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Is there an industry that ERP doesn't work for?
From my experience, most companies of all sizes and industries can benefit from an integrated ERP. It is a software package/group of functionalities that each individual company tailors to their own needs. Is there possibly a type of company or industry that it wouldn't benefit?
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4 Answers
John,
ERP defined is Enterprise Resource Planning and provides an integrated approach to managing the resources of an organization. In manufacturing, this is jobs/work orders, people, materials/components and machinery. In service-oriented business such as architecture, engineering or construction, the "resources" may be differing levels of labor or projects. In a distribution-based company it will include warehouse management and shipping logistics.
The "integration" part is where the Sales-Delivery-Cash cycle is interconnected from the Order through Accounts Receivable. Having an integrated system allows you to analyze data to enable management decision making and direct executive strategy.
More and more businesses are understanding that CRM is an integral part to this chain as well. Integrated management of Marketing Campaigns and Sales Cycle prior to the Order and post-sale Customer Service and Product Support allows for a more complete decision-making picture.
ERP systems typically include the presence of sophisticated material planning and manufacturing or assembly planning. For businesses without manufacturing or assembly activities, the expense and complexity of ERP may be overkill. Such enterprises may be better suited by a solution that incorporates CRM with a robust financial management and business intelligence solution.
Depends on how you define ERP. I don't see any reason why even a small system like Quickbooks can't be considered an ERP system. In this broad sense, I can't think of any industry that doesn't require management, statutory information, or automation of business processes.
Generally ERP stands for a comprehensive set of business applications that help you manage the majority of core business transactions in the area of finance, sales, distribution, manufacturing, supply chain, asset and human resource management. Mainstream ERP such as SAP and Oracle is well accepted, deployed and utilized as a primary and central function in most industries. A few industries such as financial services, insurance, health care, energy, some service companies and government entities are not big users of mainstream ERP. While they may use limited functions such as general ledger or accounts payable, payroll, etc they many times use industry specific software to fulfill areas not covered well by the big mainstream players.
In people's mind ERP = manufacturing, Inventory, supply chain, etc... However if you look closely at businesses in the services sector, you'll realize 2 things, 1) there are less ERP solutions for them, 2) they are the one who need it the most. The reasons are ERP solutions tend to be more complex for services than for manufacturing, and the work flow/processes in service based companies are much more prone to change overtime and in larger magnitude. This will be more and more so as markets become more volatile and service based businesses tend to move laterally rather than upward in order to stay alive. For expl a travel agency saw its business shrink by 50%. in order to stay alive it teamed up with a tour operator. Two years later it found itself with more fleet that it needed, so it started using its extra mini buses to move a specific group of passengers from the Airport to specific cities in the interior (which has nothing to do with tourism). The system in place for this company is in constant changes. No ERP on the market can accommodate this sort of situation. This is far from being an isolated case. As markets become more volatile or shrink, companies have to reinvent themselves and move sideways; the system in place has to follow closely; a packaged ERP cannot follow.
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