What is an ERP system? And why should businesses use it?

If you are already convinced you need an all-in-one enterprise solutions system for your organization, you can skip this page.

Today, small and medium-sized businesses (SMEs) also face some of the problems that large enterprises do. One of them being planning and managing their resources. SMEs face similar complexities but have limited resources to deal with them.

Small businesses (like their bigger counterparts) have to:

  1. Do accounts to track their sales/purchases.

  2. Do their taxes.

  3. Pay their employees.

  4. Manage deliveries within promised timelines.

  5. Deliver quality goods and services.

  6. Communicate with customers, answer their queries.

Large enterprises invest millions of dollars in highly sophisticated systems like SAP. SAP and similar systems are able to handle requirements from these large enterprises to bring their multi-country, multi-company, multi-currency, global businesses into a single platform. This has helped them achieve consolidation of data/records in the fundamental processes such as accounting, taxation, payroll, reporting, and supply chain to name a few.

In contrast to large enterprises, SMEs have been left out of the 1st wave of digital revolution (1995-2015). The main reason for being left out is because they don't have the financial resources to license, hire programmers and customize such software to match their needs. Systems like SAP have been a no-go for most SMEs. Such systems need a minimum CAPEX or OPEX layout of $100k (Yes, One Hundred Thousand Dollars) and upwards. Even with cloud offerings (Software as a Service, SAAS) from such vendors, there is no easy Do It Yourself (DIY) people can feel confident about.

So even today, small businesses continue to struggle to keep things organized. They often use a mix of applications and tools such as spreadsheets, accounting software, web-based CRMs to manage their day to day record keeping. As a consequence, they have to access different systems to understand customers' master data, sales, cash flows, or profitability. The information exists in different silos. It becomes hard to combine the data in order to get useful insights or alerts. This leads to SMEs being reactive instead of being proactive in their day to day operations. With such a constrained way of working, there's limited scope for growth.

ERPNext addresses some fundamental problems SMEs struggle with when managing their resources:

  1. Affordability: It is a Free and Open Source Software, freely available to download and install.

  2. Completeness: All necessary modules are available. View full list.

  3. Customization: It is easy to add fields, or add more features.

  4. Efficiency: Computing requirements are relatively low (cheaper to host and manage).

  5. Wholesomeness: A single system and database that allows multiple users to record transactions or extract data simultaneously.

What is ERPNext?

ERPNext is a complete business management solution that helps SMEs to record all their business transactions in a single system. With ERPNext, SMEs can make informed, fact-based, timely decisions to remain ahead in the competition. It serves as the backbone of a business adding strength, transparency, and control to your growing enterprise.

ERPNext will help you to:

  1. Keep track of the financial indicators of the organization.

  2. Track all invoices and payments.

  3. Know what quantity of which product is available in stock.

  4. Identify and track your key performance indicators (KPIs).

  5. Identify open customer queries.

  6. Manage employee payroll.

  7. Assign tasks and follow up on them.

  8. Maintain a database of all your customers, suppliers, and contacts.

  9. Prepare quotations.

  10. Track your budgets and spending.

  11. Determine effective selling price based on the actual raw material, machinery and effort cost.

  12. Get reminders on maintenance schedules.

  13. Publish your website.

And a ton more.

Is ERPNext only for SMEs?

ERPNext scales well from SMEs to even large enterprises. ERPNext is used by several retail chains in Africa as well as a highly regarded equities trading company in India with over a thousand employees.

Check out a variety of User Stories to know more. Here is a video to get you started:


You can also checkout the following topics:

  1. Do I Need an ERP?

  2. Open Source

  3. Getting Started with ERPNext

  4. The Champion

  5. Implementation Strategy

  6. Key Workflows

  7. Concepts and Terms

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