The Evolution of ERP: Leveraging the Power of Data for Growth
By: Tyler Mains
Enterprise Resource Planning (ERP) has undergone significant transformations since Gartner first coined the term in 1990. Initially used to expand the realm of manufacturing resource planning to include back-office capabilities, ERP initiatives have recently focused on integrating all business processes. Now, ERP extends beyond traditional boundaries to embrace a wider ecosystem that includes not just internal resources but also customers, suppliers, and other stakeholders. In this interconnected world, harnessing a vast array of data from diverse sources can be a pivotal strategy for businesses, fueling unprecedented growth and innovation. SaaS ERP further facilitates this connectivity by ensuring that everyone operates within the same network—the internet.
In 2021, the global market for ERP software was valued at $50.57 billion. It is expected to witness significant growth over the next seven years, reaching $123.41 billion by 2030. In 2023, an impressive 94% of global companies adopted cloud computing services to streamline their operations, marking a significant 14% increase from 2020. As the International Data Corporation (IDC) has stated, “Software as a Service and cloud-based, modular, and intelligent applications are no longer “nice to have” but are instead essential for business. Organizations that want to stay in business need AI-driven software that is cloud enabled, modular, and intelligent.” While 51% of organizations are sticking with their current applications, a significant 46% are gearing up to replace their current systems within the next three years.
With nearly a decade immersed in ERP, I’ll share my insights into how Cloud-based/SaaS ERP products outperform on-premises ones in terms of cost, flexibility, ease of scalability, and value.
Lower Cost of Ownership
ERP solutions offer a more cost-effective approach for businesses, primarily due to their flexible subscription models. Companies only pay for the specific functionalities they require, eliminating the need for extraneous expenditure on unused features. This tailored approach is further enhanced by the absence of a server or hosted environment to maintain. As a result, there are no additional costs for backups, updates, networking, or hardware and software purchases. Moreover, the need for dedicated IT staff with specialized skill sets is significantly reduced, as these cloud-based systems are designed for ease of management. Another key benefit is that updates to the system are automatic and typically included in the service, ensuring that businesses always have access to the latest features and security enhancements without incurring extra charges.
Flexibility
As a company expands, its needs to evolve, and ERP systems are adept at meeting these changing requirements. For instance, if a new ERP function is needed, businesses can simply purchase and activate the necessary license, instantly making it accessible to all users. This flexibility extends to custom-developed components and integrations with other programs, which, thanks to being web-based with open APIs, can be rapidly deployed across the entire organization.
Scalability
The scalability of ERP systems particularly shines in specific operational areas. For example, a growing sales team can benefit from seamless integration with CRM (Customer Relationship Management) systems, enhancing efficiency. Similarly, finance departments looking to be more proactive can utilize FP&A (Financial Planning and Analysis) functions like cash flow management, budgeting, and running what-if scenarios.
ERP systems also support native multi-entity consolidation, enabling businesses to report on individual locations, grouped subsets of locations, or a consolidated overview of the entire organization. This feature is invaluable for identifying underperforming areas and implementing improvements. Transactions between entities are streamlined, making it easier to manage and report on inter-entity financial activities.
As the number of team members increases, adding users to the ERP system is straightforward. New users receive their login details via email, and there’s no need for installations – they can simply log in using a web browser. Furthermore, as transaction volumes grow, the reliability of ERP systems remains steadfast, backed by the robust infrastructure of the software vendor’s data center. Businesses can leverage native automation functionality and approval policies, as well as open APIs, to automate transactions with other software systems. All these features collectively make ERP solutions a powerful tool for businesses looking to scale and adapt in an ever-changing market.
Added Value
With cloud-based ERP products, there’s less reliance on value-added resellers like us for routine support, maintenance, and training, enabling us to direct our efforts toward more impactful contributions that help fuel your organization’s growth.
Our suite of Business Intelligence tools enables companies to harness data more effectively, driving insightful decision-making. The integration of AI and automation streamlines operations, reducing manual efforts and increasing productivity. We also offer advanced collaboration and communication tools, fostering better teamwork and information sharing within organizations.
Recognizing the importance of security in today’s digital landscape, Vertilocity also provides robust networking and security solutions, along with full IT managed services, ensuring that our clients’ systems are secure, reliable, and up-to-date. Our auditing services help maintain compliance and accuracy in financial reporting, while our fraud prevention strategies protect businesses from potential threats and financial irregularities. Through HBK, we streamline tax preparation, offer risk advisory, and provide comprehensive financial planning. Specializing in valuation and forensics ensures holistic support for growth.
Adding to the robust functionality offered by cloud-based ERP systems, the role of a value-added reseller, like Vertilocity, is crucial in providing additional value through a range of enhanced services.
Contact us at ERP@vertilocity.com for more information on which ERP solution works best for your organization.