A List of 7 ERP Business Functions Found in Most ERP Systems

Are you a department manager trying to make a business case for ERP? Convincing your executive leadership to embrace an implementation can be a herculean task, but it’s a critical one. Without executive buy-in, it’s impossible to obtain the resources you need to get the project off the ground.

When building a business case, it helps to be as thorough as possible. In other words, you should outline all relevant enterprise resource planning (ERP) business functions and highlight the benefits they will provide your organization’s operations.

If you can articulate how the functions of an ERP software system can help automate, simplify, and streamline processes across functional areas, you’re one step closer to achieving executive buy-in.

Today, we’re outlining the ERP business functions found in most ERP systems so you can determine what operational benefits to include in your business case.

List of 7 ERP Business Functions With Measurable Benefits

1. Finance, Accounting, and Accounts Payable/Receivable

While ERP software provides a host of benefits, none are more sought-after than those that enable simpler and more transparent financial processes. 

When you implement ERP, you gain greater control over nearly every aspect of your financial operations. Not only do system modules help organize volumes of financial data, but they also automate many tasks that were formerly manual.

This greatly reduces the risk of human error and inaccurate reporting. It also helps team members perform their jobs more efficiently. 

In fact, all financial activity within your organization can benefit from an ERP system. No longer bound to legacy systems or paper files, you can work directly within a modern, integrated interface.

The result is higher levels of productivity, transparency, and quality that your employees and your clients will appreciate. 

2. Customer Service

According to recent research, companies that focus on improving the customer experience see revenue increases of up to 80%. Moreover, up to two-thirds of companies compete on customer experience alone, and 73% of buyers say that it helps direct their purchase decision. 

The takeaway? It’s never been more important to prioritize your customer-facing initiatives. One way you can do so is to optimize your approach to eCommerce.  

When users engage with your site, it’s critical to know how they got there, what they’re browsing, how long they’re spending on each item, and what they ultimately purchase.

An ERP system can provide these insights. With ERP, you can create tailored promotions that appeal to users’ preferences and encourage repeat buying behavior. 

Many ERP systems have built-in eCommerce functionality, and those that don’t usually integrate with third-party eCommerce systems. By selecting the right software, you can make sure your eCommerce function isn’t operating in a silo. Rather, all the data collected feeds back into your central platform, where you can use it to make important decisions and develop new campaigns. 

3. Supply Chain Management

Does your company deal with materials, inventory, assembly, and line personnel on a daily basis? If so, you know that it can be a challenge to manage so many moving parts. 

You need real-time visibility into every aspect of your supply chain, but you shouldn’t have to rely on a series of disparate systems to achieve it.

With an ERP platform, MRP system, or supply chain management system, all the information you need is centrally located and easily-accessible. This enables you to streamline your manufacturing processes, both domestically and internationally.

You can also oversee all parts of your production activity, making it easy to view and assess your current inventory levels, purchasing data, accounts payable activity, and more.  

In addition to facilitating smoother operations, ERP makes it easy to adjust your processes from country to country by considering differences such as:

• Manufacturing compliance requirements
• Currency fluctuations
• Import/export laws

Finally, if any issue occurs or is about to occur within your supply chain, ERP enables you to immediately spot it and take action as soon as possible.  

For instance, you’re automatically alerted when critical materials are nearing out-of-stock, enabling you to replenish them before this occurs.

4. Order Processing

When a new order comes in, how does your team currently process it? From there, how do employees track it to make sure it gets to the right destination?

Chances are, there’s an extensive workflow in place that requires data transfers between various departments, team members, and touchpoints. At any point in that process, valuable information could be lost or misconstrued. 

With an ERP solution, you can better manage all areas of your order management process, including:

• Initial order entry
• Credit checking
• Product shipping
• Sales analysis
• Sales reporting

If your business sells goods of any type, you need an ERP platform that will help team members manage inventory, shipping, and other order fulfillment tasks.

Look for a system that includes an integrated processing module to facilitate these efforts. Many of these systems come equipped with customer interface modules that directly integrate with your company website.

5. Human Resources

According to a recent report, 88% of HR leaders feel that they are a strategic partner in their organization. To contribute to their company’s success, most rely on a series of administrative tasks that they must complete on a daily basis, most of which are incredibly time-consuming and resource-draining. 

In fact, the same report revealed that HR managers spend at least four full weeks per year on manual tasks. Specifically, 23% of HR leaders report that they manually navigate new federal, state, and local regulations. Twenty percent manually enter inputs such as checking pay stubs, updating employee data, and submitting direct deposits. Finally, 19% manually process employee performance information. 

ERP software can simplify and automate all these business functions. A few of the areas where HR team members can benefit the most include:

• Employee management
• Payroll and compensation management
• Time and attendance management
• Employee evaluations
• New recruitment
• Employee training
• Job offers

In addition to basic employee database management, HR workers can also use the platform to create detailed reports and analyses on employee performance. This way, all information is on one spot and easily accessible.

While not every organization will require such robust tools, those that do need them often find that there are very few providers beyond ERP vendors that readily offer them. 

6. Project Management

Any project, regardless of its size, involves key activities such as billing, expense management, and human capital management. When these are scattered, it can be difficult for client services teams to ensure they’ve accounted for everything.

With ERP, all information is stored in the same location, so it’s easy to incorporate this data into your overall balance sheet. This way, you can make sure you’re allocating the right resources to a given project. 

Project management functionality also has many reporting benefits. With a few clicks, users can track KPIs, like project costs, and provide detailed reports to all stakeholders.

Users also can set interim project milestones to be achieved by a certain date, and then group costs and benefits within each milestone using automated sorting and filtering capabilities. This gives managers a clearer understanding of the status of each project, as well as any changes that need to be made. 

7. Customer Relationship Management

ERP systems that include CRM features can bring customer relationship data into your centralized database. This way, every business activity that you perform ties back to the value you’re delivering to end-users.

In seconds, employees can access all the information they need on each account, including contacts, order history, and prospect status.

When this information is digitized and automatically updated, team members can easily perform tasks, such as:

• Completing purchase orders
• Creating accounts receivable reminders
• Alerting account executives to follow-up on prospects in the sales pipeline

Many types of CRM software are sold as standalone systems and focus on outward-facing activities, such as:

• Customer interactions
• Pipeline management
• Sales tracking
• Prospecting activities
• Marketing campaign development

However, there is a great advantage to integrating CRM and ERP functionality. When you do so, you can align your customer-focused activities with your back-end processes and operational data. This enables centralized control of accounts and contracts.

If the systems are separate, users must retrieve this data by bouncing back and forth between two platforms. By integrating, you can eliminate the risk of data duplication or inaccuracy, and you can facilitate cross-department collaboration.

How to Optimize ERP Functional Benefits

It’s true that ERP software can automate many of the functional areas described above, as well as many more. However, relying on ERP to fully transform your company could be a recipe for ERP failure.

Why is this the case? If your current business processes are inefficient, then it doesn’t make sense to automate them – even if you’re implementing a robust system like SAP or Oracle. If you do, then you’ll still experience most of the same pain points you’re already feeling.

Instead, we recommend taking the time to optimize these core areas before you begin ERP selection. Start by conducting requirements gathering workshops. This is where you map your current processes and identify opportunities for process improvement or business process reengineering.

When you improve your processes, your ERP implementation is no longer an IT project, but a strategic initiative that executives are more likely to support.

You Must Understand ERP Business Functions Before Building a Business Case

There are many different functions of an ERP system. Understanding how each enterprise resource planning function and feature works will be critical to building your business case.

Our ERP consulting team is well-versed in the various ERP business functions, and we can help you understand how each might align with your organizational goals. If you’re ready to turn your IT project into a strategic business initiative, request a free consultation below to meet with our ERP consultants.