true power of ERP systems shines through in the kind of reporting and analytics they enable. Most ERP systems enable managers to monitor operations in real time via a dashboard, which often comes with a whole bunch of pre-configured reports, workflows and analytics capabilities. ERPs allow access to a whole new dimension of management – the dimension of data.
These three features of ERP systems completely transform any business which opts for them. To users, it feels like an entirely new way of doing business and management.
In part 2 of ‘How ERP Systems Can Save You Money’, we’ll explore other features which streamline inventory management, supply chain management and customer relationship management (CRM).