Enterprise resource planning (ERP) refers to a type of software that organizations use to manage day-to-day business processes, such as accounting, procurement, FP&A, project management, risk management, and supply chain operations.
ERP provides a fully integrated suite of finance and operations applications that are built on a common data model—providing a single source of truth for data.
Cloud ERP for Dummies
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Modern, cloud-based enterprise resource planning systems help organizations compete in a digital economy. Here are the top five benefits of modern ERP software:
|Single source of truth||Gain a comprehensive view into your organization’s financial performance and better understand profitability, costs, and revenue by using prebuilt analytics. Prebuilt analytics measure critical financial KPIs in real time, including current ratio, quick ratio, debt-to-equity ratio, net working capital, and inventory turnover—ust to name a few.|
|Reduced manual work||One of the primary advantages of an ERP system is that it allows companies to automate mundane, repetitive tasks. Built-in account reconciliation and transaction matching allows businesses to dramatically increase efficiency and speed the financial close process. This facilitates faster SEC reporting and allows the CFO to spend less time each quarter compiling data—and more time on scenario planning and M&A strategizing.|
|Scalability||Scalability As companies grow, their ERP systems must have the ability to rapidly and easily scale—across markets, geographies, and products. Cloud ERP provides unmatched speed, performance, security, and scale, allowing businesses to grow with confidence.|
|Built-in risk management||To monitor and protect companies from internal and external theft and fraud, modern ERP systems offer internal controls and audit tools to manage segregation of duties (SOD) and payment rules.|
|Flexibility||The integrated, yet modular, architecture of modern ERP allows you to deploy what you need, when you need it. You control the pace and define which areas of the business are addressed first, such as modernizing your financials, supporting company-wide planning, or improving your logistics.|
On the other hand, implementing an ERP system is not without its challenges. Here are a few common disadvantages that companies have encountered:
1. Budget constraints
Investing in a new ERP system comes with considerable commitment of time, money, and resources. Adopting a new ERP comes with upfront consulting and implementation fees. There are also heavy personnel costs that come with an on-premises ERP implementation, as you may need to hire additional IT staff to manage the system.
2. Change management
Change management is often one of the most difficult challenges with an ERP implementation. Much time and energy needs to be invested to ensure that all key personnel are properly trained on how to interact with the new system.
3. Time commitment
An on-premises ERP system implementation can often be a lengthy process—sometimes it can take as long as two years. In addition, organizations should allocate time for all its users to learn the new ERP system once it’s up and running. There is often a steep learning curve associated with learning new technology, new workflows, and a new user experience.
Legacy on-premises ERP solutions served companies well for decades, but that was then. On-premises ERP typically creates data silos; requires expensive, ongoing maintenance fees; and involves creating customizations.
Today’s fast-paced business environment demands business software capable of adapting to continuous change. Only cloud ERP systems can truly meet the challenges and demands of organizations—today and in the future.
Cloud ERP solutions are more flexible because they are divided into modules that can be integrated into larger applications. With the ability to automate workflows, analyze data, and incorporate AI and machine learning insights, cloud ERP systems have become critical as organizations compete in the digital economy. Cloud ERP solutions are also scalable, secure, adaptable, and quickly accessible — capabilities that are in high demand in an ever-changing business environment.
Cloud ERP provides the latest features, functions, and best practices—all on a quarterly update basis. This means that the latest new and emerging technologies—such as AI, digital assistants, machine learning, blockchain, augmented reality, and the Internet of Things (IoT)—become available to subscribers on a regular cadence.
With access to these technologies, organizations can automate processes that used to require heavy manual intervention, such as reconciling financial accounts. In addition, users gain a comprehensive, real-time understanding of their organization’s financial and operational health.
A modern ERP system connects all business processes across accounting and finance, risk management, enterprise performance management (EPM), and more, providing a single source of truth for data.
When compared to deploying a single-point software application, a cloud ERP suite offers the best advantage for businesses as it covers the entire breadth of ERP requirements.
The most effective ERP solutions are modern, integrated suites that offer customers seamless data and process integration. A complete solution unites management processes across the organization, giving leaders visibility and insight into all aspects of the business. Today’s leaders need to build future-ready organizations, and only a cloud-based, next-generation ERP will help them do that.
Learn more about Oracle Cloud ERP