What is Enterprise Resource Management (ERP) software and do I need it?

Enterprise Resource Planning software can help you connect departments, improve efficiency, and make more data-driven decisions.

One of the most exciting moments for a small business is when they’ve grown out of their first office and Jess who used to do product development, sales, and fundraising can finally hire a full time assistant. But one of the scarier moments is when business owners realize “something isn’t working here”. A lot of business owners we speak with are incredibly good at selling their product, but consistently run into trouble when it comes to operations.

People make mistakes, frequently, and especially when they’re doing repetitive tasks like data entry. It’s unsurprising that since the 1990s, growing businesses have been looking for ways to improve efficiency across their business operations, reduce human errors that can lead to missed sales and make more informed decisions about what’s next.

In come ERPs - enterprise resource planning software. Basically, an ERP becomes your one go-to console for operating your business. Data is shared instantly across departments and available in reports for managers and investors. Your finance department knows when sales are coming in, and your sales team has access to your customer service information.

An ERP is designed to collect information from every aspect of operations, including customer relations (like a CRM), supply chain and inventory management, purchasing, HR, finance and accounts, product manufacturing and engineering, and of course, sales and ecommerce.

Do I need an ERP?

There are a few advantages to using an ERP.

Track key performance indicators in real time

By moving everything into one system, you can have more control over your data and track your performance as it happens. You won’t have to wait for three departments to upload their end of the puzzle - it will all be there immediately because it automatically pulls information like sales and suppliers as they happen.

Streamline how you report and analyse data

Being able to track everything in real time and in one place also makes it easier to get a full picture of what’s happening in your business. An ERP can help you produce analytics and reports that have better insight. This can be good for both managers and investors, who want to know information that comes from multiple sources.

Communicate better across departments

One of the most crucial benefits of an ERP is that it helps your staff communicate more effectively. If there seem to be disconnects between data from one department by the time it gets to another, an ERP can help eliminate these kinds of miscommunications.

Every time data has to move from one person to the next, it risks getting accidentally changed or deleted. An ERP can help you improve your data integrity, avoid duplications and save a lot of time and headache.

Save money

Being able to more efficiently communicate across departments means your staff can spend less time cleaning up spreadsheets and more time developing your business. You can use an ERP to streamline inter-departmental workflows and even eliminate some job functions altogether. In plain English: if Amanda doesn’t have to spend three days updating mailing list information with new address formats, she can spend those two days creating meaningful content for those customers instead.

ERPs can cost a lot of money and it’s hard to know the exact return on investment

It can be hard to figure out your ROI, because with an ERP you’re improving your operations processes rather than increasing your cash flow. But any good manager will know that an efficient and accountable operations system will always be good for business. That being said, it can cost hundreds of thousands or even millions of dollars for a comprehensive ERP, depending on the size of your business. If you do decide to use an ERP, it’s important to shop around and make sure you’re investing in one that’s suited to you.

What should I look for in an ERP?

There are a lot of ERPs out there, so think about a few things while you’re shopping.

1. What problems are you trying to solve?

It’s a good idea to start with an internal audit, even an informal one. Map out the business processes for all of the common operations you can think of, and consider what your strengths are - and where there’s just a jumble of processes that seem unnecessary. Now’s a really good time to talk with your staff and department heads: they probably know what operations processes aren’t going so well in ways a business owner might not see.

Are you transitioning over to an ERP because you want to increase data accuracy? Increase employee productivity? Improve collaboration? Save money through efficiency gains? Increase customer lifetime value with better data integration? When you’ve listed out what you’re looking for from an ERP, you can make a decision based on what the best product is for your needs.

2. What features do you need your ERP to have?

After considering what processes in your business operations need improvement, think about the specific kinds of features you expect the perfect ERP to have. Should it be able to collect certain types of data? Should the main feature be its reporting and insight capabilities? What about data security?

3. How easy it is to integrate into your business?

Not only does your ERP need to integrate all data from your Shopify store, but you need to be able to understand how to use it and train the rest of your office to do so. Learn how much time it will take to fully migrate your data and operations to an ERP, and consider how easy it will be for you and your staff to use when it’s in full swing.

4. Cost over time

You’ve got the ticket price, but what about maintenance costs, licensing costs, recurring costs and support costs? Make sure you know what they are and make an estimate of the real costs over the next five or ten years to compare.

Remember to be a bit skeptical - you’re about to make a long-term investment and vendors are doing their best to make a sale. Of course they’re going to spin it, so make sure you are comparing several options.

Using an ERP with Shopify

If you have Shopify Plus, you’re in luck - basically any ERP system can be integrated into Shopify Plus using their API. This is important because when you invest in an ERP, you want to be sure all of your data is going to sync up in real time.

There’s a never-ending list of ERPs out there. Because needs for enterprise businesses are so different from one another, it’s hard to say which are the best in general.

If you’re looking for an ERP to work with Shopify, you can start with this report, which gives you a side-by-side comparison. Some commonly popular ones are SAP, Oracle-NetSuite, MicroSoft Dynamics and Sage, but we highly encourage you to find an ERP based on your specific needs.

Once you have decided on an ERP system to use, you’ll likely need support in integrating it with your Shopify Plus store. Shopify Experts (including us!) can help you do just that.

Not ready for an ERP yet, but know you can do better?

Automate processes that usually take time and juggling

You can do this with Shopify Flow, which helps you create back-end automations of all sorts with conditions and triggers that you set. Find out more here.

Manage your inventory and suppliers using a third party IMS

One huge aspect of business operations is your supply chain management. You can explore using an inventory management tool that lets you know at all times how your stock compares to your order volume, and make predictions about what levels of inventory you’ll need next. Find out more here.

Integrate whatever you’ve got so far

There are plenty of functions that already integrate into a Shopify storefront, including your email marketing system, taxes and finance, and warehouse or shipping services. Even if you’re not ready or aren’t sure you need an Enterprise Resource Planner, you should always be thinking of new softwares and services in terms of “how does this fit into what I’m already doing?” and if there’s something that seems to be a headache for your business, see if there’s an alternative that will integrate more easily.

We’re here to help make things work better behind the scenes, so you can make your business happen. Get in touch with Elkfox for support with getting ahold of your business operations, including ERP integration.