Shawn Windle Answers the Question: What is ERP?

"Enterprise Resource Planning does not mean the same thing today as it did decades ago when a company would select one main application to automate all its business processes across the enterprise.  Many successful business leaders find themselves asking the question, "What is ERP in business today?". In today’s cloud-based application ecosystem, especially with the high availability of cost-effective integration and analytics solutions, companies must look at ERP as a philosophical approach to determine which apps best fit it's needs while balancing the inherent costs and risks involved with running and maintaining a significant number of technical assets.  Every day, ERP Advisors Group helps clients navigate these complexities by leading them to the most elegant solutions that not only meet their current needs but can scale to meet their future growth."

- Shawn Windle, Founder and Managing Principal of ERP Advisors Group

ERP is short for Enterprise Resource Planning: software that helps businesses, organizations, and enterprises figure out what resources they have while providing tools for planning with these resources. In this video, the Founder and Managing Principal of ERP Advisors Group, Shawn Windle, provides an introduction to what is an enterprise resource planning system, offers enterprise resource planning examples, and discusses what ERP stands for in business.

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I'm Shawn Windle, the Founder and Managing Principal of ERP Advisors Group, and we're a boutique consulting firm that helps companies, nonprofits, government agencies with their ERP issues.

I'd like to tell you very simply what ERP is and what it stands for. ERP is Enterprise Resource Planning, which is basically software that helps enterprises, whether it's nonprofits or for profit companies, public, private, or even government agencies to figure out what resources they have, and help to plan with the resources; so that includes looking across the entire spectrum of all of the business processes that an organization runs to do what they're in business or what their mission is all about.

I'd like to tell you how an organization uses an ERP. It kind of comes back to this model of an organization where we have business processes that are used in conjunction with each other to produce some product at the end of the day that the organization gets paid for, or it gets funding for, or is held by regulations to deliver.

How an organization uses an ERP is really to automate these processes, and then also to get data about these processes so that it can really understand what's happening. Like, see, that's the thing about ERP is you get these kind of esoteric discussions, you can't do that, you really just have to say, look, this is what our business does and here is how an ERP can help with that and that's what an ERP is going to do. So for instance, if we have a lot of invoicing problems and we have invoicing, that's a lot of invoicing that we're doing, maybe it's a thousand or 10,000, or even hundreds of thousands of invoices per month that we need to get out.

If we identify that that process isn't working very well it could cost us a lot of money. We could be sending out inaccurate data, and our customers can get very upset about that. So if we identify that as an area that could be improved, let's plug in a piece of software to help automate that, and then we can look across the other parts of the business and do the same thing to say, man, we are just, it's taken us forever to pay our vendors because we have all these invoices that go throughout the whole organization that we don't know where they're at to even approve them, let's automate that process.

Let's automate the employee life cycle. So looking across from an employee being hired all the way to performance management and payroll, let's automate that process too. Now where the ERP really comes in, and this is really the elegance and the simplicity of it, and that's it, is we want to automate this process, that process, that process, now let's get software to do that, and it would be great if we could do it one app that could do all of it, because then we'd have one throat to choke if there's a problem. We don't have data problems because one system says a customer is different than another system.

If you can get one app to do that, that's what our goal is. That's what we're really trying to shoot for. ERP advisor has changed this concept of ERP being one big master system, and it's more of a philosophical approach to how we help an organization to fill its pain points and risks areas to get those solved as well as bring data and process automation across the entire business.

Let me tell you why an ERP is important. And it's basically because you can get disparate islands of information throughout the business, so maybe you have and really good sales data, right? And then you have accounting data, right? Well, what happens in between there? What happens when we make a good sale and yet we're not invoicing what we thought we could, you might have some manual processes to do all this, I know you do you have to, but what if we had systems in place that could better understand, help us better understand what's happening in those areas, as well as help us automate those processes so that things got done faster and better. So you kind of look at process automation, you look at data management, those are things that an ERP can really help with.

But then if you look across doing this whole concept of ERP as a philosophy, not as a software solution, but as a philosophy and that's, baked into ERP Advisers Group’s methodology. As we look across the entire business to say, where can software be plugged in here? To give you the ability to really understand what's happening in all these different facets of your organization, where you didn't before, without that you're kind of flying blind.

A great question to ask yourself is how do you know if you need a new ERP? And let me start by saying, if you don't need it, don't buy it. It's very complex. It's very risky, very expensive, and for not going to get benefit from it, don't do it. No matter what people, salespeople especially, will say you've got to be certain.

So how can you be certain on if you need a new ERP, I'm going to show you a trick and it's really this simple. Draw a map like this for your business. It can even be higher level. If you want to. Or put together a map like this for your nonprofit and take a look at your processes and where you have real, no kidding pain.

If in inventory you don't understand what's happening with your inventory locations, your warehouses. Chances are they maybe had a smaller inventory or warehouse at some point, your inventory just amount was smaller than you grew and got bigger and you have more warehouses and more branches and more locations. And now all of a sudden you have 20, 30, 40, hundreds of locations, and you're not sure what's in those different area. Now you probably have some software that manages it, but maybe that's not accurate, maybe it's hard for your warehouse people to use, so you have a lot at risk and a lot of pain here.

Like that's what you want to look for is risk and pain, and let's say your only problem is an inventory, well, maybe you can get a new inventory system only. And you don't need to replace the whole thing. So what we really want to do is focus on where is the business benefit from making changes with software and not retraining people or trying to change out technology just to change it out.

But for real, where is the pain? And can it be solved with software? And that's how you need to go about changing your ERP and knowing that it's going to be a value to you.

Here's what you need to know if you're selecting a new ERP, first thing is. Don't do it unless you have to, and I really mean that, these are complex processes. They're, they're costly, they're risky. There's a lot of change that goes out throughout the organization. So just make sure you really need it.

Make sure you look at your business, make sure you really understand where the pains are and that new software can solve it, that's the first thing. Then when you start getting into your selection process, you drive the process. Don't let the software salespeople do it. Tell them exactly what you want to see in the application.

Exactly what you need and have them show it to you exactly. As you need to see it, to be able to differentiate between the applications. Then when you get into negotiations, there's some leeway, you know, take a look at all of the terms, all of the conditions, all of the pricing, everything, and know that it's a sales deal you're buying software.

So come up with what you need mutually beneficial on both sides, but there is some leeway there and take a look at all of the conditions, especially around rate apps and things that happen into the future that you might not be aware of. The last thing to do as part of the selection is really get to know the people that are doing your implementation.

Be willing to bet your job in some instances on those people, because you may be doing that. So really get to know who these people are, know that you're going to have a trusting relationship as best as you can. Right. Get cell phone numbers. Really know the executives that are going to be the ones that you can call, if there's any problem, make sure you get that line in with those people, and you're going to do great through the implementation with those in order.