Is your growing business swamped in a mess of spreadsheets? Are you checking text messages from contractors to create invoices? Do you have a bottleneck because only one person can approve routine purchases?
I've seen all of this for my clients, and I know how frustrating it can be. Your business grew, which is great, but your systems didn’t grow with you.
One client I worked with specialized in agricultural supply. They were receiving billing information from truckers via text message. Then they had to manually enter this data into QuickBooks. As you can imagine, this was a major headache and a set-up for errors!
You've probably heard that ERP software can fix these issues and streamline your operations. Now you just need someone to explain how it actually works.
Here at Stellar One, our experts have implemented dozens of ERP platforms over decades in the industry. We know that no ERP solution fits every business perfectly. That's why we give you experience-based advice on ERP software to help you find the one that's right for you.
In this overview, I'll break down exactly how ERP works, and which type could fit your business. By the end, you’ll know whether an ERP platform is something you want to pursue further.
- What Is ERP?
- How Do ERP Systems Work?
- Who Needs ERP Software?
- What are ERP Modules?
- Are ERP Systems Expensive?
- What Type of ERP Does Your Business Need?
- Who Implements ERP Software?
- Is ERP Software Right for Your Business Now?
What Is ERP?
ERP stands for Enterprise Resource Planning. ERP software is business management software. It gives you a single system that connects all your departments and keeps everyone on the same page with reliable, real-time information.
You don't have to struggle with separate systems for accounting, inventory, sales, and workforce management. An ERP combines everything into one unified system where data can flow automatically between departments.
How Do ERP Systems Work?
ERP software is designed to rid you of the many problems that spring from information fragmentation, which happens when your various software tools don’t share data.
When businesses operate without ERP software, information gets lost or changed as it moves between departments.
ERP systems fix this issue by creating one central database where all your business information lives. Here's how it works:
1. Centralized data storage
All your business information — from customer orders and inventory levels to financial data — is stored in one place. This means everyone in your company works with the same information.
2. Real-time updates
When someone in sales enters a new order, your inventory and accounting departments see it right away. No more waiting for end-of-day reports or Monday morning updates.
3. Automated workflows
ERP systems can automatically trigger the next steps in your business processes. For example, when inventory drops below a certain level, the system can create a purchase order, send it to the supplier, and notify your team — all without anyone lifting a finger.
4. Business intelligence
Today's ERP systems don't just store data; they make sense of it. They can show you trends, forecast future needs, and help you make smarter decisions based on what's actually happening in your business.
Who Needs ERP Software?
These are the signs your business is ready for an ERP system:
You're running your business on spreadsheets
I'm amazed at how many businesses run their entire operation on spreadsheets. It’s impressive that they manage to do so much with so little automation. But it’s not easy! One of my clients managed inventory, sales, and even production scheduling across 20+ Google Sheets. You can get by with this highly manual system for a while, but eventually, it has to change as you outgrow it.
Your team spends weeks creating reports
It’s hard on finance teams when they have to spend the first two weeks of every month pulling data from various sources just to create management reports. In one case, an office manager was printing reports from seven different systems, manually entering the numbers into Excel, and then emailing PDFs to executives. With ERP software, those reports are available at the click of a button.
Information gets bottlenecked
Nothing's more frustrating than watching a business grind to a halt because one person is out sick. I worked with one business where even the smallest purchasing decisions had to go through the owner, just because it was so tough to keep track of spending. Their growth was limited by this bottleneck until we implemented approval workflows in their new ERP system.
You have low-tech partners in your supply chain
Not everyone in your business ecosystem will have sophisticated technology. A good ERP system can handle these realities while still maintaining data integrity on your end.
What are ERP Modules?
Each ERP module handles a specific part of your business, and you can pick and choose which ones you need. Here are some common modules you'll find in many ERP systems. (Not all systems have every functionality though. You can explore those differences in our ERP software reviews.)
Financial management
This module handles your accounting, budgeting, and financial reporting. It tracks all money coming in and going out, helps with tax compliance, and gives you a clear picture of your financial health.
Inventory management
This keeps exact records of what products you have, where they are, and when you need to order more. It helps prevent both stockouts (running out of products) and overstock (having too much inventory eating up your cash).
Human Resources
From tracking employee time to handling benefits and performance reviews, an HR module can help you manage your most valuable asset, your people. The capabilities of this module will vary widely between ERP systems.
Customer Relationship Management (CRM)
This module can track all your customer interactions, from initial contact through the sales process and beyond. It helps you nurture leads, close deals faster, and keep customers happy. Built-in CRM functionality is available for some but not all ERP platforms.
Even less tech-forward companies want to email their customers or prospects. I've found that simple marketing functionality is often an easy win for your business when you implement a new ERP system. In addition, it’s a big help when everyone in the company can see all customer-facing communications in the system. When the accounting team sends out an overdue notice, the sales team can see it before they head out for their appointments.
Supply chain management
This module helps you manage supplier relationships, track orders, and make sure you're getting materials when you need them at the best possible price.
Are ERP Systems Expensive?
The honest answer: ERP systems aren't cheap, but they're not as expensive as you might think. And more importantly, they typically pay for themselves with ROI by the third year. How? Less wasted time, fewer mistakes, reduced inventory costs, and better decision-making.
ERP costs fall into a few categories:
Software costs
This is what you pay for the actual ERP system. Prices vary widely based on:
- How many users need access
- Which modules you need
- Whether you choose cloud-based or on-premises software
Small to midsized businesses might pay anywhere from $100 to $500 per user per month for a cloud-based system. Some ERP platforms (such as Acumatica) do not charge by user license but by monthly transaction volume. This pricing model can work very well for growing businesses. On-premises systems usually require a larger upfront investment followed by annual maintenance fees.
Implementation costs
Getting your ERP platform up and running involves:
- Setting up the system
- Moving your existing data over
- Training your team
Implementation typically costs 1-3 times the software price. A $20,000 software package might cost $20,000-$60,000 to implement.
Stellar One offers implementation with no upfront cost, with the cost instead built into your monthly subscription fee. Implementation offers like ours can be especially good for small to midsized businesses. You can get the benefits of your ERP platform and scale your business without an initial cost burden.
Ongoing support
You'll need technical support, updates, and possibly some planning help as your business grows. An experienced ERP partner is vital to make sure you get the most from your platform.
What Type of ERP Does Your Business Need?
Not all ERP systems will fit your business. The right choice depends on your size, your industry, and your specific operational needs.
Cloud-based ERP:
- Accessed through the internet
- Subscription-based pricing (monthly or annual fee)
- Software publisher handles maintenance and updates
- ERP partner handles ongoing training and support
- Usually faster to implement
- Users can access system from anywhere with internet
On-premises ERP:
- Installed on your own servers
- One-time licensing fee (plus ongoing maintenance fees)
- You handle your own data and cybersecurity
- More customization options
- Requires in-house IT staff to maintain
For most small to midsized businesses, cloud ERP makes the most sense. It requires less upfront investment and IT expertise while providing flexibility as your business grows.
Who Implements ERP Software?
You'll work with implementation specialists who understand both the technical aspects of the software and the business processes it needs to support.
Implementation teams typically include:
ERP publishers
The companies that create ERP software (such as Acumatica, Odoo, NetSuite) are the software publishers. They sometimes have their own implementation teams. These in-house teams know their product inside and out but may have less industry-specific knowledge relevant to your business.
ERP partners
Third-party companies specialize in implementing specific ERP systems. They often have deeper industry expertise and can provide more personalized service than software publishers. Full-service ERP partners such as Stellar One will go on providing proactive support and training beyond implementation.
Your internal team
Successful ERP implementation requires involvement from your own staff, particularly:
- An executive team leader to focus the project in-house and remove obstacles
- Department heads who understand your business processes
- IT staff to handle technical aspects if necessary
- End users who will actually use the system daily
The best approach is usually a mix of external expertise and internal knowledge. The external partner team brings ERP experience, while your team brings understanding of your specific business needs.
Is ERP Software Right for Your Business Now?
A good cloud ERP platform doesn't just organize your data. It transforms how your business operates. It automates tedious tasks and gives you the insights you need to make smarter decisions faster.
Now that you understand how ERP works, you can see why so many businesses consider it essential technology. The right ERP system doesn't just solve today's problems. It scales with your business and helps you tackle tomorrow's challenges too.
Here at Stellar One, we support you with our experts who have helped scores of businesses find and implement the right ERP solution. Whether you're just starting to explore ERP or ready to take the plunge, we're here to guide you through every step of the process.
Ready to learn more? Check out our guide to whether you need an ERP Partner.
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