Difference between ERP and Management?

What distinguishes an ERP from a management system is above all the level of interaction with all company processes and the consequent ability to process data and propose actions and solutions, control flows and provide summary data useful for strategic business decisions.

What is the difference between management software and an ERP?

While a management software mainly tends to collect and report information in the various management areas (administration, production, etc.), an ERP is an integral part of the company's organizational flows: it controls them, manages them and also proposes what to do and when it is recommended to perform certain activities. For example, an ERP is able to offer what and when to buy, from which suppliers, and what and when to launch into production. To be able to do this, the ERP obviously uses much more information: for example what processes, components or raw materials are needed to produce an item, such as the inventories of the warehouses along the time span, such as the people and equipment available in the company or at suppliers, such as costs or procurement times (total production or purchase times), etc.

A further feature that distinguishes ERPs from management systems lies in the ability to simultaneously offer greater configuration flexibility to adapt to company flows (useful when the company is already well organized) and at the same time a structure that already contains within it. "Best practices" and organizational models optimized in over 20 years of use with the contribution of the best customers, models that prove useful especially when the company must innovate its organization.

The elements that mainly distinguish Customized ERP Software's in Dubai from management software are therefore 3:

Ø    Maximum integration of all functions to make the best use of the data entered or collected, with consequent processing of information to propose or plan activities and orders

Ø     Active control of all business processes also through work-flow , with a dual objective:

Ø     Maximize the speed of decisions and the efficiency of the whole system

Ø     Guarantee the quality of the processes and consequently the verifiability

Ø    ability to collect and process, through data mining tools and integrated business intelligence, those important synthetic data which, possibly summarized in a single dashboard, allow you to monitor the performance of the whole company.

Differences between ERP and Management

The ERP is therefore a system that is deeply integrated with the organization of the company, and for this reason its life cycle is much longer than that of a management system and has a significant impact both on the company business and on its evolutionary process.

How to choose an ERP

The introduction of an ERP in the company is generally a very important moment for the growth or re-launch of the same, also because it involves simultaneously all the company departments and represents a medium-long term investment (generally over 10 years).

The choice of the most appropriate solution is therefore a decision-making process that requires an in-depth strategic analysis, a path that generally starts with the identification of business objectives and with the mapping of information flows, and which revolves around 4 criteria:

Ø     Functional coverage

Ø     Technology

Ø     TCO (Total Cost of Ownership)

Ø     Evolutionary capacity

1. Functional coverage

The first step in the ERP analysis process is to verify the level of support of the requested functionalities.

The analysis of the functional coverage must therefore consider 3 aspects:

A.            Process mapping

B.            Completeness of the solution

C.            Configurability and Flexibility

A. Process mapping

In order to verify whether an ERP Software solution covers all the functions that are currently necessary for the life of the company, it is first necessary to first map the current organizational processes and their evolution needs. The degree of depth of this mapping obviously depends on the size and complexity of the company, but in general it is above all important to identify which are the most specific and most critical elements that characterize the organization of the company.

B. Completeness of the solution

The second step is to check whether the standard ERP functions cover 100% of organizational flows and current business needs.

From the previous process mapping you can understand which are the software modules that must be present at the first "go live" and which instead can possibly be implemented at a later time.

Also from this point of view, as well as for a general cleaning and engineering of the functional structure of the product, a completely modular ERP is preferable , that is composed of modules completely integrated with each other but also capable of working independently and being installed in moments following, according to a gradual growth plan.

Among the functions present in the ERP, it is also important today to verify that CRM, Work Flow, SCM and Business Intelligence modules are already present, many times mistakenly considered only accessory and complementary software to deal with eventually at a later time.

C. Configurability and flexibility of business processes

The configurability of the ERP software is the element that in many cases makes it possible to cover 100% of business needs, adding any additional functions to the standard ERP functions that may be useful for the optimal management of each specific company.

In the event that the ERP solution is already sufficiently complete and is able to cover 100% of business processes, it is in any case useful to take into account that business needs and related information flows can change during the life of the company.

In this context, it is therefore always preferable to have an ERP that is not only highly configurable, but which already manages to support a varied type of organizations, such as satisfying the management needs of companies operating in the most popular but different business sectors , industrial or commercial.

2. Technology

Many ERPs were developed for large business organizations at the time, therefore with a sometimes monolithic flow concept, not inclined to be adapted to more flexible and dynamic realities such as those characteristic of the UAE entrepreneurial fabric, instead composed mostly of medium and small businesses; for most of the UAEcompanies these types of systems, as well as being expensive, do not turn out to be either cheap or efficient, both for the live costs and for the excessive complexity of the procedures.

In other cases, at the opposite limit, some ERPs have been developed "from scratch" on the basis of the specific needs of a single company, with consequent good integration and coverage of flows. The strong specialization, beyond the considerations on development costs, which are generally very high, certainly represents an advantage, but at the same time it also becomes a limit for the evolution of the product and for its rapid adaptation to new technologies.

In recent times the recent hyperbolic evolution of ICT (Information & Communication Technology) technologies, and in particular those related to the internet, with the parallel proliferation of devices that allow you to be connected in real time, has also been playing an important role in choice of an ERP.

Some systems have in fact evolved faster than others and are able to make full use of everything available on a technological level, allowing an interaction with the company that has no more local or temporal boundaries.

The so-called second generation ERPs (or "Extended ERPs") are therefore born, which allow the central software of the company to communicate in a simple and immediate way with the whole production and commercial chain: customers, agents, technicians, suppliers, branches, etc.

This dialogue can take place in the most convenient ways for different situations, thus using the various “mobile” devices or by making the various company software interact directly.

Among the additional advantages available today, it is also important to check the availability of the software in the Cloud or SAAS (Software as A Service), that is, the possibility of using the ERP product without necessarily having to bear the costs and the commitment of a CED (Processing Center Data) owner inside the company.

3. Evolutionary ability

As mentioned, the choice of an ERP is a medium-long term investment; among the criteria for choosing an ERP, in addition to functional coverage and technological updating, it is therefore important not to overlook the evolutionary potential of the product, and consequently verify the history, strategy and investment capacity in research and development by of the supplier.

Unfortunately, the size, internationality and notoriety of the manufacturer's brand are not sufficient elements to guarantee neither the continuity of the project nor its best evolution; sometimes the software is considered by multinationals as a simple business line, therefore possibly transferable to the best offered, or in any case it is the pure profit logics that prevail over the medium-term development vision of the product; the acquisition of the ERP manufacturer by another company almost always involves the inexorable end of the evolution of the original product and its progressive replacement with that of the purchasing company.

The evolutionary capacity must therefore be assessed by verifying also how the supplier has as its mission the future of the product, and therefore of the business investment and this can be done on the basis of 4 main elements:

Ø     history of functional and technological evolution of the product,

Ø     history of the social structure,

Ø     business solidity,

Ø     Percentage of turnover destined for research and development over the years.

4. TCO (Total Cost of Ownership)

Since the life cycle of Customized ERP Software's is generally over 10 years, the commitment to its choice and its introduction into the company is greater than that of a simple management system.

The TCO therefore includes the same types of costs, i.e. licenses, maintenance fees, configuration phases, data migration, tests, start-up, training, assistance , etc., but with dimensions and the possibility of spreading over a wider period of time.

The sum of these costs (TCO) is in fact generally lower than that which would continue if you use non-integrated, non-purposeful, functionally and technologically not updated software, probably on different platforms (and therefore with redundant basic hardware and software costs ), not dialoguing with their production and commercial chain, and whose evolutionary capacity is limited in space and time.

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