ERP (Enterprise Resource Planning) is a system or solution used by companies to integrate and manage various business processes. ERP systems connect business processes within a company and enable the flow of data between them – eliminating data duplication, and ensuring data consistency and efficiency of operations across business lines. Business activities often streamlined by an ERP system include procurement, finance, human resources, distribution, and manufacturing. ERP systems facilitate the flow of real-time data, improving visibility and allowing organizations to make data-driven decisions.
The concept of ERP systems began many decades ago; however, as computer technology continued to advance thru the 1990s, ERP systems became more popular and widely used by organizations. However, companies realized their on-site ERP systems were often unable to keep up with operational demands and emerging technologies such as tablets and smartphones, so a new form of web-based, or cloud, ERP system was developed.
Presently, companies have the choice of two main deployment options for ERP solutions: on premise or cloud. The fundamental difference between these options is the physical location of the data and the core infrastructure that supports the housing of that data. When the ERP system is on premise, the file server and data warehouse are located within the four walls of the company. When the ERP solution is “in the cloud,” the file server and data warehouse are located in a remote infrastructure which is managed by IT professionals, and is accessed by the company via the internet; another term for cloud-based computing where users access software on shared computing resources is Software as a Service (SaaS).When using a cloud ERP, typically the solution is paid for in a subscription model on a monthly or annual basis.
The primary advantage of cloud ERP solutions is scalability by providing manufacturers a way to share the infrastructure cost with dozens, hundreds, or thousands of other users. The robust infrastructure can support multiple “tenants” each with their own secure data instance so that company-specific data is only available to authorized users. This provides the opportunity to easily scale the number of users without the corresponding one-to-one increase in cost.
This scalability translates directly into two very real cost reductions:
Companies are often interested in an ERP system but are not sure where to start. Below is a high-level summary of the key steps involved in selecting and implementing an ERP system.
Return on Investment, ROI, is frequently used to measure the success of a potential project and obtain stakeholder buy-in, as well as to confirm the success of a system after its been implemented. Traditional ROI calculations assume the business will see tangible benefits as soon as the system is installed.However, in the case of ERP solutions, ROI is typically realized through the improvement of a business’ processes which may take time to come to fruition.
There are two main components in an ROI calculation: cost and benefits. Total Cost of Ownership over time, TCO, is often more straightforward to determine and should include initial costs such as hardware, infrastructure, implementation cost, and consulting, as well as license fees and maintenance cost for a specified number of years after implementation. The next step is to determine the expected benefits over time, which is usually more difficult to estimate since ERP systems offer tangible and intangible benefits and the benefits are realized over time. Benefits often come from inventory reductions, improved production or efficiencies, and lower operating or labor costs. To estimate the benefits, companies should consult the vendor in addition to consulting with the various business lines being impacted to ensure agreement on the expected benefits. The relationship between TCO over time and expected benefit over time will forecast an ROI over time, which will be negative at the start but will become positive once the benefits start being realized.
KeyedIn ERP offers manufacturers a solution that enables efficiency, profitability, and growth through flexible ERP software, specifically designed to work the way manufacturers do business. KeyedIn Manufacturing is known for providing manufacturers:
KeyedIn isn’t just the industry’s best cloud ERP for custom manufacturers, it’s also supported by a growing number of integration partners, such as Sage and QuickBooks, that allow manufacturers to tie into their financial systems, BI tools, and more – better integration mean less data entry, richer reports, and fewer costly errors. Last, but not least, KeyedIn is proud to be recognized as an Honorable Mention award winner in the IMTS 2018 Exhibitor Product Innovation Competition, designed to recognize companies bringing new levels of innovation to manufacturing technology that ultimately benefits manufacturers and their business.
Contact a KeyedIn specialist today at 1-866-662-6820 to find the optimal solution to your ERP system needs, or request a demo.
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