It is estimated that over 70% of large organizations make use of an ERP or a comparable business management solution. Regardless of the size of the company, it is essential to have an ERP system in place. The ERP market is expected to reach a size of $117.09 billion by 2030.

What is an ERP system, how does it work, and why should you invest in it? Here, we explain what ERP stands for and reveal why the solution benefits your business.

ERP usually includes such modules as:

ERP systems serve as comprehensive, fully-integrated platforms, available either on-site or in the cloud, overseeing all facets of production-oriented or distribution-based enterprises. Moreover, ERP systems facilitate every aspect of financial management, human resources, and manufacturing, customizing them to meet your industry’s specific needs alongside your fundamental accounting tasks.

ERP systems offer visibility into your entire business operation by monitoring all stages of production, logistics, and finances. These cohesive systems function as the central nexus for a business's complete workflow and data, enabling various departments to access crucial information.

Now that we have understood what an ERP system means, let us delve into its evolution.

The first generation of ERP systems was based on mainframe computers and was introduced in the 1960s. These early systems were designed to handle inventory control and order processing but lacked flexibility and scalability. Moreover, since they were so expensive, only large companies with significant resources invested in them.

The second generation of ERP systems emerged in the 1980s and early 1990s and was built on minicomputers and workstations. These systems could support multiple users and applications, but they were still expensive and not accessible to smaller companies.

The third (and the latest) generation of ERP systems uses cloud technology, which allows multiple users to access information stored on a server over a network connection. This makes it possible for businesses of all sizes to own an ERP system without investing thousands of dollars in infrastructure.

ERP systems use a centralized database to equip everyone with the latest information on business processes. When someone enters or updates the data into the system, it gets immediately available to authorized users across the organization.

Switching to the cloud, especially with the software-as-a-service (SaaS) model for ERP, means that ERP software is hosted on remote servers rather than on-site. The cloud provider handles software updates regularly, saving companies from costly upgrades every 5 to 10 years. This shift reduces both operational and capital expenses because companies no longer need to buy software or hardware or hire extra IT staff. Instead, they can invest these resources in new business ventures.

Plus, staying on the cloud ensures that the organization always has access to the latest ERP software. With IT management taken care of, employees can focus on more productive tasks like innovation and expansion.

By streamlining their operations, ERP applications help businesses become more efficient and profitable. The program helps companies keep track of sales orders and inventory levels and manage finances and human resources.

As you enter critical business data into an ERP system, you can align different departments across locations to streamline your business workflows, leading to significant savings.

Here are the key values that an ERP system brings to your business:

Various types of ERP systems vary in terms of their characteristics and usage.

Here are the hosting types:

Also, you can group ERPs into different types depending on what they can do for each industry:

ERP solutions can efficiently impact your business with the following features.

The finance and accounting module of ERP simplifies financial tracking, budgeting, billing, and reporting for businesses. Key features include:

Among other things, the ERP allows you to calculate the retention that is crucial for maintaining financial stability throughout the project process. It encourages accountability, ensures adherence to quality standards, and provides a financial buffer for dispute resolution in cases of non-payment or late payment.

The ERP Supply Chain Module serves as the backbone of the system, streamlining the entire supply chain process to reduce lead times from raw material acquisition to product distribution.

Key features include:

The module benefits businesses by managing inventory, improving customer service, ensuring compliance, and providing process visibility.

Project management in ERP systems is crucial to oversee the different stages of ERP implementation projects, which include:

Project management in ERP systems often includes a risk management option, which involves evaluating and mitigating the potential risks associated with projects and their surrounding factors. By proactively identifying these scenarios prior to project commencement, you can:

This proactive approach aids in minimizing the financial ramifications and project delays resulting from such events.

As your business expands, managing your workforce and payroll becomes complex. ERP systems streamline HR and payroll tasks, automating payroll calculations and other tedious processes.

Key features of the HR and payroll module include:

This module allows you to reduce costs and errors through automation, streamlines recruitment with automated submissions and follow-ups, and provides easy access to employee data for accurate record-keeping.

Streamline your workforce and payroll management with FirstBit ERP

First Bit allows you to take the business management process into your own hands.

Project costs analysis. Control your project costs and avoid cost overruns.

Cash flow management. Monitor project cash-flow in real-time.

Resource allocation. Cost Structure diagram allows you better watch over the budget expenses that affect your project’s life cycle.

The biggest misconception of ERP systems is that they’re difficult to implement and are most likely to fail the first time. However, that’s not the case. And when you choose an industry leader like FirstBit, things can get even more effortless. Our experts can help you deploy the ERP system as per your requirements (on-premise or cloud).

One of the biggest benefits of the FirstBit ERP system is that it is FTA-accredited software. It also ensures full compliance with IFRS. This means that you won’t have to worry about financial or tax compliance in the UAE.

Also, you can integrate the FirstBit ERP system with front-office applications like CRM to build a holistic view of your business operations.

ERP and financials are two different things. ERP is an enterprise resource planning system that helps manage and organize your business’s processes, data, and people so they can run efficiently.

Financials, on the other hand, is a finance management tool that helps you track your company’s performance over time (in terms of revenue). It includes the numbers behind your business’s financial performance. These include income statements (profit & loss statements) and balance sheets (assets, liabilities & equity).

Financial software usually includes compliance with the necessary reporting requirements, such as the International Financial Reporting Standards Foundation (IFRS), Financial Accounting Standards Board (FASB), and local laws.

While financials focus on one area of the business, ERP software comprises a wide range of business processes (which includes financials).

The main differences between ERP software and accounting software lie in their scope, functionality, and capabilities. Accounting software is primarily focused on financial management tasks like accounts payable, accounts receivable, financial reporting, and basic sales recordings.

On the other hand, ERP software offers a comprehensive solution that integrates various business processes beyond finance, including supply chain management, human resources, customer relationship management, project management, inventory tracking, warehouse management, eCommerce, and more.

The best ERP system for a small business depends on the organization's specific requirements, budget, industry, and long-term goals. Conducting a thorough evaluation of the features, scalability, customization options, integration capabilities, user-friendliness, cost-effectiveness, and support services of different ERP systems can help determine the most suitable solution for a small business.

ERP software is essential for companies seeking to grow and adapt to changing business environments. ERP helps businesses navigate the challenges and seize the opportunities presented by growth by streamlining operations, such as: