ERP: what is it?

ERP stands for Enterprise Resource Planning. Therefore, "ERP system" is nothing more than business management software that serves to automate manual processes, store data and unify the visualization of results.
ERP works as management software to unify information and facilitate the workflow between areas. Taking into account that each department needs its own tool to be able to generate its reports and perform routine tasks, ERP plays a fundamental role, working as a workflow centralizer, aligning the communication of all areas and facilitating decision-making.

In this way, instead of each area having an isolated software, the ERP concentrates all information in an integrated and intelligent way, giving the company autonomy in the execution of routine tasks and making communication interconnected. Imagine that, for example, the finance department can know in real time the status of its earnings and allocate the money assertively, having full control of the cash flow.
All of the above examples are routine actions within an organization that can easily become arduous and with numerous failures, both in relation to communication noises that hinder the daily workflow, such as cash counting errors, calculations of tax obligations, inventory and payrolls. The implementation of an integrated tool is a guarantee of assertive and solid information for the company.

How does an ERP System work?

There are several systems used in business management and, often, those that have not yet adopted ERP software end up needing several software to ensure visibility of all business fronts.
In other words, those responsible for management need to navigate between different programs, collecting information from various dashboards and only then analyze the data and make decisions.
What is the consequence of this? In this scenario, the information is lost and the copied data can be used in the wrong way. Bottom line: headache and time spent locating a problem (which could easily be avoided).
The management system, the ERP, has as its main objective to organize the entire volume of information generated by the company. In a robust structure, the management system is able to assist all departments with features that help on different fronts of daily routines, such as:

• FINANCIAL CONTROL
• SUPPLY MANAGEMENT
• EMPLOYEE MANAGEMENT

As it is a robust system, it allows the company to insert modules that work best in its daily life and that help in the management of its business. From this, it is possible for the company to be able to run the system in all departments, facilitating the flow of internal information.

How did the ERP system come about?

The first steps to reach tools as technological as we have today were taken in 1950. In this decade, the first mainstream was used, which aimed to automate inventory control. This was an initial step in the evolution of this mechanism, which until then had become very expensive for companies and was still quite slow.

Intelligence applied to business management software (ERP)
In the 1970s, the evolution of the management system brought Material Requirement Planning (MRP) to the market, more precisely within the manufacturer Black and Decker, basically a very clever specialization of the EOQ.
This scenario extends until the 80's where computer networks came to solve two problems: enabling the use of servers (cost reduction in relation to mainframes) and narrowing communication between the famous departments of companies, whether via software or information visibility.
In the 90s, with the leap in computer networks, computational architecture (especially the client/server structure) and the drop in investments in hardware, management software had already become a differential in large corporations, an indispensable control and management tool.

ERP today
Gartner Group is responsible for the term ERP we know today. They understood that the evolution and transformation of the Manufacturing Execution System (MRP II) talking to systems from other areas (HR, Finance, Sales, Logistics, etc.) allowed them to control an entire company across the board in an assertive way.
Gradually, this concept grew, evolved and improved over time to reach the ERP programs we have today, with an accurate management level, customizable, specialists by segment, Cloud operations, ERP free and opensource.

What are the advantages of the ERP system?

When hiring an ERP, you don't get 'generic' software and you need to adapt it to the needs of your business – the integrated business management system is tailored to your company, ensuring everything you need. In fact, the control of branches and other companies can be done in this single program, making all communication much faster and more effective.

• Automated processes across departments
• Reduction of up to 20% in the time invested in controlling deliveries and closing shipments;
• Better quality of informed data;
• Increased productivity, since all information is shared between areas;
• Reduction of risks and errors;
• Insertion and updating of information in all sectors at once, even allowing rapid adaptation to new laws in minutes;
• Reduction of costs and time in compliance management, accounting and tax closing, calculation of taxes and contributions and control of assets;
• Easy and fast monitoring of the entire process of purchase, receipt, contract and inventory, putting an end to archaic manual processes and the use of paper and written documents;
• Integrated, intelligent and independent financial management – especially with wiipo, Senior's financial fintech.

How does an integrated system contribute to information security?

Data security is another extremely important advantage when implementing an ERP, even if it is little debated. Let's say your company uses several different management systems and platforms, each with its own access, and none of them are connected to the cloud – this can cause some risks.
What are the risks of not having an ERP?
Mismatch of information, causing the data not to reach the responsible team in a safe or correct way;
Files need to be saved on physical servers, and are more susceptible to hacking and external risks;
The exchange of data is also done in an insecure way, and can be intercepted.
Advantages of an ERP in data protection
Most software works in the cloud, allowing for secure and encrypted data storage and sharing;
The ERP system can identify the exchange of data between sectors and easily block suspicious entries (such as hackers and viruses) with the automated use of firewalls;
The company's access control and security can also be integrated with the ERP, which allows you to define hierarchies and allow specific people to certain physical and digital spaces in the company.

Types of ERP

The evolution of ERP systems is constant and rapid. See the main types of management systems available, which are ideas for the current business world and what its future will be.
Legacy ERP "Legacy" is the name given to the system that has become obsolete, with outdated technologies that do not meet current needs. A legacy ERP, therefore, is what we now call the first ERP solution models, with limited integration, few useful features, and technologies with programming languages that have since been discontinued.
ERP Back Office for E-commerce Another outdated modality, which may not even be considered a true ERP. Back office systems were developed to enable the integration of legacy ERP with e-commerce, facilitating billing control, product registration, and the like. Even so, they do not allow for fiscal and accounting management.
Verticalized ERP Solution focused on physical stores. In addition to being focused on retail, it also has other limitations: with verticalized ERPs, it is not possible to integrate physical and virtual stores. They are used for specific functionalities, such as facilitating the control of commissions, for example.
Customizable ERP Here we start talking about modern and robust ERP systems. They enable flexibility in business rules and even in the solution itself, which can be contracted in modules and integrated with the company's systems. Such differentials allow the adoption of an agile business model, which adapts quickly, and scalable growth.

Composable ERP is what Gartner has been calling the "4th era of ERP". It is capable of using machine learning to create, manage, and understand the data generated, automatically identifying and developing new features and applications. The change is already being quickly adopted by several countries, and is already applied by Senior.

Differences between on-cloud and on-premise

ERP systems can work in two main ways: in the cloud or in an on-premises data center (also known as on-premise ERP). On-cloud ERP surpasses on-premises in all aspects: security, agility, flexibility, costs, scalability; This is because the development of features and data storage is done automatically, in a digital and secure environment.In addition, on-cloud ERP also ensures protection against various external factors, such as floods and fires. (Can you imagine what would happen if physical servers were damaged?)

ERP for SMEs vs ERP for large companies

A mistake that many entrepreneurs still make is to believe that ERP is a solution for larger companies, with a huge exchange of data and increasingly complex process flows. The truth is that there are a variety of ERP programs on the market for different realities, sizes and business needs.
ERP System for Small Businesses Investing in an ERP may even seem like an unnecessary extra expense, which will delay the company's growth. But make no mistake. No more hand-filled spreadsheets, optimized processes with automation, easy access and sharing of data between sectors: these are just some of the benefits that can help small businesses quickly reduce costs, increase productivity, and align internal processes.
ERP for Midsize Businesses Did your medium-sized business start growing and stagnate? A good ERP can be the solution. By integrating technologies into daily processes, such as the use of Artificial Intelligence, it is possible to automate operational processes and direct your team to more strategic activities and more agile and effective decision-making. The integration between areas also allows for scalable growth and intelligent analysis of the data generated.

ERP for large companies The larger the size and the more complex the company's processes, the more technology is needed to keep up with and drive business growth. Among the possibilities offered by a robust ERP are integration with BI (generation of reports and intelligent dashboards using smart data) and machine learning so that the system automatically identifies and learns more agile and efficient functionalities.

What are the steps of implementing ERP software?

There is no secret, only good practices that start from the prospecting phase, continue in the marketing and implementation process and go until post-delivery. And most important of all, users and stakeholders need to embrace the idea, understand what benefits the project will bring to the company and to their work, because in a remote project the dedication of users is one of the key points.

Now let's go to the 5 steps for a successful implementation:
Step 1 - Focus
One of the main changes we make with the sales team is in relation to the target market, both in the size of the company and in business and process characteristics. This way we avoid cases of non-fulfillment of customer expectations.
Step 2 - Pre-defined processes
Companies do not always have their processes structured at a level of maturity to support the implementation of an ERP system, so we take a model of best practices in business processes along with the system.
Step 3 - Training
This is one of the main critical success factors and, to solve this issue, provide recorded training with the concepts and routines of the system. Users have the flexibility to watch the videos and reconcile it with their daily activities.
Step 4 - Approval of the processes
Although we have pre-defined business processes, each company is particular in some activities, so the highlight of the implementation is the approval of routines, where users perform their activities in the system with remote monitoring by the implementation professional. It is at this point that all the details are passed on and settled.
Step 5 - Turning and Follow-Up
With the approved routines, it is time to put everything into practice and during the first days of official use of the system, the implementation professional will be monitoring users very closely, giving the necessary support for users to succeed in their activities and more than that, to extract the maximum benefits that the use of a management system can bring.

Integration with other management systems

How does integration work?
ERP systems are offered on the market in several modalities. Unlike other programs and computer systems, the management system is not for sale on store shelves and is mostly not a ready-to-install and use system.

As it is a robust software, it requires processes for everything to start running in perfect condition. In addition, because it covers so many departments of the company, the ERP system can be purchased in modules, being tailored to the company's needs and, if necessary, integrated with other systems.
Most common integrations

HR integrated with ERP
The data of all the company's employees, regardless of their size, centralized and secure in one place: this is what an ERP can do for the HR of your business. The unification of information and automation of processes also allows the generation of intelligent reports, reduction of bureaucracy, increased productivity and much more.

CRM integrated with ERP
The integration between these two solutions allows for more effective monitoring of the customer relationship from end to end, from prospecting to after-sales. It is possible to identify, activate and retain quality leads, constantly generating comprehensive and strategic data and reports.

BI integrated with ERP
Another example of integration is ERP with Business Intelligence. While ERP collects data, such as the number of sales and costs of a particular product, BI uses this knowledge to calculate the profit of that item, compare it to previous periods, and understand how the market is accepting that item. This combination provides great agility, precision and control of all its segments, increasing its performance.

Tax management integrated with ERP
The integration of ERP with different types of financial services also considerably reduces expenses with administrative activities and, in addition, is a huge competitive advantage in the market.

It is important to note that this solution is not restricted to financial institutions. The use of an ERP system makes it possible to have optimized and automated financial products and services. This is how wiipo, Senior's financial fintech, works. With it, your financial management becomes integrated, intelligent and independent.

By Evhen Kasyanenko