How Do ERP Systems Affect a Business?

How do ERP Systems Affect a Business?

With billions invested worldwide on ERP solutions every year, it’s a safe assumption that ERP software is beneficial for businesses. But in what ways? How do ERP systems affect a business and what can you expect from one? Here are the main effects that an ERP system has on a company.


Data Integrity

Having a single repository of information across the business means that everyone in the company is using the same data. And that data is easy to access; there is no more searching through files to find the right printed report or manually collating figures from several spreadsheets. The data in ERP systems is retrievable almost immediately and all users access the same information, ensuring consistency across the business.

Better Internal Performance

Cross-functional communication is enhanced with an ERP system. Functions and departments act less like siloed mini operations in their own right and everyone benefits from greater communication and collaboration. When all departments are using a common IT system there are fewer barriers to negotiate and projects can be delivered more quickly and accurately. An ERP system unifies critical business functions, enabling departments to work together more effectively and contribute to the success of the company as a whole.

Improved Decision-Making

360-degree real-time insight provides vital information on which leaders can base critical business decisions. This business intelligence helps with understanding the financial health of the company and supports the decision-making process. Huge amounts of data can be analysed, making for far faster and more accurate reporting. An ERP system tracks a variety of KPIs, allowing a company to decide if its stock turnover rate is too low, whether the marketing ROI from the latest campaign is good enough, or how opening a new office will impact the bottom line.

Efficient Customer Service

Customer relationships are enhanced when staff are enabled to answer customer enquiries faster and more effectively via an ERP. Staff can instantly view details about a customer’s order or their credit status, for example, allowing them quickly rectify problems or initiate a remedial course of action. This engenders greater confidence on the part of the customer that the company is acting in its best interests.

Additional Sales

Good customer service brings a greater sense of loyalty, providing the perfect basis for customers to make repeat purchases. An ERP system can also be used to improve targeting. Detailed customer data allows a company to target cross-sell and upsell marketing campaigns to their customers. Customer Relationship Management (CRM) tools also provide the intelligence that allows salespeople to follow up with prospects who have interacted with the company or responded to marketing campaigns.

Enhanced Efficiency and Productivity

When you automate processes, you can get things done faster. This makes for a more streamlined operation, run by more proficient employees. It is reported that 95% of businesses achieve major improvements after using ERP through “reducing process times, increasing collaboration, and centralising enterprise data.” This reduces the time it takes to conduct vital financial processes, like the monthly or year-end close, for example. Using NetSuite, NoBlue customer, Divine Chocolate has been able to cut the time it takes to complete a financial close by more than 50%.

Better Employee Satisfaction

With automated processes and less reliance on manual labour, staff are freed up to undertake more challenging and interesting work. This raises motivation and morale within the company and positively affects loyalty, reducing staff churn rates. While having a happier, more motivated workforce is rarely an objective when it comes to planning an ERP implementation, it is certainly a positive and welcome outcome.

Reduced Costs

Through automation, better decision-making and enhanced analytics, ERP systems bring about a reduction in a company’s costs. In the warehouse, an ERP can optimise stock holding, maximise the use of space or improve picking efficiency. The Finance team can bill customers more quickly and track invoices through the system to ensure on-time payments. Project managers can minimise the time that team members are non-billable, increasing productivity and per-engagement profits.

An ERP system is estimated to reduce operational costs by 23% and administrative costs by 22%. This is a large reduction for any business.

Profit and Growth

With all the benefits of ERP systems that have been outlined above, a company has the perfect foundation for growth and development. Reducing costs, improving productivity and enhancing sales all lead to a company achieving greater profitability. In turn, this sets the scene for growth, with a company able to reinvest profits in the business. Profit can be used to expand via organic growth, such as through enlarging the workforce, opening new offices or increasing the number of sales outlets. Or a company can extend its marketing and advertising to attract new prospects or enter new markets. Profit can even be used for mergers and acquisitions or to appeal to new investors.


Are there signs that your company needs ERP software? In what ways would an ERP affect your business? To find out, book an appointment now or contact us and our team of certified consultants can provide a free business consultation with an assessment of the improvements you can expect.


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Stephen Adamson


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(+44) 115 758 8888
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