ERP Systems & Software Compared

What are ERP Systems?

ERP systems (Enterprise Resource Planning Systems) are indispensable helpers for resource planning in many companies. More precisely, these programmes support companies in bundling and controlling (ideally) all important resources, such as capacities, capital, personnel and production means, as well as related processes. Nowadays, they are often significantly involved in an all-round efficient production or provision of services and the optimal success of other elementary business processes.

Good ERP systems bring the following features and benefits:

• ERP systems allow important projects to be monitored in real time and collect a lot of data, which can be used to define and optimize business strategies.

• They provide a central platform for relevant information on resources and related business processes and replace many Office tools that would otherwise be used individually in business, thereby enabling more economical cooperation without barriers - even across different departments.

• They are precisely aligned or adjustable to each company's requirements.

• They offer the opportunity to automate processes and significantly increase efficiency as a result.

• Generally, they reduce throughput times of processes, create a higher data quality, bring a better flow of information in the company, and overcome harmful media and workflow breaks.

These are popular ERP systems:

• MOCO

• SAP S/4HANA

• Sage 100

• SAP Business One

• microtech office+

• weclapp

• Oracle NetSuite

• Xentral ERP

• Infor M3

• Oracle Cloud ERP

• Actindo

Who needs ERP systems?

Since useful enterprise resource planning is today one of the central premises for long-term successful business for virtually all companies, the use of ERP software is also indispensable almost everywhere. In addition, most departments of a company are affected by corresponding processes or must/should consider these in their daily work. For the following business areas, however, the functionalities of ERP systems usually represent a particular gain.

ERP for accounting and finance

Accounting and finance departments need ERP systems for several purposes, the most important being the financial management of business transactions. Everything a company buys and sells as well as direct costs (wages, commissions) or indirect expenses (insurance, external service providers) must be handled in compliance with legal regulations. An ERP system is (ideally) an immense help in this. Specifically, financial professionals use ERP tools among other things to prepare financial statements and provide financial information for internal and external audits.

ERP system for operations

Operations teams use ERP systems to control production processes. Included are – depending on business orientation - manufacturing processes as such, but also deliveries via external services, warehouse and inventory management as well as - especially for service providers - general procedures of project coordination.

ERP software for sales

ERP systems are essential for sales teams as they summarise all important data on sales and general information about products or services. Many ERP tools also store facts about the liquidity of customers, their general satisfaction and much more, and use them advantageously for their own sales purposes.

ERP in product development

Product development may not always use ERP tools directly, but they rely on the information provided by the respective system. Sales data can show which products are most successful, while details on returns and defects help developers to improve the offer. Engineers and designers can also use ERP systems and their combination with Product Lifecycle Management (PLM) or CAD solutions to coordinate product changes most efficiently with the manufacturing department.

ERP system in purchasing

Purchasing is responsible for finding and buying all products and services a company needs - for example, production materials and machine parts. These professionals often also take care of any required external service providers or logistics providers. The biggest challenge in procurement is knowing exactly which products or services a company needs when. ERP systems help: they provide, among other things, information about customer orders to be fulfilled, which can be compared with the available stock to determine what needs to be purchased. ERP software also manages cost data for raw materials or components, helping procurement experts to negotiate better.

Enterprise Resource Planning in Quality Management

Quality management is essential in manufacturing, but can also be important in sales and even in professional services. In heavily regulated industries, such as the food and beverage industry, quality standards are high and penalties for non-compliance are enormous. Many ERP systems include quality management features that help comply with such and other requirements.

What types of ERP systems are there?

ERP systems can be categorised using very different criteria. In fact, there are many specific industry solutions. At the very basis, however, the programmes can be divided as follows.

Best-of-Breed solutions vs. suites

ERP systems can be distinguished by how they are implemented and used. A best-of-breed ERP means a modular amalgamation of several tools via interfaces, giving buyers a lot of flexibility when it comes to choosing which functions to integrate. A suite is a more holistic solution. This can also consist of various individually combinable modules, but they all come from the same provider. This ensures uniform usability in all areas.

Open source vs. proprietary ERP systems

ERP systems differ by the source code of the system and its availability for customers. Open-source ERP providers allow users to change the source code and make modifications. Providers of proprietary ERP software allow only certified partners to access and modify the source code of their system. An adjustment is almost always appropriate in order to ultimately create conditions that exactly meet one's own requirements and thus operate as efficiently as possible.

ERP software development

Depending on the developer, some ERP systems leave full control over the product with the company. Only designated partners are allowed to create apps or extensions for the software. While other ERP providers don't mind if, for example, resellers add whole modules or make other extensive changes.

Generic or vertical ERPs

Based on the type of functions included, ERP software can be generic or vertical. Generic ERP systems aim for a wide range of usability from virtually any company. All other ERP tools are vertical. They focus on specific industries or business areas. The degree of specialisation can vary from one product to another. While some systems focus on areas such as generally manufacturing companies or sales in general, others offer functionalities for a single industry, such as the fashion and clothing industry.

What typical features do ERP tools offer?

ERP systems usually have countless useful functions that are hardly ever common. However, some core features can be found repeatedly. Read below to find out which ones.

Accounting

Almost every ERP system offers accounting features - from maintaining a general ledger and chart of accounts to creating invoices, processing payments and performing financial statements. Some ERP systems also include advanced features here, such as multi-currency and multi-entity management for global companies and project accounting for project-oriented service providers.

Front office

Although the degree of support for front office processes varies considerably from one product to another in ERP systems, corresponding features can nonetheless be considered standard.

Back office

Besides accounting, ERP systems often include a wide range of other back office functions - from payroll and human resource management (HR) to specific maintenance operations and compliance. These modules are provided in different ways, for example as standard functions, add-ons or through interfaces. For example, ERP systems for medium and large companies often contain a module for workforce management and can be linked with talent management solutions. The same applies to specific functions for maintenance. Buyers of more extensive ERP software can, for example, subsequently integrate Computerised Maintenance Management Systems (CMMS) or Enterprise Asset Management software (EAM).

Logistics

Logistics functions help companies manage their inventory of raw materials, components and products. Manufacturers need to purchase, store and optimally organise production resources, such as fabrics for clothing or parts for device manufacturing. Furthermore, companies also need to be able to track shipments to customers, from suppliers and between multiple warehouses or production sites. ERP systems offer strong support for all of this and other logistics tasks.

Production

Features in the area of production management form the core of many ERP systems – at least for manufacturing companies. These modules take into account among other things bill of materials, material resource planning (MRP), master production schedules (MPS), work-in-process (WIP) and quality control. Production managers use the functions to monitor all phases of the manufacturing cycle, identify faulty products and track the status of production facilities and personnel.

Analytics

The analytics area of an ERP software usually provides insights and data on all processes managed with the system. If companies use separate systems for CRM or HR, it is often useful to connect these with the ERP system to use data across the board. For example, buyers need various types of data, potentially from different systems, such as sales history from CRM, open quotes from quote management and shipping details and returns from logistics software, to efficiently estimate demand for a product. If these areas are directly considered in the ERP system, the analysis is obviously easier.

ERP interfaces

Basically, there are specific ERP features for all departments of a company, nevertheless many areas rely on their own, specialised software helpers. In particular, sales and marketing prefer standalone systems to an ERP module, as these often cover the respective requirements more precisely. To nevertheless be able to integrate corresponding processes into the enterprise resource management as purposefully as possible, ERP systems generally offer specific interfaces.