An ERP system is business management software, typically a suite of integrated applications that collect, store, manage, and interpret data from your various business areas, including finance, human resources, product planning, manufacturing, service delivery, marketing and sales, inventory management, and more.
It's important to know which functions of an ERP system are standard across all systems, and which differentiate one ERP from another. With this knowledge, you can cut out excess questions from your RFI and RFP, focusing on the questions and functions that really matter. In this post, we'll look at typical ERP functions in four different categories:
- First, what functionality you can expect from all ERP systems, the standard functions that will be the same or very similar across most software packages?
- Second, what are the functions that are expected of any ERP, but vary significantly in their specific features from one ERP system to the next?
- Third, what functions are true differentiators between ERP packages, features or functions that offer unique benefits to your organization?
- And lastly, what are some of the overarching differentiators that make a system or vendor a better choice?
Prepare yourself for the next generation of ERP with the
#1 Standard ERP functions that are very similar across most ERP systems
Basic modules like purchasing, project management, project cost accounting, costing, and quotation management are typically very similar across the board. For example, most ERP systems have a purchasing function that allows you to view your procurement costs, see an overview of your purchasing information, manage purchase orders, and track costs. You can expect any ERP system integrate the basic functions, giving you visibility into each area across your entire organization.
Standard ERP Functions
Project cost accounting
#2 Expected ERP Functions with significant differences between ERP systems
In this second category, we look at ERP functions that most ERP systems have, but that vary significantly between systems. For example, while all ERP software generally includes a CRM function, not all will have a CRM mobile app to help your sales team track their customers while on the road or an open API for connecting easily to third party tools. The table below shows a list of these functions as well as the special features within that function that not all systems have.
|Function||Differentiating Features to Look For|
|Cost Accounting||Ability to auto-allocate cost centers, product line reporting.|
|Financial Consolidations||Ability to aggregate financials with eliminations / currency conversions.|
|Sales||Includes a sales configurator.|
|Sales Planning / Forecasting||Includes Master Production Schedule (MPS) that is driven by sales forecasts.|
|CRM||Has a CRM mobile app and an open API with the ability to integrate to Salesforce or other 3rd party tools.|
|Work Order Management||Connects to a mobile app for Work Order Management.|
|Time Recording / Job time||Connects to a mobile app for recording job times.|
|Inventory Management||Connects to a mobile app that makes it easier to manage your inventory.|
|Warehouse Management||Connects to a mobile app for warehouse management.|
|Production||Includes a TCI interface for time cards. Connects to a mobile app for PDC, time cards and issuing materials.|
|Perpetual Inventory Costing||Provides multiple methods of costing and revaluing inventory.|
|Fixed Assets||Has a separate set of books for Tax vs Book.|
|Financial Accounting||Provides total integration between sales, purchasing, and production. Has an open API that makes it easy to integrate with 3rd party applications.|
|Multi-Company Accounting||Ability to track different tax entities in separate companies, then consolidate them.|
|Multiple Company Accounting||Ability to track different tax entities in separate companies, then consolidate them.|
|Multi-Site||Provides inter-company inventory visibility.|
#3 Differentiating features and functions
This third category of ERP functions incudes true differentiators – functions that are not present in all ERP systems, but that could be critically important to your business.
|Function||What to Look For|
|"What if" Financial Scenarios||Reports on best, worst and most likely budgets/forecasts for financial statements.|
|CAD Integration||Provides a Bill of Materials (BOM) import tool that connects to CAD interfaces.|
|Webshop / e-commerce||Includes configurator management and an open API that makes it easy to integrate with 3rd party tools.|
|Automotive & Supply||Includes EDI integration. Provides packaging options for shipping. Ability to customize.|
|Document Management||Provides an easy-to-use DMS that's integrated with your ERP that's cloud based, quarriable and robust.|
|Inter-Company Transactions||Allows for master data synching, buying and selling between companies.|
|Master Data Synchronization||Master Data sync is an important function that many ERP systems don't have.|
|Workflow Management||Ability to create your own workflows, integrate workflows into your ERP system. Provides simple interface for all users and analytics on processes.|
|Service Processing||Connects to mobile apps for service processing. Includes serialization and cradle-to-grave lot control|
|Detailed planning / APS||Includes finite capacity planning as part of APS.|
|Service Planner||Includes service planning as part of service processing.|
|Liquidity Planning||Allows for prospective cash forecasting based on transactions existing organically in the system and based on statistical payment behaviors.|
|EDI||Has simple, intuitive reporting, traceability of messages|
|Business Intelligence||Includes standard BI cubes with a BI connector. Integrates seamlessly into your ERP system.|
|Supplier Relationship Management||Includes a vendor portal for vendors to access and update relevant information in your ERP system.|
|Mobile App||Apps work on multiple platforms / devices and in a disconnected state. Ability to request custom apps for your business.|
#4 Overarching Differentiators
While this post has been mostly focused on specific features and functions of an ERP software system, sometimes the most important things to consider in selecting your ERP are less technical and more connected to the experience you'll have working with the vendor over the long term.
|Differentiator||What to Look For|
|Ease of Use||Look for a modern ERP system that's easy for new users to adapt to.|
|Organizational Fit||A vendor whose company culture fits with your own, not so big that you get lost among hordes of other customers.|
|Direct Relationship||The best ERP vendors work with you directly, rather than passing off implementation and support to unknown-to-you third parties.|
|Industry knowledge||Look for a vendor who knows your business and a product that reflects that knowledge.|
|Total cost of ownership||Purchase price is just one factor in the total cost of an ERP system. Also consider the cost of upgrades, customizations and support.|
|Ease of Upgrades||Be sure you'll be able to upgrade to the latest software even if you've customized.|
|Trust||Trust may be the biggest factor as you start a new relationship with your ERP software provider.|