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Benefits of An ERP System

By
Bradley Johnson
Table of Contents

Writing an eCommerce business plan and starting an eCommerce business takes a lot of work, but has big payoffs. It requires being patient enough to get your eCommerce business license, but energized enough to execute an informed eCommerce marketing strategy.

Learning how to increase eCommerce sales or researching the best wholesale directory adds up quickly. If you don’t have your business information under control, you can end up spending more time chasing reports than actually building your company.

Once your brand gains recognition by more customers, however, you can start to improve company operations. You can also hire more employees and list more products as revenue breaks company records. 

As your business reaches milestones, you need to make sense of increasingly complex and disparate information. An effective way to do this is through enterprise resource planning systems, or ERPs. 

Familiarizing yourself with what is ERP and looking over some ERP system examples are great first steps. Knowing what an ERP is capable of and what the leading ERP companies are helps you make an informed decision. 

Once you’re familiar with the basics, reviewing the top ERP systems saves hours of research that you’d otherwise have to do yourself. When you’re nearing a purchase decision, you may be wondering how an ERP is specifically going to benefit your daily needs. 

Let’s look at the core business advantages of an ERP and how to overcome their associated obstacles.

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What Are the Primary Business Benefits of An ERP System?

Organizations invest in an ERP system so they can be more efficient and profitable. Here are the primary business benefits of an ERP system: 

  • Reduces time spent on data consolidation. The first and largest benefit of an ERP is that it pulls your business’s core data into one hub. You don’t need to bounce between eCommerce accounting software, warehouse inventory management software, and any other tool for different information. Simply log into your ERP every morning for the data you need, when you need it.
  • Improves cross-departmental communication. When warehousing staff need information from another department but don't know where to find it, this is a real hindrance. An ERP pulls data from various departments so you can locate critical info quickly. Using your ERP reduces recurring communication between departments, too, so you can spend more time getting work done. This ERP benefit grows proportional to the size of your company, meaning larger companies have a greater need to share information between silos. Having ERP skills can be useful when you're trying to land a better eCommerce manager salary, too.
  • Updates crucial data in real-time. When using an ERP, your team doesn’t need to manually compile reports anymore. All that’s required is connecting each eCommerce software to the ERP, so you can view essential metrics in your ERP dashboard. Your ERP will use application programming interface (API) calls to update information between applications on a continuous basis. This means you can export reports directly from your ERP. 
  • Strengthens opportunities for profit. Separating meaningful eCommerce KPIs from low-impact ones is difficult when you’re trying to make sense of different tools. When you have a bird’s eye view of daily operations, you can identify all of your business’s sources of profit, so you can capitalize on them. This benefit is especially valuable if you sell high demand products or wholesale products in an online marketplace. Consumer interest in these niches can change dramatically and quickly.  
  • Enhances existing financial projections. Remaining profitable is a necessity for every business, but that doesn’t mean it’s easy to achieve. Most ERPs include accounting features and demand planning software. This supports the work of financial analysts. By easily accessing expenses, sales, and revenue, analysts can more easily uncover what needs to be changed for profits to grow. 
  • Highlights problematic trends before they become losses. Part of the challenge in running any business is spotting weaknesses and remedying them. ERPs pull so much data that it’s much easier to see where operations need to be fixed. Perhaps your variable expenses haven’t been reviewed recently, or turnover has been higher than expected. An ERP reveals this and other data right away, so you can propose a solution faster.

Quiz Question: All of The Following are Benefits of ERP Systems Except...

ERPs automate so much that it may cause you to think about what types of human labor it simplifies. To get crystal clear on how an ERP helps, here is a quiz question:

Each of the following is a benefit from ERPs except: 

A. Simpler cross-departmental communication

B. Increase in weekly productivity 

C. Decentralized empowerment

D. Improved financial forecasting

If you chose “C”, decentralized empowerment, you’re correct.

The purpose of an ERP is to consolidate various types of information, including departmental data. Consolidation includes centralization, meaning employees from disparate parts of a company can find info in the same location.

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Problems In Implementing ERP Systems

ERPs are incredibly powerful, but that doesn’t mean getting them up and running is effortless. Even when your ERP is installed and functional, you still need to overcome invisible hurdles, like employee adoption and teams understanding their responsibilities. 

Getting the most out of your ERP requires being aware of associated problems and how to resolve them. This is easier said than done--it requires a laser-like focus on the unique needs of your organization. 

Here are common problems faced when implementing ERP systems: 

  • Knowing how to use it. You may have the fanciest, most advanced software in the world, but it won’t make a difference if you and your staff don’t know how to use it. This is why getting people educated on the software right away is of paramount importance. Book slots in people’s schedules so they have ample time to get acquainted and understand how they’re going to use it. 
  • Software compatibility. The rapid pace of technological improvement poses a challenge to businesses that are change-resistant. If your existing infrastructure or warehouse management system can’t work with your new ERP, you’ll need to update in-house technology first. Verify that the ERP you’re considering is compatible with your operating system, software version, and preferred hardware. 
  • Individual and company-wide adoption. It’s difficult to acknowledge, but humans are creatures of habit and resist change. Despite the power and convenience of new software, many throughout your organization may continue doing things the old way. Don’t take this personally--recognize that it's human nature to minimize tension, even when some tension creates better results. Even so, foster an attitude of success by leading by example. 
  • Achieving and sustaining results. Pulling all of your data under one roof is one thing, but achieving measurable results with it is another. An ERP’s purpose is not to give your staff one more chart to look at, but to reduce the time spent on looking at charts. Aim to save time by uploading existing info to your new software, like your warehouse management process flow. Create a task roadmap that coincides with your ERP adoption so you can hit the ground running. 
  • Ensuring ERP benefits are greater than costs. It takes a lot of work to build and maintain an effective ERP. Because of this, the average ERP can easily cost mid-to-large-sized organizations between $40,000 and $50,000 per year. Make sure that the money you’re spending is being made back (and then some) by all the profitability insights an ERP affords. 

Below are simple-to-implement solutions for the above problems: 

  • Onboarding and periodic education. An effective way to prevent informational overwhelm is to educate employees on your ERP right away. Don’t expect them to master a new tool if you haven’t given them the resources to do so. Schedule regular training sessions so employees can hit the ground running with their new knowledge. 
  • Keep IT and software up to date. Your teams can’t operate at peak capacity if they’re forced to use outdated technology and old systems. If your company doesn’t have one already, implement periodic updates for hardware and software. This requires staying on top of software updates, replacing broken equipment, and communicating more complex needs to your IT department. 
  • Demonstrate powerful use cases and encourage early adoption. An understandable question many have about new tools is, “How can this make a difference for my work?” The best way to show this is by asking a few people in each department to identify primary use cases. If a department contextually understands how the new software will maximize their work, they’ll be much more likely to use it. 
  • Assign employees specific tasks. Some employees may be thrilled to use new software; others may not be. To help staff understand why you invested in a premium tool, give them a specific objective. Educate them on how to use the tool, then assign a task with a due date. Being personally responsible for an outcome drives both knowledge of and appreciation for a new process.
  • Limit licenses to only required users. The average ERP license runs between $40 and $150--per user, per month. One or two users isn’t costly for a profitable company, but adding several users quickly adds up. Only staff members who use your ERP daily or weekly should have a license. 
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Making a Plan, Checking It Twice

ERPs make life easier for the end user but can require quite a bit of setup time. That’s why an ERP implementation plan that addresses the aforementioned obstacles is so important. 

Remember that just like any other long-term investment, some time needs to pass before you see tangible returns on it. Continue making the ERP a priority in your eCommerce marketing efforts, strategic planning, and daily work.