Comparing Types of ERP Systems for Your Organization
Read time: 15 minutes
All types of ERP systems, or enterprise resource planning, trace their roots to manufacturing. However, throughout its evolution – from the original early 1900s concept to the modern technology it is today – ERP has expanded to become a master source of enterprise information for companies operating in a variety of industries.
While some businesses are able to function with smaller, disparate programs in order to manage their operations, many learn they need a solution with full visibility into their business data, as well as reporting tools necessary to define key performance indicators, measure performance and plan for growth.
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Characteristics of an ERP System
Effectively using ERP leads to better business processes across departments. Business leaders choose ERP software to solve a variety of problems. Perhaps “I need a better way to manage my warehouse inventory” sounds familiar. Or rather “My financial information is in several programs that don’t talk to one another” is more accurate for you. These are two of many issues that an ERP system can resolve.
While serving as the central source of business information, ERP software can be configured to streamline multiple processes and operate in real time. Structured in a modular design, ERP software modules generally include:
- Order processing
- Supply Chain Planning
- Project management
- Budgeting and forecasting
- Human Resources and Payroll
- And more
Modern ERP software eliminates previously manual processes and provides you with options for automation. As you undoubtedly are aware, automation of standard business processes reduces risk of human errors, the duplication of data and streamlines operations.
Additionally, ERP software, being a single platform for business information, breaks down the virtual walls between departments in order to foster collaboration. Employees who work in separate departments within an organization often operate as silos. ERP provides better cross-departmental visibility into important company data.
ERP software is accessible to organizations of all shapes and sizes today. With cloud-based software, platforms and infrastructure, it’s no longer necessary to invest in on-premise hardware (although this is still an option). Businesses who opt for Software-as-a-Service (or SaaS) ERP can minimize upfront costs, as financing is on a monthly subscription basis. As part of a SaaS model, security and data storage are handled by the ERP vendor – versus having to manage, secure and maintain in-house. Regular functionality updates are pushed to software through the cloud instead of requiring more elaborate software upgrades.
Top ERP Vendors by Category
While ERP can be a useful business tool for your company to manage operations and grow, it’s not one-size-fits-all. Aside from the price tag, a number of factors determine which software is right for your business. ERP can be categorized by company size, cloud-based and industry.
Company Size – Small Business, Mid-Sized, Fast-Growing, Large Enterprise
Small Business: A small business on the rise require software to manage daily business functions, such as finances. However, most don’t want to pay for the bells and whistles they don’t need yet, opting for simple with room to grow.
- Acumatica: Their Small Business Edition is a cloud-based ERP designed specifically for small businesses that have basic accounting needs and require fewer than 10 users. It operates as a bridge from accounting programs to a full ERP solution with the potential to grow.
- Oracle NetSuite: A full-service solution, NetSuite provides complete visibility into business data at a price point smaller businesses can afford. However, NetSuite will scale with you as a long-term solution as your business grows.
- Sage: This vendor offers multiple products that cater to the needs of small businesses – taking control of finances and automating processes that reduce time spent on administrative tasks. Sage products manage accounts payable, accounts receivable and payroll that is US tax-compliant, as well as maintain inventory data.
Mid-Sized: Companies of this size have grown out of their disparate programs and require a connected system that automates processes while providing a central location for all business data. However, the need for customization is minimal.
- Microsoft Dynamics: While Microsoft Dynamics isn’t designed specifically for a small business, Microsoft allows businesses to build aspects of its software based on capability, user number, monthly price and more. Additionally, Microsoft has a number of partner products that can be integrated to add functionality.
- Oracle JD Edwards: As a flexible but fully integrated ERP solution, mid-sized businesses benefit from JD Edwards due to that flexibility and the number of applications the software can run. As a your business evolves, JD Edwards can be configured to best serve your company according to your needs now and in the future.
- Oracle NetSuite: The software’s robust but flexible functionality allows businesses to be run entirely through NetSuite as they outgrow old programs. This flexibility is useful especially as smaller and mid-sized businesses continue to grow and evolve. Built-in business intelligence combines visibility with insight to make informed decisions.
- Epicor: Real-time visibility is necessary to informing important business decisions, and Epicor offers a large number of modules to tackle business operations in real time.
- Infor CloudSuite: Flexibility is at the core of this software for fast-growing businesses, allowing your company to determine what kind of capabilities it will need based on changing requirements as you grow. CloudSuite offers a host of modules for a variety of needs, as well as integrating with a third-party ERP for additional capability.
- Microsoft Dynamics: Similar to Microsoft Dynamics for mid-sized businesses, Microsoft doesn’t offer a solution developed truly for fast-growing businesses. However, businesses can build their own solution with Microsoft’s products and those of their partners.
- Oracle ERP Cloud: The flexibility of ERP Cloud is designed for businesses that need a solution to scale with them. ERP Cloud is a full solution with an integrated software suite that runs completely in the cloud. Data is protected with a multilayer security approach and can be stored on-premises, in the cloud or a hybrid of both.
- Oracle NetSuite: This complete solution is designed for fast-growing businesses. It’s fully integrated and comes with a complete suite of applications that are able to effectively grow with your business, but is accessible enough due to its lower price point and ease of use.
- QAD: Their On Demand is a cloud solution designed for growing enterprises. Its simplicity and lower cost provides an entry point into ERP for smaller businesses that expect to grow rapidly. On Demand can be implemented as limited as needed for a smaller organization, but add functionality as the business expands.
- Microsoft Dynamics: As Microsoft offers its products based on the type of capabilities you choose to run, large enterprises have a gamut of products from Microsoft or its partners to craft the right tools. However, customizing an ERP system can lead to issues in the future, and large businesses that construct their own ERP with multiple tools as opposed to a single system could encounter problems.
- Oracle ERP Cloud: Businesses of varying sizes can benefit from ERP Cloud. However, this solution tends to come with a higher price tag, making it less attainable for smaller businesses. Its scalability and integrated software suite make tackling your business’ operations, expansion into new markets and mergers possible.
- Oracle JD Edwards: Flexibility is the key for JD Edwards as a benefit to large corporations or companies. JD Edwards can accommodate subsidiaries and various processes with its choice of modules, operating system and database, as well as running on-premise or in the cloud. Additionally, the software’s consistent look, end-user personalization and manual process automation allows employees across the organization to use the tool to its fullest potential.
- SAP: The All-in-One and HANA systems from SAP are designed specifically for larger enterprises to manage the complexity and growth of a large business. SAP software is designed to handle high transactional volume with real-time visibility. HANA specifically is an in-memory data platform developed to process large amounts of data.
One of the top ERP trends continues to be cloud-based software. As the buyer, you can determine how much of your software is hosted by your vendor and whether your data will be stored on site, in the cloud or a hybrid of both. Cloud ERP tends to have a lower upfront cost due to the subscription-type style of paying monthly for these services.
- Infor CloudSuite: This software was built for the cloud, hence its name. Infor is an Amazon Web Services partner that uses its infrastructure to protect data. Tools utilized in CloudSuite are optimized for web use, and upgrades are deployed automatically to keep your system up to date.
- Microsoft Dynamics: Current and new Microsoft customers can migrate to their cloud, and data centers and both owned and managed by Microsoft. All software maintenance, such as backups, upgrades and security patches, are pushed to software over the web automatically.
- Oracle ERP Cloud: Oracle uses a multilayer approach to protect business data within ERP Cloud, which can be done completely in the cloud, on-premises or a hybrid solution. Applications are interconnected and run entirely on the internet, and Oracle deploys security and software updates periodically so your technology is always up to date.
- Oracle NetSuite: The first “real” cloud ERP, NetSuite has robust capabilities for mid-sized and fast-growing businesses looking to run their operations entirely through the software. NetSuite also utilizes mobile capabilities so you can stay connected on the go.
Some types of ERP systems are better suited to certain industries, or can be configured to be industry specific. Whether intentional or coincidental, certain ERP software are better options than others when it comes to a selected industry.
- Infor CloudSuite: This optimized solution can be integrated with another Infor platform or a third-party ERP software. Designed for manufacturing operations, CloudSuite manages operations end-to-end in order to increase customer service, improve production and quality, use data for planning purposes and more.
- Microsoft Dynamics: Optimized for manufacturing, Microsoft Dynamics AX is designed to improve production flow, increase planning capabilities, streamline business processes and more. The software uses real-time insights into business and supply chain data and is equipped to manage multiple facilities.
- Oracle JD Edwards: This software allows manufacturing organizations to integrate multiple facilities, operations and data to be viewable in one location as an enterprise-wide system. Role-based landing pages in UX One provide a personalized view of alerts and analytics, and easy transition and navigation allow users to take quick action on outstanding tasks.
- QAD: Developed and optimized especially for manufacturing, QAD uses agile functionality to change processes, comply with regulations, meet customer requirements and more. Modules such as Lean Manufacturing, Product Genealogy and Production Scheduling Workbench allow your business to streamline processes to eliminate waste, track details of products throughout the production process and provide visibility of data to employees throughout your organization.
- Microsoft Dynamics: Businesses can use Microsoft Dynamics for better visibility into their supply chain. Sales data, inventory levels and shipment schedules are available in one place to make informed business decisions and run leaner operations.
- Oracle ERP Cloud: Distribution businesses rely on ERP Cloud’s Supply Chain Management Cloud to coordinate operations from order to shipment. The application allows you to orchestrate the entire process, improve efficiency within logistics and inventory management and forecast through procurement.
- Oracle JD Edwards: Like manufacturing, JD Edwards integrates multiple facilities and operations into one location for data and management. Users can streamline logistics to better optimize performance, ultimately reducing costs.
- Oracle NetSuite: Optimized for distribution, NetSuite’s ability to run the business completely within the software allows complete visibility into the supply chain from beginning to end. Users can always be connected to their supply chain operations and logistics through mobile capabilities.
- Sage: Business Cloud is a suite of solutions for the wholesale distributor. Enterprise Management provides access end-to-end to your distribution operations, provides real-time analytics on performance and costs and is adaptable to multiple locations and more.
- Microsoft Dynamics: Professional services, as an industry, tends to be project-based in terms of its services. Microsoft Dynamics includes multiple modules designed to manage project completion from the beginning, including basic resources, jobs, sales invoicing, purchase invoicing, purchase order management and more. Additionally, you can utilize the software to apply data to forecasting.
- Oracle ERP Cloud: ERP Cloud offers Oracle Project Portfolio Management Cloud, which can be implemented by companies of any size. Businesses use PPM Cloud to track financials, manage tasks and resources and collaborate using mobile and embedded social capabilities.
- Oracle JD Edwards: Flexibility, integration and real-time viewing are top features for companies in the professional services industry. Tools like Project Costing, Contract and Service Billing, Rental Management and more optimize and streamline operations for your organization to track and organize data.
- Oracle NetSuite: Professional services is an industry with frequent change, and NetSuite enables businesses to monitor and respond easily. Use mobile capabilities to stay up-to-date anywhere. The software also makes customer service easier with a single location for information and interaction.
Why Use ERP?
ERP software’s main purpose is to increase efficiency, streamline processes and improve communication and collaboration between departments of an organization. While ERP is a business tool that can be pricey, the benefits outweigh the costs in order to grow the business and improve revenue. Some of the top benefits of ERP are:
- Data visibility
- Improved efficiency
- Better reporting and planning
- Automation of manual processes
One of the main reasons businesses choose to implement ERP software is for the data visibility. If your business data is separate and reporting is complicated and difficult, ERP might be right for you. Better visibility and reporting lead to better informed business decisions and improved long-term planning. These beneficial applications can be applied across the board, from finance to operations.
Once your business data is visible and reporting is optimized, use this information to make your processes more efficient. Whether that’s improving your inventory management or prioritizing ways to increase your company’s cash flow, efficient operations will benefit your bottom line.
A main method to making your operations more efficient is to automate manual processes. Employees who perform tasks that require manual work, such as invoice creation, routine communications and financial report generation, can set up functions within ERP software to complete these tasks automatically.
What to Consider
Perhaps you’ve decided that ERP is right for your business. Now you’ve made that decision, it’s time to determine which software is the best fit. ERP in general is designed to help you manage your business by streamlining operations and increasing communication and collaboration. But every system is different.
As you explore your ERP options, consider the following:
- Cost and Budget: Money comes into play in several ways. First, your budget might steer you toward a particular level of functionality. Second, how that software is delivered might also be determined by budget – cloud-based systems typically have lower upfront costs due to their subscription-style billing. The number of users your organization will have is also an important factor and will determine the number of software licenses you’ll need.
- Replacement or Upgrade: If you’re already running ERP, an upgrade of your older system to a more modern solution, or to the most up-to-date version of your current software could be a quicker and more cost-effective solution. However, if you’re facing issues such as poor integration or loss of vendor support, it might be time to replace. The question of whether to replace or upgrade depends on your company and the factors involved in the decision. Does the most recent version have the tools your business needs? How old is your current software? How many customizations do you currently have? How quickly do you need to have new software up and running? Answering these questions and more will give you better idea of whether upgrading or replacing is right for your business.
- Business Environment: As we’ve mentioned, some types of ERP systems are better for specific industries. Consider what technology your industry competitors use. How does this ERP software address pain points for businesses within my industry? Do many of my competitors run this software? Is it optimized for my industry? Answering these questions and more can narrow down your options and lead you to the best fit.
Ensure a Successful Project
Just like any project, there are a number of factors that can determine the success or failure of your ERP implementation or upgrade. However, there are three major components to consider:
- People: When determining who will be on the ERP implementation or upgrade team, some business leaders opt to choose employees that can be easily pulled from other projects or their daily position. However, that’s a mistake. An ERP project isn’t just an IT project, and to be successful, your team should be comprised of your top employees – including an executive who will champion the project – who will invest a significant amount of time.
- Processes: Consider your ERP project like a road trip. You need a plan to know where you’re going, and a map to tell you how to get there. A structured methodology should be used, and regular communication is a necessity to ensure the details of the project are executed properly. This includes training, which should be done early and often.
- Technology: When technology projects fail, it’s easy to blame the software. However, a closer look typically indicates that the steps taken during the project’s implementation are to blame. Bad, incomplete or unorganized data will not magically be fixed in a new system. Performing a cleanup and review before conversion is necessary and should be done before the project begins. Additionally, understanding the integrations and reporting needs your business has before the project begins will save time, money and foster success.
No tech project is perfect, regardless of the steps you and your implementation partner take to avoid issues. Careful planning and execution can minimize these challenges, but chances are it won’t be a seamless transition. Consider these common problems in an effort to avoid them.
- Customization Needs: Smaller organizations likely require fewer customizations or alterations to their system. However, if you’re a larger enterprise, your business might include subsidiaries or additional offices in other locations. In these cases, a one-size-fits-all approach isn’t sufficient. While we don’t recommend making customizations to your ERP software, sometimes they’re necessary to your operations. Choose a software that is flexible and capable of these alterations.
- Security Risks: While most ERP software is designed with the appropriate security measures in order to protect business data, technology by its nature it can be vulnerable. In order to protect your data and that of your clients, determine the proper security structure for your business. There are three methods of data storage – cloud, on-premise or hybrid – and what works best for your business is determined by you. Additionally, implement best security practices to pinpoint weaknesses before they are compromised.
- Not Training or Testing Enough: Testing a new ERP is critical. ERP partners will conduct iterative testing throughout the implementation process in order to ensure the software is configured to properly function for your business. Additionally, this theory works similarly with training. Including and training end-users from the beginning and throughout the entirety of the project ensures higher buy-in for the software, better utilization, reduces risks borne out of a lack of understanding or knowledge and increases cost and time saved.
ERP Future Trends
While companies have used ERP software for decades, it’s constantly evolving. As technological advances are made, businesses are adapting and so are their business tools. Below are some of the top trends to watch in ERP:
- Cloud: While cloud ERP is commonplace by now, it’s still one of the top trends. More and more businesses are recognizing the benefits of the cloud, whether for data storage or to run the entire solution. Much of the movement appears to be with small- and mid-sized businesses, which is likely due to the lower upfront cost associated with cloud ERP. On-premise software requires purchasing hardware and can add up quickly. Additionally, not only are traditionally on-premise solutions offering cloud options, but also cloud-only software is becoming more flexible and functional. This provides a full solution for a company of any size.
- Mobile: In America, 77 percent of the population owns a smartphone, and mobile capabilities in ERP are rising as well. Many top ERP vendors, such as Oracle, Microsoft, SAP and Sage, continue to integrate mobile tools into their software. With an emphasis on real-time visibility, users take that to the next level by having access to up-to-date data from anywhere. These options take a range of forms, but tend to be inexpensive and don’t require significant changes to infrastructure.
- Artificial Intelligence and Machine Learning: AI and machine learning options are fundamentally altering the way ERP is built and used. ERP vendors are developing tools that are configured to complete manual tasks, such as in accounts payable with payment processing to minimize fraud. AI tools are intended not to take the place of a human, but instead learn how a human would make a specific choice based on the criteria of that decision. This allows the employee more time to complete tasks that require critical thinking.
- Internet of Things: It seems like if a device has an on and off button, it’s part of the Internet of Things, or IoT, these days. ERP is no exception. Using IoT to increase interconnectivity within your business using your ERP can further automate manual processes, such as configuring the software to monitor a product in a facility to send you an alert when it needs servicing or a replacement part. Additionally, IoT can be configured to minimize the need for forecasting by better optimizing your inventory management and planning operations.
- ERP for Subsidiaries: While the core idea of ERP is to control the whole enterprise through one ERP, some companies are running their subsidiaries with smaller-scale solutions. One reason is ease: it’s become easier to deploy SaaS-based tools, and businesses are choosing to do so with a smaller subsection of the enterprise. Perhaps to test out a full replacement of an on-premise system or to gauge its ability to fit into the current system, the structure can become complex and burdensome to both IT and management.