We hear a lot about ERP systems and how large companies benefit from them. From large manufacturing companies to enterprises in various sectors, ERP software is used day in and day out. But are they really providing the solutions these organizations require? What are the limitations of ERP software, and what can be done to increase the efficiency of ERP systems to benefit your organization?
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Understanding ERP Systems
ERP Systems: What’s Included and What is Not
ERP systems are great. They are fully integrated systems that include all required functionalities for a large organization. From Production and Sales to Finance, most ERP systems, like SAP, Oracle, or Odoo, offer modules for all departments in your organization. But why is it not sufficient for organizations to just run on ERP systems? The answer lies in the system’s capabilities itself.
To begin with, ERP systems are monolithic. They are enterprise software packages that include everything in a single suite. It’s like a vast network of software modules, each serving a specific purpose. Not all modules may be required for your business today, but they may be needed in the future. Being such a large network of software presents challenges in managing the system.
ERP systems have complex workflows that require training for operators. There are often complications in simple processes, making ERP systems an inefficient solution for some businesses. Customization is difficult and requires expertise.
Although ERP systems are a great fit for some organizations, the large, complex nature of the software can be a limitation for many. The complexity of ERP solutions has created a new market for custom-built software, which can be integrated with existing systems and is an emerging market in itself.
Alternatives to ERP and Custom Solutions for ERP Integration
ERP solutions are often the backbone of most enterprises. Changing the entire system is not a reasonable option for many organizations as it may lead to a disruption in organizational flow. Finding a solution to seamlessly integrate new systems into the existing ERP solution is usually recommended for a smooth digital transformation. This may include the integration of certain systems and solutions.
1. Best of Breed Solutions
Best of breed solutions are niche software systems that focus on one primary function. For instance, Salesforce is a CRM software and considered a best-of-breed solution specialized in CRM. Other software systems are available for different functions, such as Human Capital Management, Accounting Software, Project Management Tools, Payroll Processing, and Warehouse Management. These best-of-breed solutions can be integrated with your existing ERP systems to provide smooth workflows for each department in your organization.
2. Workflow and Interoperability Software
Software like Snowflake and Palantir are great examples of workflow and interoperability software for business intelligence, workflow management, and data integration. These tools allow companies to integrate new technology without completely replacing their existing systems.
3. Platform-Based Solutions
Platform-based solutions like Salesforce Force Platform and Microsoft Dynamics help companies build custom applications on flexible platforms. These platforms allow third-party developers to tailor applications to specific industry needs, offering more customization and adaptability.
4. Low-Code / No-Code Solutions
Low-code and no-code solutions are easy to customize and do not require extensive technical knowledge or coding skills. These systems are customizable and reduce the risks and costs typically associated with ERP implementations.
5. AI-Based Solutions
AI is particularly efficient in digital transformation strategies by providing insights and analytics based on existing data. Evolving rapidly, tools like ChatGPT and Generative AI have developed the ability to interact with ERP systems and provide insights directly from the system.
Conclusion
Digital transformation is no longer just about implementing ERP systems. Traditional ERP systems have limitations, which can be overcome with custom software development and the latest best-of-breed solutions. Integrating ERP systems with custom software can help provide tailored workflows specific to your industry, adding efficiency, reducing time, and improving performance in your organization.