ERP and the Automation Opportunity

Last Updated: August 18th, 2023
Researched and Written by: Adam Bluemner

There are lots of reasons to purchase enterprise resource planning (ERP) software, as these integrated software suites can bring efficiency in the workplace through automation. To start, time-consuming business processes like data entry can be greatly sped up by using an ERP. Yet there are far more benefits, along with some challenges, businesses should consider before implementing an ERP software:

Benefits of ERP Automation

The most obvious benefit of automation is lower business costs by replacing time-consuming manual tasks with streamlined software processing. But the immediate savings are not the only advantage of adopting an ERP. Other top benefits of automating include:

  • Real-time insights into business performance
  • Faster data processing
  • Reduced errors from manual data entry
  • Improved communication with automatic reminders
  • Scalability for future growth
  • A single, consistent source of financials and other records

Examples of ERP Automation

Budgeting and forecasting is difficult under the best of circumstances. With an ERP, the majority of the process is automated by using data to more accurately predict costs by analyzing past data trends. Getting faster budgets can also streamline the approvals process by getting numbers in front of key decision-makers faster.

Report generation is another task which can be highly automated through an ERP. Since all the numbers are available in one central database, new reports on company finances or sales performance can be created with a click of a button. The data can go into traditional report formats or a more visual example, like graphs or charts, to be as clear as possible.

Depending on the software, there are extra modules to cover additional functionality. For instance, modern ERP solutions often include human resource (HR) specific tools. Other add-ons can streamline customer relationship management (CRM) by sending follow-up reminders to salespeople so they can ensure timely outreach.

Obstacles to Automation

If the goal of your ERP purchase is to increase efficiency via automation, there are a few obstacles you’ll need to address. Understanding the importance of automating these tasks allows for data driven decision-making on what is in the best interest of your company.

Automation vs Manual Tasks

No one wants to have their job replaced by automation, leading some businesses to avoid adopting software despite the significant benefits. In reality, utilizing an automation tool correctly allows employees to move on from menial, time-consuming tasks and focus on the big picture.

For example, take the classic spreadsheet. A study by Ventana Research found nearly half of research participants claimed spreadsheet issues “stretches out the time it takes to complete business processes.” To make matters worse spreadsheet inaccuracies are rampant. The Wall Street Journal reported that University of Hawaii researchers found 88% of spreadsheets contained errors. Automating data entry with an ERP frees up employees from spreadsheets and human error from duplicate entries.

Too Many ERP Options

Many companies dismiss the possibility of ERP software simply because the last time they searched, there may not have been options specific enough to match workflows. Fortunately, now there are literally thousands of ERP systems on the market today, with smaller and smaller industry niches being catered to with every new software release. With the trend toward industry specialization, it’s likely that even your most unique processes can be supported with software on the market.

Finding the right ERP can be highly intimidating. Software Connect’s expert software advisors can help you find an ERP which fits your business needs.

Current Labor Costs vs Software Subscriptions

Depending on the size of your organization, a $20k, $50k, $100k, or $500k investment in an ERP solution can represent a significant lump in your company’s expenses. The cost of manual processes often seems acceptable if you don’t examine it closely. Let’s consider a common situation. Imagine it takes an analyst 20-30 minutes to run a report. If this task is done 20 times a week it adds up to 520 hours of work a year or about $10k+ in annual labor costs.

Using an ERP solution to streamline those types of tasks makes the status quo look significantly less tenable since the SaaS model offered by providers inherently spreads costs out over time. Automating is in your company’s overall financial best interest. In fact, the barriers to entry, with regard to software acquisition, are lower than ever.

The popularity of using ERP to automate business process has resulted in a few new trends:

First, artificial intelligence (AI) and machine learning integration are becoming more common in business intelligence modules. An ERP which utilizes either of these new technologies can offer better data analysis and decision-making capabilities.

Next, there’s been an increase in demand for cloud-based ERP solutions to increase scalability and improve communication along global workflows. With the global supply chain more sensitive than ever, it’s important for businesses to see performance no matter where they are located. Cloud-based ERP allows users access anytime, anywhere.

Finally, Robotic Process Automation (RPA) is on the rise in ERP. The “bots” created by RPAs can perform all sorts of rule-based tasks, further adding to overall automation already provided by an ERP. Integration through APIs allows RPA bots to access the central database and perform tasks seamlessly.

The Aberdeen Group, a preeminent technology and market research company, collected some great research about the effect of ERP solutions on efficiency improvement. Here are three particularly significant findings:

  • Midmarket organizations using ERP software required 6.2 days a month to close their books while companies without ERP systems averaged 10.4 days a month to complete the same task.
  • ERP adopters maintained an “internal schedule compliance” rate of 90%, while it dropped to 84% in companies without an ERP system.
  • Companies with ERP increased in profitability by 10% during the period of study, while those without ERP registered no profitability improvement, on average.

The reality is that every situation is different. Your processes, your technology assets, and your financial situation are different from even your closest competitors’. What makes sense for your organization is a specific, unique thing. Many companies have seized on the automation opportunities offered by ERP software to their benefit. Start your search today with Software Connect.

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