ERP to Cloud Open Source ERP: The Evolution

ERP

The acronym ERP stands for Enterprise Resource Planning and refers to creating a more efficient, leaner, better-automated, and integrated business through sophisticated technology solutions.

ERP, or enterprise resource planning, can also be described as a modular software system designed to integrate the main functional areas of an organization’s business processes into a unified system.

An ERP system includes core software components, often called modules, that focus on essential business areas, such as finance and accounting, HR, production and materials management, customer relationship management (CRM), and supply chain management. Organizations choose which core modules to use based on which are most important to their particular business.

An ERP refers to a type of software that organizations use to manage day-to-day business activities such as accounting, procurement, project management, risk management and compliance, and supply chain operations. A complete ERP suite also includes enterprise performance management, software that helps plan, budget, predict, and report on an organization’s financial results.

ERP software then, is a business management technology solution that businesses and manufacturers use to collect, store, manage, and communicate data across all functions of the enterprise. Users interact with the software via visually-collaborate dashboards. Typically, ERP dashboards contain color-coded bar charts and graphs, along with other visual descriptions of data that give users a fast look at key metrics. ERP users must have access to dashboard metrics because they track and measure data that leads to business process improvement.

ERP systems are designed around a single, defined data structure (schema) that typically has a common database. This helps ensure that the information used across the enterprise is normalized and based on common definitions and user experiences. These core constructs are then interconnected with business processes driven by workflows across business departments (e.g. finance, human resources, engineering, marketing, operations), connecting systems, and the people who use them. Simply put, ERP is the vehicle for integrating people, processes, and technologies across a modern enterprise.

A key ERP principle is the central collection of data for wide distribution. Instead of several standalone databases with an endless inventory of disconnected spreadsheets, ERP systems bring order to chaos so that all users—from the CEO to accounts payable clerks—can create, store, and use the same data derived through common processes. With a secure and centralized data repository, everyone in the organization can be confident that data is correct, up-to-date, and complete. Data integrity is assured for every task performed throughout the organization, from a quarterly financial statement to a single outstanding receivables report, without relying on error-prone spreadsheets.

How ERP works

An ERP system also called an ERP suite, is made up of different enterprise resource planning applications that talk to each other and share a database.

Each application (aka ERP module) typically focuses on one business area. You can combine different modules to meet the needs of the organization. Finance, human resources, sales, and logistics are popular starting points. There are also modules specific to industries – from manufacturing to retail. At its most fundamental level, ERP software integrates information from all areas of a business into one complete enterprise system so data can be shared across departments in real-time to streamline processes and automate common tasks. At its core, an ERP system is a database management system, creating and managing a database of business processes including:

Accounting and Finance

The accounting and finance module tracks the company’s finances, including budget and expense planning, core accounting, revenue management, and tax management.

Customer Relationship Management (CRM)

With the CRM module, businesses can manage their client-facing operations, such as sales, marketing, and customer service. Employees can track sales prospects and customer pipelines. Users can also manage marketing tasks, including advertising and lead generation campaigns.

Supply Chain

The supply chain module tracks products from manufacturing to the warehouse to distributors to customers. Features include supplier scheduling, purchasing, inventory, claim processing, shipping, tracking, and product returns.

Inventory Management

Using the inventory management module, businesses can monitor materials and supplies through inventory control, purchase orders, automatic ordering, and inventory scanning.

Manufacturing

Manufacturers and other production-oriented facilities can use the manufacturing module to manage their shop floors, looking at elements such as work orders, bill of materials, quality control, engineering, manufacturing process and planning, and product lifecycle management.

Human Resources

The human resources module helps organizations manage their hiring cycles from recruitment to succession. Companies can take advantage of the following features: applicant tracking, payroll, time and attendance, performance management, and learning management.

Business Intelligence

A business intelligence module collects and analyzes data from multiple sources and helps users make better business decisions. Some features include customizable dashboards and visualization tools, ad-hoc and scheduled reporting, and real-time data access.

ERP systems rely on a centralized relational database, which collects business information and stores them in tables. Having the data stored centrally allows end-users, such as from finance, sales, and other departments, to quickly access the desired information for analysis.

Instead of employees in different departments managing their spreadsheets and reports, ERP systems allow for reporting to be generated from a single, centralized system. Information updated in one ERP module, such as CRM, HR, and finance, is sent to a central, shared database. The appropriate information in the central database is then shared with the other modules.

ERP software also offers some degree of synchronized reporting and automation. Instead of forcing employees to maintain separate databases and spreadsheets that have to be manually merged to generate reports, some ERP solutions allow staff to pull reports from one system. For instance, with sales orders automatically flowing into the financial system without any manual re-keying, the order management department can process orders more quickly and accurately, and the finance department can close the books faster. Other common ERP features include a portal or dashboard to enable employees to quickly understand the business’ performance on key metrics.

A Brief History of ERP

Gartner invented the term “enterprise resource planning” in 1990. ERP is preceded by Material Requirements Planning (MRP), developed by IBM engineer Joseph Orlicky as a system for calculating the materials and components needed to manufacture a product.

From Paper Cards to Mobile Devices

The history of ERP goes back more than 100 years. In 1913, engineer Ford Whitman Harris developed what became known as the economic order quantity (EOQ) model, a paper-based manufacturing system for production scheduling. For decades, EOQ was the standard for manufacturing. Toolmaker Black and Decker changed the game in 1964 when it became the first company to adopt a material requirement planning (MRP) solution that combined EOQ concepts with a mainframe computer.

MRP remained the manufacturing standard until manufacturing resource planning (called MRP II) was developed in 1983. MRP II featured “modules” as a key software architectural component, and integrated core manufacturing components including purchasing, bills of materials, scheduling, and contract management. For the first time, different manufacturing tasks were integrated into a common system. MRP II also provided a compelling vision of how organizations could leverage software to share and integrate enterprise data and boost operational efficiency with better production planning, reduced inventory, and less waste (scrap). As computer technology evolved through the 1970s and 1980s, concepts similar to MRP II were developed to handle business activities beyond manufacturing, incorporating finance, customer relationship management, and human resources data. By 1990, technology analysts had a name for this new category of business management software—enterprise resource planning.

Past: 1990s to the New Millennium: From On-Premises to the Cloud

From the 1990s until the beginning of the twenty-first century, ERP adoption grew rapidly. At the same time, the costs of implementing an ERP system began to climb. The hardware required to run the software was typically on company premises, with big machines in a server room. Both the hardware and software licenses required capital investments and depreciated over 5 to 10 years. Besides, organizations nearly always wanted to customize their ERP systems to fit their specific needs, entailing an additional expense of software consultants and training.

Meanwhile, ERP technology was evolving to embrace the internet, with new features and functionality such as embedded analytics. As time went on, many organizations discovered that their on-premises ERP systems couldn’t keep up with modern security demands or emerging technologies such as smartphones.

Today: A New ERP Delivery Model: Software as a Service (SaaS)

Today, ERP has expanded to encompass business intelligence (BI) while also handling “front-office” functions such as sales force automation (SFA), marketing automation, and eCommerce. With these product advancements and the success stories coming out of these systems, companies in a broad range of industries—from wholesale distribution to eCommerce—use ERP solutions.

Enter the cloud—specifically, the software-as-a-service (SaaS) delivery model for ERP. When ERP software is delivered as a service in the cloud, it runs on a network of remote servers instead of inside a company’s server room. The cloud provider patches, manages, and updates the software several times a year—rather than an expensive upgrade every 5 to 10 years with an on-premises system. The cloud can reduce both operational expenses (OpEx) and capital expenses (CapEx) because it eliminates the need for companies to purchase software and hardware, or hire additional IT staff. These resources can instead be invested in new business opportunities, and the organization is always up-to-date on the most recent ERP software. Employees can shift their focus from managing IT to more value-added tasks such as innovation and growth.

ERP

A hybrid ERP system is a multi-sourced, modular application environment for the modern, digital, networked enterprise characterized by the Core building block of the entire digital enterprise platform. Act as the foundation for real-time reporting, analytics, and high-velocity transactions.

Hybrid ERP is also called a two-tier model where you have a combination of core on-premise ERP capabilities combined with cloud capabilities in areas such as collaboration, Customer Relationship Management (CRM), and sales. A hybrid ERP system is a multi-sourced, modular application environment for the modern, digital, networked enterprise characterized by:

• The core building block of the entire digital enterprise platform
• Act as the foundation for real-time reporting, analytics, and high-velocity transactions
• Supports content-rich transactions
• Maintains a consistent flow of data to enable sophisticated analytics based on a mix of internal and external data

The Business Value of ERP

One of ERP’s many purposes is to keep the internal processes of a business running smoothly. In other words, ERP streamlines its information. In business terms, streamlining means to improve the efficiency of a business by simplifying and/or eliminating any steps that may be deemed unnecessary by using modern techniques, which in this case is implementing ERP software.

Information “silos” can occur when departments or groups do not share information with other departments within an enterprise. ERP software focuses on breaking down and solving the issue of silos by sharing data across departments in real-time and automating common tasks to streamline the manufacturing process and spur growth.

Thanks to ERP’s ability to knock the doors of silos down, any information placed into the software, can be accessed by other users depending on how security is setup. Streamlining this information across departments is one key benefit of ERP software that helps enable open communication, easier access to information, and business transparency.

At its core, ERP helps employees do their jobs more efficiently by breaking down barriers between business units. More specifically, an ERP solution gives a global, real-time view of data that can enable companies to address concerns proactively and drive improvements.

Benefits of ERP systems

With an ERP solution, employees have access to accurate information that enables them to make better decisions faster. Not only that, but ERP software helps to eliminate redundant processes and systems, dramatically lowering the cost of doing business overall.

It’s impossible to ignore the impact of ERP in today’s business world. As enterprise data and processes are corralled into ERP systems, businesses can align separate departments and improve workflows, resulting in significant bottom-line savings. Examples of specific business benefits include:

• Eliminate information silos, gain a single source of truth, and get fast answers to mission-critical business questions while getting a better insight
• Reduced risk through improved data integrity and financial controls and Maximize business visibility and control, ensure compliance with regulatory requirements – and predict and prevent risk.
• Fast-track business and financial reporting and easily share results. Act on insights and improve performance in real-time.
• Lower operational costs through streamlined business processes and best practices
• By using integrated ERP applications that share a database, you can simplify IT and give everyone an easier way to work.
• Enhanced collaboration from users sharing data in contracts, requisitions, and purchase orders
• Raises collaboration using data sharing and integrated information provides better business intelligence and customer service capabilities; and improves supply chain management.
• Streamline and automate your core business processes to help everyone in your organization achieve Higher productivity with fewer resources
• Improved efficiency through a common user experience across many business functions and well-defined business processes
• boosts efficiencies by automating data collection;
• Consistent infrastructure from the back office to the front office, with all business activities having the same look and feel
• Higher user-adoption rates from a common user experience and design
• Lower management and operational costs through uniform and integrated systems
• With efficient operations and ready access to real-time data, you can quickly identify and react to new opportunities.
• enables business growth by managing increasingly complex business processes

Cloud ERP

As technology continues to advance and evolve, more businesses of all sizes are considering cloud ERP than ever before. Business organizations nowadays need advanced, globally-connected, and continuously updated tools and systems that allow them to focus more of their time and energy on implementing growth initiatives and less on day-to-day IT management. That’s where cloud ERP comes into play.

Cloud-based computing (also called Software as a Service, or SaaS) allows users access to software applications that are hosted, offered and managed in the cloud platform and run on shared computing resources via the Internet rather than on-premises within an enterprise’s own data center. These computing resources are maintained in remote data centers dedicated to hosting various applications on multiple platforms.

Essential to Cloud ERP systems is a shared database maintained in remote data centers dedicated to hosting various applications on multiple platforms that supports multiple functions used by different business units and allows employees in different divisions to access and rely on the same information for their specific needs. And with Cloud ERP this is accomplished without requiring an extensive (and often expensive) on-premises server presence.

Unlike on-premises systems, cloud ERP which is a type of software as a service (SaaS) increases accessibility via the internet and enables users to share and transfer data across business departments, as well as externally, in real-time. Because it is cloud-hosted, businesses are notified of any updates to the software immediately. Cloud-based ERP also comes with availability, backup, and disaster recovery plans from providers to reduce interruptions to the software.

Cloud ERP generally has much lower upfront costs, because computing resources are leased by the month rather than purchased outright and maintained on-premises. Cloud ERP also gives companies access to their business-critical applications at any time from any location.

The Cloud is particularly valuable to small and medium-sized businesses (SMB’s) because it provides access to full-function applications at a reasonable price without a substantial upfront expenditure for hardware and software. Using the right cloud provider, a company can rapidly scale its business productivity software as their business grows or a new company is added.

Cloud ERP Benefits

Today, more businesses are choosing to deploy ERP in the cloud than ever before. Here are 10 main cloud ERP benefits:

1. Rapid updates and upgrades:

Cloud ERP from Epicor offers instant and ongoing updates and upgrades to your ERP software and tools, so you never have to worry whether you’re using the most up-to-date technology to suit your business needs. You also don’t have to spend time updating—or hiring someone to update—your systems like you would if you used an on-premises ERP system.

2. Lower up-front and operating costs:

One of the biggest benefits offered by cloud ERP is that it’s much less expensive than traditional onsite ERP systems. When you deploy on-premises, you might pay for the software once by way of a license, but you have other costly expenses such as server purchase and ongoing maintenance, database creation and management, initial implementation, IT staffing, energy costs, and security and backup. With cloud ERP, you pay less upfront and your overall ongoing operating costs are much lower because the vendor takes care of updates, maintenance, and security for you.

3. Rapid implementation:

Cloud ERP can also get up and running in much less time than on-premises ERP systems. With on-premises ERP, you have to worry about things like selecting and purchasing hardware, training IT staff, potentially hiring more people, implementing new data security protocols, and ensuring that everyone on your team has reliable access to the tools they need to help you grow your business. With cloud ERP, deployment and implementation are fast and painless. Deploying your software in the cloud is also reliable and offers easy data access in real-time from anywhere—which can help make your entire team more collaborative and successful in their roles.

4. Scalability:

Cloud ERP is built to help you scale operations at your company. Cloud ERP allows your team and partners to access information on a global level. With cloud ERP from Epicor, you also benefit from world-class security and system monitoring that allows you to grow quickly without having to wonder whether or not your information is safe.

5. Focus on core competencies:

Because cloud ERP vendors take on most of the burden associated with managing a complex ERP system, you can spend time on what matters most—growing a sustainable, profitable operation. In other words, you get to focus on what you’re best at. When you don’t have to spend time worrying about software upgrades, downtime, and security issues, you get to spend time on areas that directly impact future business growth.

6. Improved accessibility, mobility, and usability:

Cloud ERP is better in these areas than other types of ERP deployments. Because your ERP system is managed in the cloud and global-ready, your team can access the tools they need from anywhere using their mobile phones and an Internet connection. Information is accessible in real-time, so key business decisions can be made without having to wait until everyone is in the same room or accessing your ERP system from the same place. In other words, it helps you build a more agile team. This focus on instant accessibility and improved collaboration helps boost productivity both inside and outside your enterprise.

7. Improved system availability and disaster recovery:

Data security is a very real concern for any team today that leverages the Internet to run their business. When you invest in cloud ERP, you put the responsibility on the shoulders of your vendor—and they ensure that your system is protected from potential attacks or vulnerabilities. Epicor invests in world-class infrastructure and security to keep your system protected and allow you to focus on other areas of your business that require your attention.

8. Cost transparency:

When you deploy cloud ERP systems, the cost is predictable and transparent. Either you pay a monthly subscription on the SaaS model, or you adhere to a pay-per-use model. Besides, there are no unexpected expenses relating to software updates and technology upgrades with cloud ERP, as they fall under the responsibility of your vendor.

9. Sales automation:

Sales automation is also optimized thanks to the global-readiness, real-time, and mobile access that comes with cloud ERP deployments. With cloud ERP, your partners, customers, and vendors can connect to your system seamlessly from anywhere in the world. Epicor Cloud ERP is highly reliable, and customers who deploy ERP through the cloud experience 99.5% or greater uptime.

10. Security standards and compliance:

As mentioned, cloud-based ERP vendors like Epicor have world-class security support and protection for customers. Epicor has a comprehensive, end-to-end security model. We build security into every layer of the ERP environment—and physical network interface cards, user passwords, and 24×7 system monitoring. A holistic approach to security lets us anticipate and minimize disruptions, giving you more up-time and better peace of mind.

Open Source ERP

An open-source ERP system is an enterprise resource planning system with publicly available source code. Companies can access the open-source code for free and customize the software themselves, rather than relying on the vendor. Most ERP solutions are proprietary or closed source, and customers can’t access the source code.

Open source ERP can be particularly attractive to small to mid-sized businesses (SMBs) that want to upgrade or customize their ERP systems without paying large licensing and support fees.

More than ever, businesses are relying on enterprise resource planning (ERP) systems to streamline their operations. From accounting to manufacturing to sales, the all-in-one solutions drive efficiency and collaboration. But for some businesses, the price tag of an ERP solution is simply too high.

Open-source ERP software is a cheaper alternative for many companies, especially small and medium-sized businesses (SMBs). It’s modular and flexible, allowing companies to only pay for the features and customization they need.

An Enterprise Resource Planning (ERP) project can be a major undertaking one that may be made or broken by an organization’s choice of the software that backs it up. A bespoke or custom-tailored software system would seem to be the ideal. But development costs can be prohibitively high.

Even with the best development team in the world (which would push the costs even higher), there’s little guarantee that the tools and requirements specified by an organization for the design of its ERP system will provide the perfect mix when the software itself rolls out. And commissioning amendments to a deficient or defective design will push prices even higher and push enterprise operations into an uncertain midpoint. Buying an ERP solution “off the shelf” can be a safer prospect, with a large market to choose from and perhaps the greater probability of accountability, availability, and support from established software vendors.

But licensing fees for proprietary software (and the software itself, for that matter) can take a huge bite out of your budget – especially if your business is diverse, widely dispersed, or has highly specialized needs that aren’t addressed by the generic feature sets of some off the shelf products, something of a predicament.

But there’s a third option which provides businesses with a better balance between customization, costs, and the manageability of their ERP systems: open-source software.

Benefits of Open-Source ERP

There are many reasons to choose open-source ERP software. Here are some of the benefits:

Vendor-Independence & Freedom from Licensing

The open-source software model bestows full licensing rights for a system to each user or organization that downloads and installs it. There’s typically nothing to pay for this – and no recurring fees for updates and renewals.

Open source ERP systems are coded and developed by a specific community – but that community can accept inputs from organizations and users across the globe. The inward-looking and exclusive attitude of “closed shop” proprietary software (which denies contributions to off the shelf product development to all but a company’s approved developers) doesn’t apply.

Neither do the restrictions imposed by the licensing policies of proprietary software vendors, which tie users into (often long-term) contracts with a particular manufacturer, on whose goodwill and continued viability as a commercial enterprise the software user has to rely upon.

Lower costs

ERP software isn’t cheap. Solutions generally cost between $75,000 and $750,000 for SMBs and $1 million to $10 million for larger companies. These high up-front costs can stop many companies from investing in technology.

Open-source ERP software can be a cost-effective alternative because customers don’t have to pay a license fee to access the source code. That means companies can install and customize the software for free.

Most ERP solutions have a broad range of features and modules that are included in their cost. On the other hand, open-source ERP systems come with only basic functionality. Companies can decide whether to add free modules or pay for proprietary features.

Reduced Cost of Ownership

“Free” and “low-cost” are terms often associated with the open-source model, and it’s true generally that an open-source ERP system will tend to be less capital-intensive than a bespoke or off the shelf solution.

Development, licensing, and software maintenance fees are largely eliminated, reducing an organization’s overall cost of ownership. Access to open-source operating systems, APIs (Application Programming Interfaces), and databases also contributes to this.

Community Development Resources

In addition to the source code of the core software, open-source ERP systems also give their users ready access to the often-vast resources of their user and development communities. This can include program modules to increase functionality, code snippets, and routines to tweak performance or to perform specific functions, and the opportunity to share or trade ideas and resources with others in the community.

Discussion forums, feedback, industry news, and information on relevant developments in related ERP technologies also figure in this. And the open-source ERP community can serve as a talent pool for developers and operators who can assist enterprise users with their technical support or system maintenance needs.

High-quality coding

“High-quality” and “low cost” are words that are seldom paired. But many low-cost open-source ERP solutions offer high-quality coding because they’re built on previous open-source projects that have been reviewed by various independent developers.

Your internal IT staff also can audit open-source code for quality. With closed source ERP solutions, IT employees can’t access the source code. They can only test whether software processes work correctly with business data.

More control over customization

When companies want to add customization to their ERP solution, they often have to work with the vendor, their internal IT team, and even an external consultant. It can take time to coordinate between groups, and there can be miscommunications. And if the vendor decides it can’t develop particular customization, the company doesn’t have any other options.

With open-source ERP software, companies can create customization internally, without having to go through a vendor. Businesses also have access to ready-made or industry-specific features and modules created by user communities. This reduces the time and complexity of customization and gives companies more options.

Simpler to scale

One of the biggest challenges in selecting an ERP solution is considering future scalability. Many growing companies realize too late that upgrading their software or increasing the number of users requires costly re-implementation.

Open-source ERP is easier to scale and can be upgraded more frequently without disruptions. However, this is only the case when system customization is properly implemented.

You Can Customize & Modify at Will

Open-source projects also give their users and participants the right to modify and redistribute the underlying source code of their applications, at will. So, organizations using open source ERP systems can customize their platforms to meet the specific needs of their businesses – by making alterations to the program code themselves, adding modules obtained from the project’s development community, or by outsourcing development work to members of the project community.

Demo at your own pace

Companies that want to test out an ERP solution usually have to contact a vendor, request demos, and set up a meeting. This process takes time, and the company will likely sit through a sales pitch.

On the other hand, companies can access open-source ERP code through a publicly available database and test the software without interacting with a vendor’s sales team. Although the solution won’t have customization at first, companies will be able to test it at their speed and discretion.

Security, Updates & Maintenance

Users of proprietary software generally have to rely on the software manufacturer or vendor for upgrades, security patches, and system maintenance. Enterprise users, in particular, may find themselves bound by licensing conditions to wait on the pleasure of their software supplier for essential updates and security fixes. The problem is that these improvements are often dictated by market conditions and the corporate priorities of the manufacturer, rather than the individual needs of the user.

An open-source ERP system puts control of the update, maintenance, and security management aspects of a platform squarely in the hands of the user – who is at liberty to call upon their own in-house IT expertise, or the resources of the project community. This last point is particularly relevant, as open-source projects are noteworthy for the rapid pace at which program bugs or security issues are identified and corrected by members of the development community.

5 Differences Between Open Source and Closed Source Software

Looking for ERP for their companies, business owners often face a difficult choice between closed source and open source ERP. The thing is that the choice is not always obvious, as each of the ERP has its particularities with a mix of advantages and disadvantages.

In this article, we will get open source vs closed source explained and speak about their differences, but before it lets clarify what open source and closed source ERP are.

Open source ERP refers to the ERP which uses the code freely available on the Internet. The code can be copied, modified, or deleted by other users and organizations. As the ERP is open to the public, the result is that it constantly updates, improves, and expands as more people can work on its improvement.

Closed source ERP is opposite to Open source ERP and means the ERP which uses the proprietary and closely guarded code. Only the original authors of ERP can access, copy, and alter that ERP. In a case with closed source ERP, you are not purchasing the ERP but only pay to use it.

For better understanding the peculiarities of open source ERP and closed source ERP, we have made a comparison of five basic aspects: pricing, security, support, source availability, and usability.

Price Policy

Open source often referred to as a free of cost ERP. It can, however, have costs for extras like assistance, additional services, or added functionality. Thus, you may still pay for a service with OPEN SOURCE ERP.

Closed source ERP is usually a paid ERP. The costs can vary depending on the complexity of the ERP. While the price can be higher, what you get is a better product, full support, functionality, and innovation. However, most companies provide free trials to convince the purchaser that their ERP is the right fit.

Security

The question of security is very controversial as each ERP has two sides of the coin. The code of open source ERP can be viewed, shared, and modified by the community, which means anyone can fix, upgrade, and test the broken code. The bugs are fixed quickly, and the code is checked thoroughly after each release. However, because of availability, the source code is open for hackers to practice on.

On the contrary, closed source ERP can be fixed only by a vendor. If something goes wrong with the ERP, you send a request and wait for the answer from the support team. Solving the problem can take much longer than compared to Open Source ERP.

When it comes to choosing the most secure ERP, the answer is that each of them has its pros and cons. Thus, it is often a challenge for firms that work in a particular industry.

Quality of Support

Comparing open source and closed source ERP support, it is obvious that closed source ERP is predominant in this case. The costs for it include an option to contact support and get it in one business day in most cases. The response is well organized and documented.

For open source ERP, such an option is not provided. The only support options are forums, useful articles, and a hired expert. However, it is not surprising that using such kind of service you will not receive a high level of response.

Source Code Availability

Open source ERP provides an ability to change the source code without any restrictions. Individual users can develop what they want and get benefits from innovation developed by others within the user community. As the source code is easily accessible, it enables the ERP developers to improve the already existing programs.

Closed source ERP is more restricted than open-source ERP because the source code cannot be changed or viewed. However, such limitation is what may contribute to closed source ERP security and reliability.

Usability

Usability is a painful subject of open source ERP. User guides are written for developers rather than to layperson users. Also, these manuals are failing to conform to the standards and structure.

For closed source, ERP usability is one of the merits. Documentation is usually well-written and contains detailed instructions.

Top 10 Signs Your Business Is Ready for an ERP System

It’s taking longer and longer to reconcile financials at the end of the month. Your sales forecasts are based more on guesswork than solid figures. Your business is having trouble keeping up with its order volume and customer satisfaction is faltering as a result. You have no idea how much inventory you have in your warehouse, and it’s a pain to find out. If this sounds like your business—or close to it—then it may be time to consider an ERP system.

Because every company is unique, there’s no single indicator that says, “You need ERP now!” However, the companies that would benefit most from ERP software often face similar problems and frustrations. Is your business facing some of these same issues? Read on to discover the top five signs that your company is ready for ERP.

Most businesses start out using a variety of simple, standalone tools to manage different processes – such as QuickBooks or Excel Spreadsheets. Here are five signs you’ve outgrown them.

1. You Have Lots of Different Software for Different Processes

Spend a few minutes thinking about how employees at your company record, track, and process information. Do accounting staff use one system for receivables and payables, and sales use another to enter in customer orders? Is the process of taking those orders and getting them fulfilled and into accounting a time-sucking manual process? Do employees in your warehouse use a completely different solution to track shipping and receiving?

When various front- and back-end systems run separately, it can wreak havoc on the processes that are meant to ensure your company is running smoothly. Without accurate data from sales, inventory management may suffer, while not having the latest information from accounting can trigger a ripple effect on everything from marketing budgets to payroll.

ERP software integrates these systems so that every business function relies on a single database. With one source of information that contains accurate, real-time data, an ERP solution breaks up information logjams, helps staff make better decisions more quickly, and frees up their time to work on more high-value exercises like helping the business grow even faster.

2. You have manual processes with multiple data sets

Are most of your departments using their applications and processes to get things done? If so, chances are you’re spending too much time on duplicate data entry. When information can’t flow between systems, reporting takes longer, errors happen often, and decision making is hampered.

3. You Don’t Have Easy Access to Information About Your Business

If someone asked you what your average sales margin is, how long would it take you to find out? What about other key performance metrics, like orders per day or sales to date? For companies that rely on siloed systems and spreadsheets that need to be constantly updated and reconciled manually, it could be a long wait.

The pace of business is faster than ever before, which means employees across your company need immediate access to key data. With an ERP solution, executives can get a holistic view of business operations at any time, while other staff can get the information, they need to do their jobs more effectively. For example, sales representatives should be able to view a customer’s full transaction history and more proactively improve renewal rates while increasing upsell and cross-sell opportunities.

4. You’re spending more time on daily activities

If it’s taking longer to manage key activities, like closing the books, too many disparate applications may be to blame. ERP software integrates solutions and data into one system with a common interface, making it easier for business units to communicate and do their jobs effectively.

5. Accounting Takes Longer and Is More Difficult

Often, the first noticeable signs that your company needs ERP software will come from your accounting department. If your employees rely on paper-based invoices and sales orders—and spend hours every week manually entering them into different accounting and sales systems—you need to consider how much time is being wasted on tasks that ERP software can handle in an instant.

The same goes for financial reporting—if it takes ages to consolidate or reconcile financial information across systems and through countless spreadsheets, an ERP solution can make a significant impact. With all financials in a single database, accounting staff won’t have to spend hours cross-posting information, rekeying numbers, or reconciling data manually. Your accounting staff will be more productive, freeing them to deliver critical reports without delays and frustration.

6. You have many unanswered business questions

Can you easily answer important questions about your business – such as revenue per product line or the number of returns? If not, segregated systems and a lack of access to metrics and KPIs may be holding you back. Enterprise resource planning software is designed to address these challenges.

7. You’re missing out on fast-moving opportunities

Are you spending so much time running your business that you can’t pursue exciting new opportunities? Newer ERP systems include advanced, intelligent capabilities, like machine learning and predictive analytics, that make it easier to identify and capitalize on profitable new ventures.

8. Sales and the Customer Experience Are Suffering

As companies grow, one of their biggest challenges is often inventory management. Ensuring that the right number of products is in the right location at the right time is a vital part of business operations.

When sales, inventory, and customer data are maintained separately, it can create serious problems across your company. If you run out of a popular product, sales will be off until the next shipment arrives. Meanwhile, if a customer calls to inquire about an order and employees can’t track it to see if it’s been shipped—or if it’s even in stock—your company will start to develop a poor reputation for reliability and service.

With an ERP system, on the other hand, staff in every department will have access to the same, up-to-the-minute information. Customer-facing reps should be able to answer customer’s questions about order and shipping status, payment status, service issues, etc., without having to hang up the phone and check with another department. Better yet, customers should be able to simply go online to their account and view status information. Meanwhile, the warehouse manager can see that stock is getting low and can reorder.

9. Your IT Is Too Complex and Time-Consuming

One of the biggest downsides of having multiple systems across your business is that IT management can become a nightmare. Customizing these systems, integrating them, and maintaining them with patches and upgrades can be complex, costly, and critical time and resources.

If your patchwork of systems includes on-premise, legacy business software, system upgrades can be more trouble than they’re worth. Not only are these updates expensive and time-consuming, but they may also undo customizations implemented by IT staff. Given that, it’s no surprise that two-thirds of mid-size businesses are running outdated versions of their business software.

Rather than adding more software—and complexity—to an already ineffective system, ERP technology can give you the agility to respond to changing business needs rapidly. That’s why selecting a cloud-based ERP system updates is no longer an issue, and new functions are easy to add as your business grows and changes.

10. You have runaway business processes

Are there areas where your processes are getting away from you? Maybe it’s harder for you to manage inventory, satisfy customers, or keep costs in check. If so, your business processes may need to be restructured to accommodate growth or changing priorities – a natural fit for ERP software.

ERP System Pricing Models

An ERP software can be termed as consumer software and this enterprise application software is typically not bought and sold instead it is licensed for use. It may be licensed to be used by a company, on a particular computer, or by other criteria such as several users. Buying it once doesn’t mean you can duplicate it and share it with all your friends, or even sometimes use it on all your computers. For enterprise application software how you pay for that license and the term of the license can vary.

How Much Does an ERP System Cost? For any business investing in an enterprise resource planning (ERP) system, pricing is an important factor.

ERP software isn’t cheap, and prices vary depending on the type of deployment, number of users, and level of customizations. Some vendors publicly display pricing on their website, especially for cloud ERP solutions, while others only provide a quote after finding out a company’s business requirements.

Depending on the type of deployment, ERP vendors use two pricing models: perpetual licensing and subscription plans. Here’s how they work:

Perpetual licensing

Companies that choose to host ERP software using their servers (on-premise deployment) generally pay a perpetual licensing fee. This one-time cost is paid up-front and is based on the number of users and the level of customization.

Perpetual licenses usually don’t include recurring costs like maintenance, support, and upgrades. However, Today, a software license can be perpetual. This means you pay for it once and can use the enterprise application forever. Even in this case more often a perpetual license agreement might have a stipulation that you have the right to use that software only for as long as you continue to pay maintenance to the software vendor that provides the product. But perpetual licenses are not the only type offered. Instead, your license might be for a specific period. This is generally referred to as a “term” license. At the end of the term, you must either renew the license or discontinue the use of the software.

Subscription plans

Companies can also pay a subscription fee to access cloud ERP software, which the vendor maintains and hosts on a third-party data server. The software-as-a-service (SaaS) pricing model means fees are paid per user monthly or annually.

Subscription plans often require companies to have a minimum contract length and come in various tiers with increasing functionality and modules.

Implementation Costs

ERP implementation is famous for being a long and expensive process. Costs include:

Modules or features not included in the base price

Some solutions may charge additional fees for individual modules or advanced features, including payroll, manufacturing, and e-commerce. There are also industry-specific solutions that offer features for a particular market.

Customizations

Many companies require customizations for their specific business processes, and costs can add up quickly. Businesses should make sure they focus on adding only the features they need.

Consultants

Many vendors, especially larger ones like Oracle, SAP, and Microsoft, use third-party consultants for implementation. Costs can vary significantly for services like change management and data migration.

Hardware

Companies that want an on-premise deployment will need to purchase data servers and hardware infrastructure to host their ERP system.

Training

Some vendors may include basic training services for free during implementation, but others may offer them at an additional cost, especially if the training is done at the client’s site.

Small to medium-sized businesses can expect to pay between $75,000 and $750,000 for implementation. Costs for large businesses range from $1 million to $10 million.

Companies that can’t afford large up-front implementation costs should choose a cloud deployment, which doesn’t require hardware installation and may not offer as many customizations.

Ongoing Costs to Consider

ERP systems often require additional resources that aren’t generally included in the base price, such as:

IT staff

ERP systems can be complex to manage. Companies that choose an on-premise deployment will need internal IT staff to handle any technical difficulties that arise.

Customer support

Basic support (e.g., knowledge base, email support) is typically included in the price of an ERP solution. However, vendors may offer plans that include advanced support, such as priority support or access to a dedicated customer service manager.

Maintenance and upgrading

Most on-premise ERP deployments charge an additional fee for annual maintenance and software upgrades. However, maintenance and upgrades are typically included with subscription pricing for cloud deployments. So, a maintenance agreement, which is a recurring cost, typically provides both technical support and certain innovations. Some of those innovations will be included in your maintenance fee and others may still need to be purchased. Maintenance is typically priced as a percentage of the software license.

The Future of ERP

The future of ERP exhibits the future of business. Open source is the future. Web, mobile, and cloud solutions are increasingly built predominantly on open source infrastructure. With the increase of AI and mobile app development services, businesses are ready to put data at the heart of every decision. Companies now prefer cloud-based ERP. As per a recent survey, more than 94% of enterprises regard cloud-based ERP as a safer option.

Then you need to know about the trends that will shape the future of ERP in 2019.

1. More ERP users will switch to Cloud

The year 2018 saw the movement of several software platforms to the cloud. Till now ERP is lagging with the integration of cloud computing. In the year 2019, expectations are ripe that more ERP users will switch to the cloud. This trend holds great importance for small to medium businesses. With cloud ERP solutions, they need not maintain in-house infrastructure. They can avail of the benefits of a comprehensive system with minimal human resources. It will help them access ERP systems which they cannot afford. As per recent reports, a total cloud-based market with cross the levels of US $411 billion by 2020. This trend has found favor with big corporations also. They are availing enterprise mobility solutions for their cloud ERP requirements.

2. Businesses must be ready for Updates

With the rising trend of cloud ERP solutions, there are going to be more updates available. This will need the businesses to keep their personnel always ready. They cannot rely on an old-release version for much longer. To be prepared for one big release, the company will have to adapt to many smaller releases. This will help reduce the steep learning curve between the systems. It will need businesses to invest in staff training and upgrading of skills. Meeting these demands is possible with the help of mobile ERP solutions.

3. The blockchain is the future

Blockchain has found takers in various enterprise software. It will find its way in the ERP also. The blockchain is one of the most secure platforms for carrying out transactions. Though, it is only in the nascent stages right now. But the future of ERP will feature blockchain. Specific organizational functions can become more efficient with blockchain. Supply chain management and customer acquisition will become more active with this technology. Many companies where shipping and tracking are essential functions have started using the services of blockchain consulting firms. You can enlist the services of enterprise app development providers. They will help integrate blockchain with your ERP.

4. Artificial Intelligence is the way to go

Artificial Intelligence services are impacting every facet of business operations. The concept of machine learning is going to revolutionize ERP. It will help businesses achieve high levels of automation. It will replace the need for human resources across various functions. The concept of robotic process automation (RPA) is catching up. Whereas previous systems focused on specific processes, RPA is applicable across all departments. This will help the company reallocate wasteful human resources to more productive avenues. Another extension of AI is in the form of Chatbots. One can hire the top Chatbot Development Company to integrate the AI-enabled chatbots to reduce the cost of operations. The reallocation of funds will be towards business automation. Companies offering Enterprise mobile application development in India can take care of this.

5. Personalization of ERP Solutions

As per the ERP system predictions for the next 10 years, businesses will opt for personalization instead of customization in ERP. It will help them stay up to date with the industry trends. Business users will look for personalization of solutions instead of modifications. It provides the company with a specialized solution at a fraction of the cost. The market for personalized ERP solutions will cross the US $ 15 billion by 2020, as per a report by Forrester’s. Companies can reduce the need for dedicated IT teams to manage ERP. In the future, all the activities of ERP will focus more on customers.

6. Opensource Cloud ERP

Trends show that enterprises are more likely to shift and implementing more Open Source Cloud ERP, due to the excessive License and maintenance fee of the Closed source Cloud ERP.

Conclusion

As technology continues to advance and evolve, more businesses of all sizes are considering cloud ERP than ever before. This popularity is largely a result of factors such as cost, reliability, speed, and access. To stay on the cutting edge of innovation, you need to understand what cloud ERP is and how it could help your business. This resource will put you on the right track toward evaluating, implementing, and managing the right cloud-based ERP system for your company and team.

Open source Enterprise Resource Planning or ERP Software system is like a shell created outside the core system to meet the business needs and line-up with the company organization. If implemented within an organization the right way and used the right way, it can drive significant benefits, including better information sharing, reduced operational costs better synergy between marketing and sales leading to more revenue, better automation, and integration of processes. All in all, a healthy proposition.

However, Union Mercantile Solutions by Union Mercantile Ltd is an IT solution company with an agenda to serve the low-cost IT service where on hand experience was gathered by working for in house IT solutions for our valuable customers. As Enterprise Solution Provider, we have analyzed the data about the satisfaction of different software’s, ERP, Solutions, IT infrastructure of the various company in Bangladesh and found out that the satisfaction rate is not quite sufficient and the root cause is lack of information for the right solution for the right infrastructure. Most of the companies are investing a vast amount of money in their IT but end product and results still require much to be desired. In this course, we are enlightening on the topic “ERP to Cloud Open Source ERP: The Evolution”