Benefit of ERP System

Key Features and Benefits of ERP Systems

Key Features and Benefits of ERP Systems

Key Features and Benefits of ERP Systems 700 500 Xcelpros Team

At a Glance

  1. 1.Poor software fit /inaccurate requirements
  2. 2.Business leadership is not committed to the implementation
  3. 3.Insufficient team resources
  4. 4.Lack of accountability to make timely, high quality decisions
  5. 5.Lack of investment in change management
  6. 6.Insufficient training/support
  7. 7.Insufficient funding
  8. 8.Insufficient data cleansing
  9. 9.Insistence on making ERP look like legacy
  10. 10.Lack of testing



Overall cost reduction, improved security, and interoperability are why small businesses invest in newer and agile enterprise resource planning (ERP) software.

The biggest question companies have at the start is: Do we use an on-premise solution or a cloud-based ERP?

On-premise solutions require more up-front costs for:

  • Purchasing servers
  • Creating databases
  • The initial implementation
  • Consultants

Ongoing costs involve:

  • Information technology (IT) staffing
  • On-line security
  • Data back-up
  • Duplicating this set-up for every site

Keeping everything local requires ongoing maintenance, specialized in-house or on-call consultants, upgrades, and updates. You’ll likely need more hardware as your company grows. As you add additional facilities, your computer infrastructure will also continue to grow.

Moving to the cloud can help reduce most of these costs by about 30 percent. Depending on the age of a company’s existing equipment, there may be some hardware costs in the form of upgrading existing equipment to ensure compatibility. These costs will pale compared to the expense of having to add or outright replace servers.

Among the features of a successful cloud-based ERP implementation are:

  • The vendor is responsible for the cloud servers since it hosts and manages the software
  • No additional IT costs for staffing, maintaining the hardware and software, software updates and upgrades
  • The host (vendor) is responsible for your data security

This is just a small example of features and benefits of an ERP that pay off over time, especially when a company grows.

Other Cloud-Based ERP Advantages

Purchasing a cloud-based system has several other advantages beyond hardware and maintenance costs, including:

Scalability: A key reason growing companies move to the cloud is their ability to grow with it. Adding another 100 users might require expanding your server. As your company grows, adding new users to your ERP is just an internet connection away.

Agility: Does one part of your company require extra help with Supply Chain Management? An open-source-based ERP likely has a module designed just for that. Assuming you start with financial management, adding a sales component is a logical complement.

Disaster Recovery: Natural disasters such as fires, floods, or earthquakes are common everywhere. So are unnatural disasters in the form of riots and even wars. Cloud-based systems keep your data on multiple servers in different regions. When one server goes down, your data is safe on another. How safe are they? One ERP provider estimates that cloud systems are so secure and redundant its customers experience less than eight minutes of unplanned downtime a year.

Storage and access: This same geographical dispersal that means your data is safe from disasters also means that when you need more space, it’s easy to get. When your server farms occupy large warehouses, adding more terabytes—Western Digital has 18-20TB drives available for home computers with those in the 100TB territory made for commercial firms—is a power and data connection away.

Automatic updates: Cloud service providers provide around-the-clock monitoring. They are constantly finding ways to improve performance and data security. Microsoft, for example, employs 3,500 security engineers. They protect customer data in part by ensuring the Azure cloud computing platform is safe from all attackers.

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I’m Interested

Plan Your Implementation

No matter what software your company has, and how robust your network may be, it’s still possible for your ERP implementation to fail. In fact, the average estimate of all ERP installations that fail is between 40% – 60%

Successful implementations often require focus on seven critical aspects.

Figure 1:Plan Your Implementation

Pharmaceutical Analysis using Power BI

  1. 1. It is choosing the right team. Your implementation team must have a good mix of talent. It should include people with experience in your particular business segment. Include business analysts, developers, software architects and project managers. The team must also include a strong-willed and senior management Champion from your company whose goal is ensuring the highest priority tasks are accomplished first.
  2. 2. We are planning a phased approach. Install the implementation in logical sections. This reduces disruption, especially when moving data from the old system to the new.
  3. 3. It was moving useful data only. Client data that is no longer relevant is not worth keeping. Bring over material that helps now and in the future. Reformat your data as it’s brought from the old system to the new while you perform the build. Separate that data into static, one-time entry data like customer lists, and dynamic information such as transactions.
  4. 4. It is setting achievable goals and expectations. A great way to accomplish long-term goals is by breaking each into a series of smaller steps, each with its payoff. Build on the previous step to accomplish the next and keep going.
  5. 5. Using the implementation to fine-tune your business. Many companies purchase an ERP system to reduce costs. Use the implementation to take a critical look at each business process. Where are the bottlenecks? Where is effort duplicated? How can each process be streamlined to be more efficient and effective?
  6. 6. Time is a sixth critical part of an effective ERP implementation. Don’t be in a hurry to turn the key; fire it up and race off. Successful implementations take six months to two years. Effective, thorough planning and a thoughtful, well-researched approach before purchasing will help ensure your ERP implementation is successful.
  7. 7. Another important task is understanding that a new ERP will look different from the old one. While having a familiar look and feel is nice, your staff will embrace an optimized newer version once they understand how well it performs. Microsoft’s Dynamics 365 line of products may look different than your old ERP, but it will retain some familiarity for Office 365 and Azure users.

Final Thoughts

Online ERPs are designed for flexibility and expansion. A cloud-based ERP is less expensive to maintain over time, no matter where your company has its production plant, warehouse, or office. Small businesses considering ways to improve efficiency and encourage growth will want to examine the many top ERP solutions available.

Before you buy, though, make sure you have:

  • A plan with short-term, medium and long-range achievable goals
  • An upper-level management champion
  • A budget based on hard facts
  • A willingness to change
  • The strength and stubbornness to know that growth requires pain, the pain of change.

Taking the right approach will help your company prosper and grow.

Also read: Top 5 ERP System Trends in 2020 to help plan for 2021

Homegrown systems to modern ERP System

From homegrown to modern ERP System: Transforming your business

From homegrown to modern ERP System: Transforming your business 700 500 Xcelpros Team


Homegrown enterprise resource planning (ERP) programs were created to use businesses’ information technology (IT) infrastructure to help grow and manage companies.

In the 1990s, the early adopters of homegrown ERPs spent millions of dollars to modernize their technology. Their goals were making it easy to run daily operations, increase competitiveness and find ways to be more efficient. The cost of developing such an ERP system was high, making Homegrown ERP systems a prized possession for larger corporations. Only those with a strong inhouse IT team and deep pockets could build and maintain them.

For some companies, the issue of deciding whether to use an ERP system and then picking one was deep rooted. Organizations that grew through mergers and acquisitions added ERP systems as part of the package.

Other companies dealt with classic cases of “Software Snowballing” where an ERP was mixed with other software, none of which was designed to share information. This method of mixing stand-alone products drastically raises the cost of integration. It makes sharing data more complex while also adding expensive software licenses and product maintenance costs.

The good news is that was the old day. Older ERP systems lacked the flexibility and rich features of today’s modern ERPs.

Industry Speaks

During 2019’s CPhI North America 2019 Convention on Pharmaceutical Ingredients conference held in Chicago, Xcelpros staff met with decision-makers from organizations who are neck-deep in older homegrown ERP systems. These companies find themselves having vital resources slowly but steadily drained.

The people we spoke with unanimously agree that ERPs of the past are adding inefficiencies and straining existing resources. These companies recognize the importance of an effective ERP. They want to convert their investments into a program that promotes growth, collaboration and efficiency.

Early adopters were encouraged by what their ERPs brought to their companies. They kept adding more resources to the system. Over time, some critical functions started unraveling. For example, the accounting module could not keep pace with global standards such as generally accepted accounting principles (GAAP) or international financial reporting standards (IFRS). This inability to keep up leads to non-compliance issues.

From a maintenance standpoint, vendors of older systems started focusing on newer technologies. Companies with old programming tools and operating systems were left high and dry. In some cases, key personnel were tasked with maintaining an ERP on the verge of retirement. Most of our guests realized that updating a legacy system wasn’t practical since the technology is dated. With challenges outweighing the benefits, most of our guests at the CPhI were looking for a newer alternative.

Cost of Staying in Denial

One major issue for companies with homegrown legacy ERPs is the stack of standalone software. Each piece handles one part of the organization’s business processes. Licensing costs to maintain these programs often results in expensive bills at the end of every fiscal year.

The result, or what we call “the cost of staying in denial,” is severe. It grows with every passing day. Some of the common challenges faced by enterprises using homegrown ERPs are:

  1. 1.High costs to benefit ratio in maintaining legacy systems compared to modern products.
  2. 2.Incompatibility with popular business applications such as Microsoft Office 365, stifling collaboration.
  3. 3.Expensive integration required to perform regular tasks such as sales visualization. This often leads to high latency.
  4. 4.High people costs to maintain older tech that is already retired or will hit its end of life soon. In addition to the tech, the people who know to maintain it may also be leaving, putting pressure on newer staff who are hesitant to learn outdated products.
  5. 5.High costs of using a private datacenter to run the application, which is expensive. Many telecom firms worldwide are selling them to private companies. This includes Verizon and AT&T in the US.
  6. 6.Disruptions to normal business operations caused by upgrading the older ERP system. It is a time-consuming, expensive process.
  7. 7.Lack of collaboration because stand-alone applications limits growth opportunities and competitiveness.

To sum up the challenges, it is a typical case of application explosion with disjointed data sources also known as “the problem of too many.” Randomly applying partial solutions over time sucks up computing resources, increasing the overall cost of ownership.

It’s Time to Retire Legacy Systems

The companies Xcelpros spoke to at CPhI agree that their legacy systems are eating into their productivity and their limited resources. We wondered why, when chief executive officers and other top managers were aware of these issues, they had not already moved on to a modern ERP system.

Our research uncovered these issues:

  • Replacement costs and other economic considerations
  • A regressive mindset of, “if it ain’t broke don’t fix it”
  • Resistance to change management
  • Emotional attachments

It’s Too Expensive to Replace

We found comments about the perceived cost of a new ERP system were interesting, mainly because they were inaccurate. However, costs associated with switching to a new system were the most frequently cited reasons by our guests at CPhI’19.

This mindset and myth challenges years of ERP systems providers showing that new ERP systems typically save them money.

A current ERP such as Microsoft Dynamics 365 Finance and Operations actually costs up to 50 percent less than an on-site legacy system for a 100 employee company, business application provider Skyward Techno states.

When ERPs were first introduced about 30 years ago, their main feature was a uniform database that could sync information across business functions. It would ease decision making, the manufacturers claimed.

It was true … briefly. After ERPs came other targeted business applications. They include human resource management (HRM), customer resource management (CRM), product lifecycle management (PLM) and supply chain management software. Each program had its own unique database promoting “best of breed” software for their respective functions.

Companies that bought into that mindset then are now facing the problem of too many competing programs. A major issue is that specialization denies these firms the opportunity to harness the power of insights gathered by shared data.

A 2016 survey by Panorama Consulting found that nearly 65% of the organizations who implemented an ERP cited replacing outdated ERPs as the major driver for the change. The findings cited in the study matched with what we uncovered at the CPhI conference.

Figure: 1ERP Replacement Statistics

ERP replacement Statistics

With changing trends, best practices have morphed into more optimized processes that promote efficiency and shed workplace complacencies. At a time when profitability is stressed and finding a newer market is challenging, the right technology for your business can be the edge you are looking for.

Combating Resistance to Change

The adage, “If it ain’t broke, don’t fix it” is as archaic as legacy ERP systems. Delaying key technology decisions is costing companies every day they wait. Modern ERP systems such as Microsoft Dynamics 365 lowers operational costs especially when compared to older software.

The Bureau of Labor Statistics (BLS) estimates the wage for skilled labor is $17 to $25 an hour per worker. Using a median wage of $21/hr., production managers responding to sudden demand spikes need additional man hours to meet the demands. Not including overtime required by the federal Fair Labor Standards Act (FLSA), the labor costs of dealing with these demand spikes can quickly exceed projections.

Modern ERPs such as Microsoft System Dynamics 365 Supply Chain Management let companies forecast trends. This software helps plan resources, track jobs plus manage materials and scheduling. The result is a more efficient operation.

Panorama Consulting estimates that modern ERPs ability to integrate data and create accurate forecasts can lower labor costs by 20%. Reducing labor cost is just one of the many positive ways a modern ERP benefits your business.

Managing Change Effectively

Change is inevitable even with technology. Change Management has been underestimated when adopting ERP. The result is implementation failure.

Change management includes designing the right framework for transitioning from unlearning the old and accepting the new way of working. Applying change management requires careful planning, making the role of ERP consultants more critical than before.

Part of this was mentioned in the 2019 Panorama Consulting report. It states that 68% of poll respondents had intense to moderate focus on Change Management during an ERP implementation. The overwhelming response shows the importance of organizational change management. It must include key leadership buy-in, effective communication, a robust training strategy and hiring consultants.

Figure: 2Importance of Change Management in ERP Implementation

Importance of change management in erp implementation

At least 50% of ERP implementations are intended to make employees more productive. The importance of change management in erp implementation cannot be undervalued as it impacts nearly half of your organization’s strength. It is something that needs meticulous planning and must not be pushed as the last item on a long list.

Break the Emotional Attachments

Emotional attachments were never documented as reasons to stay with legacy ERPs. However, some of our CPhI guests defended them even though they also agreed that the cost of maintaining them outweighed their benefits.

Some of these people are averse to change. When an older system can’t scale up, they customize it without knowing what will happen. That method may have worked years ago. Today? Modern companies want optimized processes that promote efficiency. Having a complacent workforce is no longer acceptable.

Older ERP systems have hidden costs. Once they require that actions be documented and stored somewhere. If that information isn’t recorded, inefficiencies cannot be detected during a year-end performance review.

Old Systems Cost Money Today

Companies spent huge sums to develop or license a homegrown ERP a decade or two ago. They are paying more for its maintenance today than a modern system costs.

Newer, younger developers don’t know how to update older systems to meet modern needs. The technology in them is too old. This causes companies using them to be less efficient, reducing their ability to compete with modern firms. Older companies using stand-alone systems are unable to leverage analytics and consumer insights. They also lack collaboration between modules such as finance and inventory. Modern ERPs have these connections.

What can a modern ERP System mean to your business?

Modern ERPs are much smarter and efficient than their predecessors. They connect and unify processes and information across business functions such as Finance, Human Resource, Manufacturing, Supply Chain, Logistics, Procurement and Sales. Their connected d esign makes the system more agile, providing benefits that stand-alone systems cannot.

Some of the benefits are:

  • Making informed decisions
  • Driving collaboration and innovation
  • Increasing transparency
  • Promoting efficiency
  • Reducing dependence on human workers
  • Increasing productivity
  • Complying with quality and other government standards

Microsoft Dynamics 365 for Finance and Operation is one such ERP. It comes with cutting-edge technologies such as Artificial Intelligence (AI), Machine Learning (ML), Prescriptive Analytics and powerful visualization. Everything is unified under a single ecosystem. The ERP drives business results by integrating data across an organization. It provides meaningful insights easily accessible from a cellphone or handheld device. Backed by Microsoft, it is not only secure but flexible and scalable.

Most companies own at least one Microsoft product since Windows operating systems are on 87 percent of the world’s computers. Business applications such as PowerPoint, Excel and Word are a regular tool for most organizations.

Microsoft Dynamics 365 has a similar look and feel to popular products such as Windows and Office 365. It’s ease of use and familiar look which makes switching over a much easier task.


ERPs have undergone a metamorphosis. They are no longer backend record keepers. Instead, they provide a versatile powerhouse that aids in making impactful decisions accurately and quickly. Modern versions cost less than what many firms pay to keep older systems running.

Break the myth that ERPs are an all or nothing solution. Using Microsoft Dynamics 365, you can pick and choose the right modules for your business, adding more features and scaling up or down when situations change.

When updating to a modern ERP, consider using an established vendor whose product vision caters to your present-day requirements and your future needs. Firms that are part of Microsoft’s Independent Software Vendor (ISV) network have the extensive industry knowledge to guide you through your ERP journey.

Ask yourself a question: “Is my ERP system a roadblock to profitability?” If the answer is remotely “yes,” contact Xcelpros. We’ll bring the coffee.

Planning to transform you business with Modern ERP, book a consultation with our experts.

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