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Updated Mar 06, 2023

Managing Resources: ERP Industry Trends That Impact Bottom Line

Mark Fairlie
Mark Fairlie, Senior Analyst & Expert on Business Ownership

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Big business loves enterprise resource planning (ERP) solutions that help management gather data across complex, sometimes multinational structures. ERP software helps businesses drive quality and efficiency in client, employer, supplier, and regulator interactions by offering a single platform for managing multiple business elements.

In the next decade, small and medium businesses will embrace ERP technology more as costs fall and storage capacity and computer processing power increase. We’ll explore ERP market predictions for change and growth in the coming years and explain more about ERP solutions.

What is ERP software?

ERP software records and stores real-time business performance data across departments within a company. You can generate reports from that data to analyze how well departments and individuals are doing. These insights can help businesses streamline processes and team members to operate more efficiently, increase productivity, preserve quality, and achieve profitable growth.

An ERP system can take the following forms:

  • A collection of software as a service (SaaS) packages that communicate with each other (usually via API or custom integration)
  • A bespoke ERP system built around a business’s specific needs

ERPs share a common database, operate in real-time, and provide a standard user interface, depending on permission levels. You won’t have to maintain separate databases or periodically merge databases to generate reports.

ERPs constantly collect and compare departmental metrics. Users can create accurate reports on business performance based on the metrics they select – for example, how productively the team uses company resources. 

Companies use ERP reports to do any of the below:

  • Set budgets and targets across the business. 
  • Manage projects more effectively.
  • Measure business performance as a whole and on a granular level.

What are typical ERP features? 

ERP systems generally feature some or all the following functions:

  • Accounting tools. An ERP’s accounting tools manage standard financial recordkeeping. Many systems have additional management accounting capabilities capable of generating complex financial reports for C-suites, senior managers and other stakeholders. Read our Oracle NetSuite Accounting review to learn about accounting software that includes ERP resources.
  • HR tools. ERPs may include HR tools to manage recruitment; monitor adherence to employment legislation; keep track of sicknesses, missed work, leave of absence periods, and holidays; track performance against performance goals and metrics; record disciplinary procedures; and more.
  • Manufacturing process tools. ERP manufacturing process tools can streamline processes, eliminate redundant tasks in production, prevent waste, ensure sufficient stock is available when needed, match demand and supply, and more.
  • Inventory management tools. ERP inventory management tools are particularly useful for companies operating “just in time” models. Broader benefits include monitoring products that sell the most, automatic stock replenishment, calculating the landed cost of goods sold, and monitoring sales channel performance, turnover rates, quality checking, and shrinkage.
  • Order processing tools. ERP order processing tools manage customer data processing, packaging and shipping teams, invoice and receipt creation, payment processing, investigations into delayed orders, and more.
  • Supply chain management tools. ERP supply chain management tools improve collaboration with vendors and handle demand planning and warehouse planning. They also monitor parts and personnel utilization, create import and export documentation, and more.
  • Maintenance tools. ERP maintenance tools measure equipment efficiency and effectiveness (including data from sensors), monitor scheduled upkeep, and manage work orders and ticketing.
  • Project management tools. ERP project management tools assign costs to individual projects, monitor progress against milestones, coordinate engineer-to-order projects, provide dashboard insights for project managers and other stakeholders, and more.
  • CRM tools. ERP CRM tools manage marketing and sales channels and customer and technical support. CRM systems are not ERP systems, but many ERP systems have built-in CRM functionality. Read our reviews of the best CRM software to learn about solutions that incorporate ERP capabilities.
Did You Know? Did you know

The 2022 ERP report reveals that the sectors most likely to invest in ERP systems include manufacturing (26.4%), information technology (17.1%), healthcare (13.6%) and construction (7.9%).

What are the different types of ERP solutions?

The three primary ERP solution types are on-premise, cloud-based and hybrid. However, there is a total of seven ERP types. 

  • On-premises ERPs. On-premises ERPs are hosted on a company’s servers and terminals in buildings they own or lease.
  • Cloud-based ERPs. Cloud-based ERPs are hosted in the cloud and are commonly referred to as SaaS offerings. Businesses pay for them via a monthly subscription. The vendor will provide updates, training and support. Customization levels vary.
  • Hybrid ERPs. Hybrid ERPs are a mixture of on-premises and cloud-based. Where data and apps are hosted and stored depends on the individual arrangement between the client and the cloud vendor. Hybrid clouds offer greater customizability than cloud-based apps.
  • Generic ERPs. Generic ERPs are excellent for finance and accounting, but don’t cover operational analysis. You may need a developer to add the broader functionality you want at an extra cost.
  • Industry-specific ERPs. Industry-specific ERPs fit the specific needs of sectors like hospitality, waste management, construction and retail. Much less customization is needed on these systems than generic ERPs.
  • Open-source ERPs. Open-source ERPs provide basic functionality for accounting and processes. Like generic EPRs, you must employ a developer at your cost to customize the ERP to perform the functions you need. Open-source ERP software is often free or very low cost.
  • Two-tier EPRs. Two-tier EPRs are for larger companies with a head office and regional centers. All locations share the same database, and the head office sets general functionality across the entire system. However, regional centers can customize the head office ERP to match local language, legal and accounting customs. 

How to take advantage as ERP growth and adoption continue to increase

The coming decade will likely bring healthy overall growth in ERP usage across businesses as companies seek a competitive edge with improved efficiency and streamlined processes.

Investing in complete ERP systems may be economically prohibitive for some companies. It’s possible to replicate many ERP features with API plug-ins to get your existing business apps to speak with each other until you feel able to invest in an ERP solution. 

Whichever route you take, ensure you’re clear about how you want to improve your business and use that as a starting point in your ERP planning.

Mark Fairlie
Mark Fairlie, Senior Analyst & Expert on Business Ownership
Mark Fairlie has written extensively on business finance, business development, M&A, accounting, tax, cybersecurity, sales and marketing, SEO, investments, and more for clients across the world for the past five years. Prior to that, Mark owned one of the largest independent managed B2B email and telephone outsourcing companies in the UK prior to selling up in 2015.
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