An ERP is a very useful tool for companies, business owners and entrepreneurs as it allows unified management of their operational processes among all their areas.
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Reducing processes, increasing collaboration and centralizing a company’s data are actions that support the success of a business not only in cost reduction but also in the productivity that can be achieved within work teams.
An ERP allows these actions to become a common denominator of the companies that use it. Do you want to know the different types of ERP for your business? Keep reading.
What is an ERP?
Enterprise Resource Planning (or ‘business resource planning’ in Spanish) is a management system that allows you to automate the main processes of a company, centralizing information on a single platform and streamlining workflows.
It is a system that is designed to improve the efficiency of process management in order to reduce operating costs, increase productivity and make collaboration between different departments of a company more efficient.
How does an ERP work?
These types of solutions work by linking the different processes that are generated within an organization with the possibility of managing and understanding them from a single platform. It manages the data resulting from these processes and speeds up the information obtained from the company regardless of the area from which it is requested.
It works with a centralized data structure where a single database is generally used, which is fed with information from different areas. In addition, it allows the company’s information flows to function better and obtain an operational improvement as well.
Let us think that an ERP is where the entire company coincides to know the data of some process, sale, client or activity of any department. An example would be when an order arrives in ecommerce that sells products on request.
First notify the sales areathen (or at the same time) a warning arrives at the production area of the product so that in turn they can review in the inventory systemand thus know if there is the necessary raw material to create the product.
Once this is determined, the process continues to the production stage, in which the and the necessary inputs are deducted from inventory.
Finance and accounting will be notified to proceed to the collection and billing issues, then it will go to the logistics area to proceed with your shipment.
All this process is recorded in an ERP in which any of the areas involved can review the operation of the process. More or less this is how an ERP works, keeping the data, processes and actions carried out in a company up to date.
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Types of ERP for companies
There are different types of ERP that have to do with its operation and conception within companies, which are basically divided into the following:
- Local
- Cloud or SaaS
- Hybrid
- generic
- tailored
Local
In this type of services, a local server owned by the company is required to be able to implement the solution. It supposes a higher investment for the infrastructure than an own server but it also has the characteristic of greater data confidentiality and security since the information is not stored in a public cloud.
Cloud or SaaS
This is a service installed in the cloud that has a charge for use according to the resources consumed or by membership. In general, the ERP providers are the ones who provide the data storage service in their own clouds, although they can also use a third party as a cloud provider.
The acronym SaaS stands for Software as a Service, which is just the marketing model for this type of service managed by another company other than the one that uses the system.
Hybrid
In this model, the two previous ones are used simultaneously, that is, some of the applications operate on the company’s local servers and others in the cloud. This allows companies to prioritize tasks and organize their resources as they see fit.
Generic
This is the name given to the ERP model that has a predefined modular structure that is generally adapted to the most common needs of each company. It is usually one of the options with the lowest cost and is very functional when a specific development is not required for a specific area.
Custom or parameterizable
This type of ERP requires a greater investment because, as the name indicates, it is about creating a personalized solution that is more tailored to the specific needs of a company. It requires a more specific and in-depth diagnosis of needs where even some providers can generate specific module developments according to the demand of the company’s operation.
Characteristics that an ERP must have
Flexibility
Flexibility refers to the ability to adapt to changes, and in technology it becomes really necessary to be flexible because the speed with which updates occur requires structures and products capable of supporting them.
In addition, flexibility is about the degree of customization an ERP has, which is very necessary to adapt it to the real needs of the business.
Integrations
While an ERP can manage most processes within a company, the ability to integrate with other tools makes business management even easier. Let’s think that companies use different applications for their daily operations that can be further enhanced if we have a connection to the main database.
To choose an ERP, it is necessary that we have mapped both the tools that we already use, and the processes that we release with them. The idea is that we make the operation more efficient and that the chosen technology adapts to the characteristic functioning of our company, and not the other way around.
Modularity
These features are very important because when working by modules, we can decide when to scale and add more modules if our operation requires it, or disable some that can be dispensed with. This facilitates the implementation of new processes without affecting other areas.
The main modules of an ERP within a company are:
- Sales
- Finance
- Marketing
- Shopping
- Operations
- Warehouse
- Inventory
- HR
- Production
- Ecommerce
business orientation
When choosing an ERP, take into account which one best suits your business model. To do this, you must analyze your project well, defining the key activities and even what you plan to improve by implementing a service of this type.
Seek that the services that they offer you really have an orientation to your business model and not only to the automation of processes because you would be wasting resources and capacities of this type of applications.
Importance of an ERP for a business
As I have already been mentioning, an ERP allows companies and businesses to have better control over the processes that are carried out every day in different areas, in addition to benefiting proactivity and streamlining activities between teams.
Main benefits
- Reduce time by centralizing company information
- Provides greater control of internal processes
- Allows further analysis of metrics and data
- Contributes to collaboration between areas
- improve productivity
Depending on the business model that each company has, the benefits increase as long as the implementation of an ERP system is consistent with the objectives.
Type: Evaluate the cost benefit depending on your real needs and first map your processes to make the best decision.
How does an ERP serve entrepreneurs?
For entrepreneurs it is of great importance to understand what happens in each of their areas and an ERP system allows processes to be streamlined. In addition, thinking of a digital entrepreneur who has an online store, an ERP can be quite useful in the processes of:
- Logistics
- inventories
- transportation management
- online sale
- crms
It is important to know the types of ERP that exist but also to understand how your business works to decide as objectively as possible which one can bring you the greatest benefits in relation to cost.
Bind ERP: a data option for SMEs
An ERP that remains in the taste of entrepreneurs for its ease of use and characteristics in general is Bind ERP. For ecommerce it has turned out to be a great ally as it allows you to centralize your sales data as well as the monitoring process.
Some of its advantages are:
- Organize your inventory
- View and control the import of expenses
- Keep your catalog of products and suppliers up to date
- You can receive merchandise automatically
- Manage bank accounts and boxes
- Manage accounts receivable
- You can see your financial statements
- Simplify your electronic invoicing
- Simplify your reports in a dashboard
In addition, having all the updated information about customers, products, and sales is a great advantage as an entrepreneur, since many times the work team consists of few people. Having an ERP that simplifies processes is very valuable. Check out this article about using an ERP.
At Tiendanube we have an integration with Bind ERP that I am sure will be very useful for you to better control your sales, invoices and suppliers. In this you can see more information to integrate it into your online store.
Conclusions
The use of an ERP is currently not only for large corporations because, as I have explained in this article, there are different types for each need and an SME can access to use this type of tool regardless of the line of business.
For an entrepreneur who is growing, it is also useful to use a system that facilitates the management of his business and he can choose to start his experience with a modular or generic ERP.
At Tiendanube we want more entrepreneurs to potentiate their projects and that is why we offer you the opportunity to create your own online store at no cost.
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