ARTICLE TABLE OF CONTENTS
This is about the primary users of ERP (Enterprise Relationship Management) systems.
You’ll learn:
- What an ERP system is
- Who the primary users of ERP systems are
- Lots more
So if you want to know this ERP basic, then you’ve come to the right place.
Let’s get started!
The Primary Users of ERP Systems
If you’re in business, whether it be finance, healthcare, or hospitality, you’ve probably worked with an Enterprise Resource Planning, or ERP, system, whether you realized it or not. These broad and overarching systems help with day-to-day tasks as well as larger, big-picture forecasts.
But if Enterprise Resource Planning is a new term to you, you may be asking yourself:
Who are the primary users of an ERP system?
What businesses use ERP systems? Which industries rely on them?
And, who within those industries and companies actually interact with ERP systems on a daily basis?
Well, we have answers to all of those questions, but first, it’s helpful to define what exactly an Enterprise Resource Planning system is. Knowing that will make explaining its primary users that much easier.
Enterprise Resource Planning Defined
According to the University of Wisconsin’s Lubar School of Business, Enterprise Resource Planning Systems are:
Critical information systems that connect a company’s operations, including purchasing, production, sales, service, accounting, supply chain, finance and asset management, and customer/supplier relationships.
That might sound like a whole lot of word salad, but the concept is actually pretty simple. ERP systems connect all the different aspects of a company on one cloud, web, or server-based network.
So, if you were selling socks, as an example, and you receive a giant order, you could note that order in your company’s ERP system. Doing so would alert everyone else instantly.
The manufacturer would receive the order, accounting would receive costing and profit information on the sale, and the customer is automatically sent an invoice, all without you lifting another finger.
The Primary Users of ERP Systems
Now that we understand what an Enterprise Resource Planning system is, we’re ready to answer our real question:
Who are the primary users of ERP systems?
Essentially, any department head within a company, as well as many different types of employees, are going to use the ERP system in some way or another.
Let’s break this down into five standard areas that most companies contain:
Finance
Chief Financial Officers and others with their hands on the financing side of a business will use ERP systems to track information and generate reports.
One of the significant ways they’ll use an ERP system is for profit-tracking.
The system will generate reports that give a big picture view of a company’s profit generators. It will also show what the company’s return on investment looks like overall.
Financial officers will also use ERP systems for fixed asset management and risk management. With the right ERP system, financial officers will be able to see depreciation on equipment, office space, and other large assets with just the click of a mouse.
By using risk management tools that often come with ERP systems, they’ll also be able to predict and manage potential crises.
For example, an ERP system can alert a finance manager if cash reserves can’t cover accounts payable. It can also flag customers that become credit risks.
Sales
Sales managers and directors use ERP systems daily in multiple ways. Each time they make a sale, they’ll input it into the ERP system, which alerts everyone else involved, but that’s not all.
With an ERP system, a sales director or manager will be able to see current inventories instantly. So, if they have a client on the phone who needs something right away, they can see if it’s in stock.
And if it’s not, they can alert the head of manufacturing or another relevant department head, who can place an order for more products.
See how it streamlines the system?
ERP systems will also allow a sales manager to forecast potential sales and track sales opportunities. A lot of this is done via a specific module on the ERP system known as Customer Relationship Management, or CRM.
We’ll discuss that further when we talk about customer service representatives as primary users, so just hang in with us here.
Manufacturing
For those on the manufacturing side of things, an ERP system is invaluable. The system can track inventory, so the head of manufacturing can see what they have in the warehouse at the touch of a button.
If they don’t have enough of any one supply, it can also help with inventory procurement. Beyond that, an ERP system will usually track orders and schedule their deliveries.
ERP systems have tools to schedule production as well. And, ERP systems usually have a module for tracking logistics. Sound too good to be true yet?
Human Resources
Human resources love ERP systems because having one helps them cut back on tedious paperwork.
An ERP system will hold all of your employees’ information in one accessible but protected place. That means no more dusty file cabinets and endless paper stacks to sift through.
When it comes to hiring, an ERP can help track an applicant’s process. It can also generate and send out onboarding documents as needed. And, in the event of an employee’s termination, it will typically organize and track that process as well.
Maybe most importantly, an Enterprise Resource Planning system will usually handle payroll in addition to all of the other goodies. That actually helps every department head to stay within budget when it comes to employee hours.
Customer Service
As mentioned above, an ERP customer service module is known as a CRM, or customer relationship management.
Customer service representatives rely on CRM systems to serve a business’s customers flawlessly.
A CRM system will hold customer information like their name, address, and phone number. So, if there’s a problem with an order, a customer service representative can quickly locate the information and reach out to the client.
CRM systems also tend to have areas for notes and small details. Knowing that the customer had a recent birthday, or prefers to talk via phone rather than e-mail, will make a customer service representative shine.
Of course, sales representatives use the information on the CRM system as well. It’s amazing how often a simple happy birthday can land you an extra sale!
Industries that Use ERP Systems
Now that you have a basic grasp of who the primary users of an ERP system are, let’s look at how specific industries rely on ERP systems.
See, that’s the thing about Enterprise Resource Planning systems; they’re entirely customizable to the industry. And, as you’re about to see, almost every industry uses them in a slightly different manner.
To be clear, the industries we list here may use ERP systems in all sorts of ways we don’t mention. We’re only highlighting the significant benefits of an ERP system as it pertains to each industry.
Accounting and Finance
When it comes to accounting and finance, ERP systems are vital to integrating data and generating reports.
Accountants and financial advisors hardly need a system to track inventory or manage logistics.
Instead, they use ERP systems to create reports for their clients. They also use it to assess and manage risk.
In this industry, it’s often essential to have an ERP that keeps up on the latest tax legislation, which many do. And depending on what type of firm or corporation it is, the ERP system may be able to reflect and compare different currencies.
It can also generate reports in appropriate languages for a diverse clientele as needed. For larger financial firms, that capability may be vital.
Logistics
In the world of logistics, ERP systems are extremely important. Here, they help increase efficiency by organizing supply chains.
As a logistics company, waste tends to occur when a truck or other delivery vessel ends up traveling empty-handed.
Perhaps the inventory it was scheduled to carry wasn’t where it was supposed to be, or maybe there was some other issue.
GPS tracking systems often integrate with ERP systems so that every truck, train, or ship is always full. This decreases waste and makes the logistics company more profitable.
Of course, logistics companies depend on inventory management within an ERP system as well. They also rely heavily on CRM systems to keep their clients satisfied.
Construction
Construction companies use Enterprise Resource Planning systems to track projects from start to finish. The system can help with creating estimates and will typically store information on pricing and specs.
An ERP system made for construction will also keep track of job hours, which helps companies avoid going over their budget.
It can produce bids, proposals, and contracts. Plus, an ERP system will typically generate purchase orders, and invoices too. So, even smaller construction companies tend to find ERP systems useful.
Healthcare
In healthcare, there has long been a breakdown between front-end and back-end financials. On the front-end, patients schedule and pay for care. On the back-end, healthcare managers deal with insurance claims.
An ERP system links these two areas with ease, making patients and employees far less frustrated, or cutting back on miscommunications.
More so, an ERP system can automate inventory management, which is vital in a healthcare setting. To take care of patients, medications, and protective equipment are crucial. Being out of stock could be a life or death situation.
An Enterprise Resource Planning system can place orders for more inventory when supplies, like masks, or medications like penicillin, hit critically low levels.
Agriculture
Perhaps most pertinent to Agriculture is an ERP system’s ability to track compliance. Farming food is a tightly regulated industry in which every fertilizer and pesticide must be recorded and reported on. An ERP system easily organizes this information for farmers.
It also helps those in agriculture track when they planted, harvested, and shipped their products. This allows for traceability, which is vital when it comes to food.
If you’ve ever wondered how they’re able to say an outbreak of salmonella came directly from a farm in Salinas, it was probably thanks to the tracking capabilities within an ERP system.
ERP systems customized for Agriculture may include breeding calendars as well. This allows farmers and ranchers to maximize the number of calves born every year by tracking their moms’ health.
Lastly, ERP systems for Agriculture often have field mapping capabilities. A farmer can input which areas of the field are most and least fertile. Then, the system can automatically signal farm equipment, like a tractor. The equipment will adjust its operations based on where it is in the field.
Hospitality
Hotels and restaurants use ERP systems in a variety of ways. Online booking and reservations systems are typically part of larger ERP systems. They help prevent double bookings while maximizing profits.
ERP systems can also track and manage loyalty programs. If you’ve ever collected Starwood points or earned a free dessert at a large restaurant chain, chances are those points were tracked using an ERP system.
Of course, hospitality also includes events. ERP systems made for hospitality can generate event floor plans, book banquet rooms, and create catering agreements.
Retail
For retailers, inventory management is probably the most crucial part of an ERP system. Also vital is a point-of-sale system that integrates seamlessly.
When someone makes a purchase, the store clerk should be able to accept payment via a point-of-sale system that links to the rest of the ERP system. That way, store managers or owners can see what’s selling and how much it’s selling for in real-time.
This creates tight inventory control and better profit margins.
Higher Education
Colleges and universities run similarly to other businesses, so an ERP system is just as beneficial to them. If you think of the classes as a product and the students as customers, it all makes sense.
In higher education, ERP systems link student information with school administration and financial management. So, in one system, a school admin can see a student’s grades, whether or not they’ve paid tuition, and what their schedule looks like for the next quarter.
Government and Public Sector
Government and public sector employees often deal with budget, timeline, and bureaucratic constraints that make getting jobs done a challenge.
An ERP system designed for the public sector attempts to streamline these issues.
Enterprise Resource Planning systems used in government will typically have budgeting and forecasting tools that link back-office financials to an elected official’s plans.
It will also have the ability to generate and send out permits and licenses as needed for different jobs or events throughout a jurisdiction.
Maybe most important, though, is the ability to provide a self-serve portal. A self-serve portal reduces the number of employees needed to serve the public with basic tasks, thereby cutting government expenses.
With a self-serve portal, a city resident can, for example, purchase a dog license, pay a parking fine, or view important information via the internet. No human interaction is required, thanks to the ERP system’s self-serve portal.
Nonprofits
Nonprofit and for-profit businesses face many of the same issues on a day-to-day basis. However, nonprofits also have to navigate a web of rules and regulations to maintain their nonprofit status.
Traditionally, nonprofits start small and may not use an ERP system. They tend to get by with a spreadsheet and a calendar. As they grow, though, things become more complicated, and an ERP system is a common investment.
ERP systems will merge back-office accounting and record-keeping with tax and other government regulations. This ensures the company is compliant and never at risk of losing its nonprofit status.
Types of ERP Systems
At this point, you may be thinking ERP systems seem great for big businesses, like hospitals or large universities, governments, and any sort of organization, but what about smaller operations?
Can an ERP system work with a family-owned restaurant?
Would there be any benefit?
Well, ERP systems come in multiple shapes and sizes. They work for small businesses and large corporations, too.
Let’s take a look at the different types of ERP systems and where they might be useful.
Industry Specific
In the above section, we talked a lot about how ERP systems work in specific industries.
It used to be the case that industry-specific options only catered to large corporations. In fact, you’ve probably heard of the top industry-specific providers because, at this point, they’re household names.
Oracle and SAP, do these ring any bells?
Both companies created industry-specific ERP systems for large-scale corporations. But these days, ERP systems that are industry-specific can be custom-built for smaller businesses too.
Sometimes these systems are built specifically for a company. Other times, they come as a boxed solution. More often than not, though, they’re based on a company server for security reasons.
Small Business and Simplified
Small business or simplified ERP systems are scaled-down versions of full-blown ERP systems. They only include the modules a specific small business needs.
For example, a family-owned restaurant may need a CRM module, human resources, and accounting. But, they probably won’t need logistics or manufacturing components.
Many simplified ERP systems are cloud-based rather than server-based. Smaller companies may not have their own server.
If they do, they may not have space to run an ERP system on it. So, they often rent server space in what’s known as a cloud-based Enterprise Resource Planning system.
PeopleSoft and Netsuite (owned by Oracle) are both well known for small or simplified ERP systems and offer cloud-based solutions.
Web-Based and Remote
ERP systems are often housed on a business’s private server for security reasons. They tend to hold a lot of sensitive information, like employee files or financial documents.
However, some ERP systems are now available as remote or web-based solutions.
Remote and web-based options are becoming more popular since they let employees access the ERP system anywhere they have an internet connection.
As remote work continues to grow in popularity, more web-based ERP systems will likely thrive.
GalaktikaSoft is an example of a company that creates web-based ERP systems, typically for smaller businesses.
