ERP Implementation Strategy for Businesses in India
Enterprise Resource Planning (ERP) systems merge diverse traditional management roles into an integrated structure, assisting the flow of information across multiple organizational verticals.
By adopting effective ERP solutions, organizations can run more efficiently as a single software system manages the firm’s data and streamlines critical business processes.
Further, using legacy systems can reduce a firm’s ability to create an impact within the market. This is more so if you are a foreign player or a small business in dynamic emerging markets like India, where certain sectors are mature or crowded and others need to get tapped into more efficiently.
In this article, we briefly explain how ERP systems can help businesses operate more efficiently by introducing automation and control, integration of management functions, and facilitating data-driven strategies.
Ease of operations
Instead of separate provisions for each organizational function, the ERP offers a single point solution to provide optimal results for the company.
It integrates different business functions into one system, avoids duplication of records, and allows disparate operation to communicate with one another.
For instance, if the firm’s sales team confirms an order on the ERP system – it generates a transaction for the finance department, a work order for the production floor, an update to the inventory system, and a reminder for the purchasing department to replenish stocks sold out.
This also means that all departments run using the same information, which is particularly important for firms with branches or subsidiaries in different areas.
Data being accessible on a single platform makes managerial decision-making more efficient and optimizes operations across all departments and locations.
Flexibility of function
ERP systems have the flexibility to adapt to organizational needs. For instance, the ERP software can be modeled specifically to create solutions based on the company’s structure and requirements.
Given how competitive business environments have become, small to mid-sized firms can choose to model the ERP system to achieve basic software functionalities, and later expand its capabilities as the need and capacity of the firm increases.
The inbuilt flexibility of the system allows operations more freedom to evolve strategies and achieve organizational growth.
Strategic data management
An ERP system creates collated data sets for use within an organization. In simpler terms, it means that the firm’s information is collected, arranged, and sequenced in a utilizable manner.
Making this data then selectively available to personnel creates an environment where employees can take initiative and better strategize to achieve business growth.
For example, supply chain managers would do well to understand regional sales data to effectively execute tasks.
Through the ERP system, the availability of real-time specific data enables faster day-to-day decision-making, freeing employees to focus on other concerns.
Further, a centralized and consistent system boosts inter-department collaboration within the firm.
Each department can generate, assemble, and analyze data in a uniform manner using the ERP system. This enhances coordination across verticals by easing the utilization of cross-department data – facilitating the achievement of the organization’s core strategies.
Tracking key performance indicators
Using collated databases showing relevant data from across the business – managers become better equipped to analyze and track the key performance indicators (KPIs) of employees, departments, and the company.
Instead of focusing on a single data set, such as accounting or sales, a more holistic view is reached by including data from other departments, such as customer relationship management (CRM) or HR, in setting and evaluating independent KPI targets.
For example, accessing the data history of previous purchases and ongoing orders from the sales team as well as purchaser grievances from the HR team – obtained by using appropriate ERP tools – will help a customer relationship manager engage better with a client.
Ultimately, this improves efficiency and enables the firm to customize and meet performance targets.
Long-term cost saving through increased efficiency
While the initial costs of implementing an ERP system can be high, the long-term benefits include structured and streamlined processes that cut operational and administrative costs.
More importantly, it ensures the organization stays updated with the latest technology – modern software systems such as the ERP work on machine learning and subsume cloud computing, data analytics, and the internet of things (IoT).
Using ERP tools, managers and analysts within the organization will be able to process complex data faster and in a targeted manner through customized reports and assessments.
Accurate and real-time information logged onto the system will prevents disruptions to the firm’s business cycle – avoiding any decision delays that can cause revenue loss.
By reducing or eliminating repetitive processes, ERP systems ensure critical resources are not diverted towards manual tasks, such as back-end data entry.
Cyber attacks are a threat to all organizations. Something as basic as employees exchanging data through Google documents or Excel reports over non-secure networks could lead to a security breach.
Companies generating or managing large volumes of information may find it difficult to continuously monitor and red flag security vulnerabilities.
In this regard, an ERP system offers in-built security protections by restricting data access with advanced permission protocols and maintaining efficient firewalls, preventing the leak of sensitive data.
On the other hand, if a data breach does occur, the IT department can promptly update the entire system instead of investigating individual software infringements.
Helping companies achieve regulatory compliance in day-to-day operations is another key benefit of implementing an ERP system.
Software for business processes can be modified to suit the regulatory environment and equip the organization to adopt international standards and best practices.
For example, the ERP system can exercise control over the reporting system.
By inputting the required accounting or financial reporting method into the system, the ERP can ensure all reports are prepared in a particular manner and flag discrepancies.
Further, any changes in regulations may be tracked through the software, reducing the overall compliance burden on the organization.
The ERP software is capable of flagging non-compliance, which can then be immediately rectified by relevant personnel.
Why firms in India should opt for ERP – Efficiency, Integration, Transparency
Today’s organizations need to ensure optimum digital preparedness to retain a sustainable advantage above disruptive competitors.
This is where an effective ERP strategy compliments a firm’s core strategy.
As highlighted in the article, implementing an ERP system provides organizations with the necessary adaptability and optimization to compete in a fast-paced work environment.
It enables organizations to grow by leveraging forecasting ability through real-time data analytics, while ensuring compliance and security.
He says, “ERP integrates the “data islands” produced by different application systems. This helps to reduce duplicate data, making data flow smoothly inside the organization. Employees can then utilize the ERP platform for effective collaboration.”
On making organizational functions more efficient, Zhang adds, “ERP optimizes business processes that improve efficiency, avoiding the possible risk due to differentiated working methods within the organization, thus enhancing output.”
Increased transparency is another important incentive according to Zhang: “Companies with branches in different areas benefit from ERP systems collating all information at an accessible location. This makes headquarter-based business decisions more effective as the transparently available data reduces risk exposure to human error or malpractice.”