Why Businesses Need Enterprise Resource Planning Software

  • Published on : September 2, 2022

  • Read Time : 11 min

  • Views : 7.8k

Why Businesses Need Enterprise Resource Planning Software

Resource planning is a vital aspect of running small to large scale or startup organizations. However, small, mid-sized, and startup businesses feel hesitant and doubtful about what technology and tools to go with to fulfill a growing business objective. Even many small to medium-scale businesses seems to be unaware of ERP (Enterprise Resource Planning) system or why it is important for their business.

Initially, ERP solutions are used mostly by large-scale organizations as they have the potential to bear heavy installation and maintenance charges. However, with the advancement in technology and fierce competition in the market, ERP apps are getting wide acceptance among small and medium-scale businesses as well. The major benefit it offers to businesses is data streamlining for several departments and making easy and quick availability of data that supports better decision making and enhanced productivity.

This is not it, the ERP system had a lot to offer to small, medium, and startup businesses to stay ahead of the competition. Let’s dive into detail and analyze the importance of ERP solutions for small and medium-sized businesses, before that we’ll learn what ERP system is.

What is ERP Software?

ERP – Enterprise Resource Planning is a software system that supports a business to carry out all the diverse business processes in an automated form. It includes inventory management, accounting, capacity planning, invoice tracking, market research, quality control, manufacturing, sales, human resource management, and many more.

An ERP system is usually a combination of multiple modules or business applications that are integrated into the centralized system and share a common database. Each module is specialized for a specific business area and works together by using the same data. The companies can select the specific module they like to add to the software and scale up the business processes.

Why Do Small and Medium-Sized Businesses Require ERP System?

1. Integrates Information Flow

ERP system streamlines the flow of information between different departments in small to medium-sized businesses. Not only simple information but the business transactions and financial processes of the company can be handled in real-time. It can handle the company’s general ledger and other financial systems – entirely based on the requirement of the company.

These suitable modules allow the management to view the financial transactions. The financial transaction modules support the core processes of the organization’s finances ranging from sales order entry, inventory, product pricing, shipping and delivery, invoicing, production, warehousing, and many other financial processes.

2. Increases Productivity

The ERP app development provides a centralized system for an organization to gather data and get a clear insight into each business aspect so that they can focus on business growth. The employees don’t have to spend their time and put effort while interacting with an enormous amount of data handling. This will help them to work dedicatedly on managing business processes and increasing productivity.

It helps to eliminate the requirement of dealing with a number of documents and excel spreadsheets or to reach out to any individual or a department to seek out details. The centralized data storage enables better communication, collaboration, and data accessibility, this also helps to analyze the progress your team is making as well as the room for improvement.

3. Improves Decision Making

The customized ERP systems support real-time data and enable actionable insights based on the available data. Data automation simplifies critical process management, accounting, and marketing.

With easy access to information, the business strategist can easily conclude suitable decisions while minimizing the risk of failure and surpassing the deadlines of deliverables. It is a vital aspect for all types of businesses to build a reliable market in the competitive world.

Small and mid-sized enterprises usually can’t afford delayed decision-making as it can hamper their business progress. Therefore, for such a business ERP systems can be crucial solution to promote data based valuable decision making, forecast sales, predict financial needs, and take efficient decisions to meet deadlines.

4. Reduces Human Errors

Process automation is the need of the hour and almost every business requires it, regardless of its business size. The ERP software inevitably narrow downs the scope of human errors. The most common errors that can be witnessed in organizations with manual management are missed orders, incorrect invoice generation, and improper inventory management issues that can be easily avoided.

With minimum errors, the ERP system can promote and build a positive customer experience, which ultimately boosts employee’s satisfaction and confidence and prove to be a great aspect that small and medium-sized business can’t compromise at all. The real-time insights over workflow minimize wastage of resources, in terms of tracking product expiry, automated inventory requirement generation, a scenario of multiple ordering, etc. situations can be reduced to a great extent.

5. Promotes Business Control

Businesses that experience a huge number of business transactions and immense usage of spreadsheets may lead to losing control over data and may hamper business activities. The spreadsheets are prone to errors and leakage of data confidentiality, which overall hampers business operations. This generates the demand for ERP solutions in an organization to gain firm control over the business and maintain the confidentiality and security of the data.

On the other hand, businesses with heavy operational and transactional entries deal with data management complexity, to avoid such issues businesses must adopt ERP systems. Simultaneously, such automation minimizes the requirement of human resources, which minimizes the operational cost and saves the business from facing any downfall or a negative impact.

6. Automated Workflow

The difference in human resource efficiency and skills generates the risk of error and it is quite obvious to face such issues. The more the business process depends on manpower, the maximum the chances of errors with data, and may also lead to potential delays.

Automating data flow and management can eliminate the scenario of human errors to a great extent, such as inventory flaws, missed orders, or any manual miscommunication. When business operations and processes work in parallel, this builds a reliable customer experience and a good employee satisfaction level. For a business, both employees and customers are valuable entities and it can be efficiently managed with ERP software regardless of the business size.

7. Boosts Collaboration

The employees experience inconvenience in accessing required data due to poor communication and lack of collaboration. Implementing an ERP application or software for small and medium-sized businesses can effectively promote inter and intra-departmental collaborations and this brings transparency to the organization.

When it is easier for employees to access data across departments, then business management, decision making, operations and analysis become easier for employees to see the big picture of the organization.

8. Increase Sales and Long-Term Planning

When organizations keep track of their inventories and receipts via spreadsheets and release the budget based on that, then there are chances of manual errors and forgetfulness to maintain all receipts and bills. Such issues, ultimately lead to a loss of sales and an increase in budget. In contrast to that, the businesses that adopt ERP software to automate their business operations can prevent such issues from happening.

The ERP solution maintains all the receipts and bills generated and can easily prepare the report of resource requirements and can take necessary measures to handle things smoothly. Getting the ERP software developed can enable to maintain consistency in business policies and processes throughout the organization. Such, planned and organized management improves customer services and promotes profitability.

9. Enhances Data Security and Improves Quality

Data is the backbone of any business to function smoothly, thus by adopting ERP systems organizations can enhance the security of the data. The data integrity can be maintained across functional perspectives such as sales, marketing, customer services, and other aspects that help to promote collaboration across the departments. To maintain efficiency within the organization the ERP solutions serve in-build data controls to provide much-needed security to the valuable data.

The ERP systems support a single data entry system to maintain a high level of data security however, employees can fetch data through multiple sources. Having a centralized data entry system can help to improve the accuracy, efficiency, consistency, and security of the organization’s valuable data.

10. Better Customer Relationships

Customers are the soul of any business, therefore customer information should be optimized and centralized to drive sales and build a cordial customer relationship rather than just storing them in electronic form. All this can be handled by integrating ERP systems within the organization and focusing on customer acquisition and retention.

Using ERP and CRM (Customer Relationship Management) together can automate varied customer services, such as payment integration and other facilities. All these tactics nurture prospects in a guided manner and promote sales, which ultimately initiates to build of better customer relationships.


By implementing ERP software, small and medium-sized businesses can witness tremendous benefits with operational efficiency. The businesses no matter the size, should definitely consider custom ERP software development to automate, simplify, and scale business operations efficiently. It helps to minimize the technology obsoleteness within the organization and supports the formulation of long-term business planning.

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