Types of enterprise systems and their modules' explanation
Enterprise software has evolved into large-scale systems for the operation of the most modern enterprises and today it’s impossible to ignore their impact on these enterprises' success.
Enterprise systems (ES) are critical for managing companies in many industries. Corporations require them to collect, process, and interpret a vast amount of data, tying together lots of business processes and enabling the flow of data between units to run operations efficiently.
Most have heard the term “enterprise system” but do not have a precise idea of how exactly such systems are integrated into organizations and what functions they are designed to perform. In this article, we will tell what exactly the enterprise system is, how it can help businesses, present its major types and their key features.
What an enterprise system is
As businesses scale, small and outdated management systems cannot handle the increasing amount of data to process, resulting in errors and reduced efficiency. Enterprise systems (ES) tie together all aspects of enterprise operations and form an information system based on enterprise software packages. Such software supports business processes, information flows, and provides reporting and data analytics to enhance business performance.
Why demand for enterprise systems is growing
Enterprise systems organize enterprise data and processes, allowing companies to coordinate departments and improve workflows, resulting in savings and boosting enterprise efficiency. Here we have gathered the core business benefits:
- Improved productivity by streamlining and automating the core business processes by eliminating manual processes and reducing human errors;
- A single source of information for getting business insights and making better decisions by faster business and financial reporting;
- Enhanced collaboration and coordination by providing better communication within a department and between others;
- Optimized customer and partner relationship management, production, and distribution by uniting the company’s internal processes in sales, finance, production, logistics, etc.;
- Reliable and transparent supply chain and distribution network thanks to on-time delivery and order accuracy;
- Lower risks by maximizing business visibility and control, and ensuring compliance with regulatory requirements;
- Scalable infrastructure as the organization grows by adding necessary modules.
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Major types of enterprise software
Currently, there are distinguished three main types of enterprise systems: customer relationships management (CRM), enterprise resource planning (ERP), and supply chain management (SCM). Each of them can exist separately, out of the ES system and comprise various modules, each addressing a specific business requirement.
Customer Relationships Management (CRM).
The CRM system is designed to collect customer data and forecast sales and market opportunities. It tracks all communications with clients, assists with lead management, can enhance customer service and boost sales.
According to the CRM Software Global Market Report 2022, the global CRM software market is expected to grow from $106.23 billion in 2021 to $123.51 billion in 2022 at a compound annual growth rate (CAGR) of 16.3%. The market is expected to reach $216.63 billion in 2026 at a CAGR of 15.1%.
CRM usually closely integrates with the sales and marketing module. The sales module handles workflows like inquiries, quotations, orders, and invoices. It helps boost leads, speed up the sales cycle, and earn more profits. Marketing software helps build highly personalized marketing campaigns, automate communications via social media, email, and advertisements based on customer segmentation features.
Both modules provide detailed reports, be it on sales pipelines, lead sources' effectiveness, activity, forecast, case logs, and profitability or marketing campaigns performance to measure the effectiveness of efforts and shape plans and spend.
Supply Chain Management (SCM).
The SCM system streamlines your entire supply chain, ensures a smooth flow of goods from supplier to customer, and makes these processes adjustable to market shifts. This module helps employees, such as purchasing agents, inventory planners, warehouse managers and senior supply chain leaders, to get detailed information and optimize inventory levels, prioritize orders, maximize on-time shipments, avoid supply chain disruptions and identify inefficient processes.
SCM includes such modules as procurement (or purchasing), inventory management, warehousing (WMS), and transportation (TMS).
- Procurement module
The procurement module helps assess the needs of an organization in terms of goods consumption. It provides automation, tracking, and quotes analysis, along with invoice management, contracts, and billing.
- Inventory management
The module enables inventory control by tracking item quantities and location, offering a complete picture of current and incoming inventory and preventing stock-outs and delays. The module can also compare sales trends with the available products to help a company make informed decisions, boosting margins and increasing inventory turn.
- Warehouse management system (WMS)
The WMS primarily aims to control the movement and storage of materials within a warehouse, including the receipt, storage and movement of goods to intermediate storage locations or to the final customer.
- Transportation management system (TMS)
The TMS assists with the logistics within the SCM by optimizing loads and delivery routes, tracking freight across local and global routes, along with automating previously time-consuming tasks, such as trade compliance documentation and freight billing.
Read our case study to know how we provided the growth of a logistics company by developing and implementing a custom TMS
Enterprise resource planning (ERP).
ERP software helps support organizational goals by providing a cross-functional, company-wide communication system. It allows efficient collection, storage, interpretation, and management of information.
The core ERP modules include CRM (Customer relationships management), SCM (Supply chain management), finance and accounting, human resources management (HRM), manufacturing, finance and accounting, and business intelligence (BI). We have described the CRM and SCM modules above and are going to take a closer look at the remaining ones.
- Human Resources Management (HRM)
HRM software allows its specialists to automate administrative tasks and speed up internal processes. Provided functions are integrated into a single module that makes general management and decision-making easier. It features standard HRM tools as a timesheet, database for employee records, recruitment, and employee evaluations.
The module may also include performance reviews and payroll systems, and the last is usually integrated with the financial module to manage wages, compensation, and travel expenses.
The key functionalities of this module are developed to help businesses make manufacturing more efficient through product planning, materials sourcing, daily production monitoring, and product forecasting. The module is tightly integrated with SCM, especially in areas like product planning and inventory control.
- Finance and Accounting
This module keeps track of the organization’s finances and helps automate tasks related to billing tasks, account reconciliation, vendor payments, and others. Its key features include tracking accounts payable (AP) and accounts receivable (AR) and managing the general ledger. Financial planning and analysis data help prepare key reports such as Profit and Loss (P&L) statements.
The finance module also shares information with other modules, such as manufacturing, procurement, and others, allowing the generation of financial reports for different departments and business units.
- Business Intelligence (BI)
BI provides predictive analytics in a format of various graphs, charts, and tables to optimize work performance and give executives actionable insights to help make better organization’s decisions. The system collects and analyzes data from various sources, like marketing, sales, manufacturing, HR, etc., using data mining, benchmarking, and advanced statistical algorithms.
Implementation and improvement of an ERP system
Each enterprise has streamlined work processes that have been running for many years and they face a tough choice whether to upgrade the existing one, integrate a ready-made solution or develop a custom ERP from scratch.
Below, we have presented the options you should think about when deciding to optimize your business operations through ERP solutions.
A partial upgrade of an already used ERP system can be a suitable solution if you have a limited budget and already established business processes. You can define the required modules and integrate them into the current system, which will strengthen and improve the already working system and minimize disruptions caused by introducing new software into the processes.
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However, if your ERP system is ten years or older, or uses an outdated technology stack, we recommend replacing it completely.
Create a custom ERP.
Building an ERP from scratch can give you a competitive advantage over organizations that use standard ERP functionality. Such software can be flexibly customized and changed over time to reflect the growing needs of the business. You can add unique features, edit or remove the existing ones to suit the evolution of the company.
When planning the budget, consider that the cost of ERP development is typically based on the number of departments using the system and the functionalities the system delivers.
The complexity of enterprise software pushes most corporations to outsource the development of applications they need to run operations. After development, the system gets back in-house for deployment, which usually requires a specialized technology team.
Choose an ERP software provider.
Each enterprise software solution is designed for a specific business goal and offers different functionalities. The major players in this market are SAP AG, Oracle Corporation, Microsoft Corporation, Infor Inc., Kronos Incorporated, and IBM Corporation. When deciding on the choice, make sure the solution complies with strategic planning and the major goals of your organization and suits you in terms of the cost of implementation and, above all, maintenance.
A big advantage of ERP systems is that they are modular. It allows enterprises to gradually implement key modules one at a time, that gains the ability to change certain areas without disrupting overall operations. However, it is important the modules are compatible with each other and easily integrated with the existing solutions, if any.
As stated in the Panorama Consulting Solutions report, this is not only less risky from a technical perspective but also from an organizational–users have more time to learn the new system.
This is the reason many ERP platforms start with a set of core modules, which allows for a highly flexible approach to suit unique business requirements.
Through automation and data centralization, a modern enterprise system has become a key to success for any corporation that wants to be and stay competitive. An ES boosts productivity and reduces operating costs, along with automating business processes, facilitating collaboration and coordination between departments, as well as giving access to reporting and crucial analytics.
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