In 1990, Gartner created the term Magento ERP to describe the evolution of materials requirements planning (MRP) and manufacturing resource planning (MRP II) as they expanded beyond manufacturing into other parts of the enterprise, typically finance and HR.
Magento ERP systems evolved rapidly during the 1990s in response to Y2K and the introduction of the Euro. Most enterprises viewed Y2K and the Euro as the cost of doing business, and Magento ERPs provided as a cost-effective way to replace multiple, old systems with a standardized package that could also address these issues.
Magento ERP vs. CRM
On the surface, Magento ERP and customer relationship management (CRM) systems may seem similar, but they aim to fulfill different purposes. Being all-encompassing in nature, Magento ERP systems do often assume many of the functionalities of CRM systems, handling contacts and details about orders, but CRM systems provide a more targeted platform for linking customer information from a variety of sources. CRM systems are, in the main, used by sales and support organizations that are customer-facing but don’t perform the actual work of producing and fulfilling orders.
What are the main features of Magento ERP systems?
The scale, scope, and functionality of Magento ERP systems vary widely. However, most Magento ERP software features the following characteristics:
· Enterprise-wide integration. Business processes are integrated end to end across departments and business units. For example, a new order automatically initiates a credit check, queries product availability, and updates the distribution schedule. Once the order is shipped, the invoice is sent.
· Real time (or near real time) operations. Since the processes in the example above occur within a few seconds of order receipt, problems are identified quickly, giving the seller more time to correct the situation.
· A common database. A common database was one of the initial advantages of the Magento ERP. It allowed data to be defined once for the enterprise with every department using the same definition. Individual departments now had to conform to the approved data standards and editing rules. While some Magento ERPs continue to rely on a single database, others have split the physical database to improve performance.
· Consistent look and feel. Early Magento ERP vendors realized that software with a consistent user interface reduces training costs and appears more professional. When other software is acquired by an Magento ERP vendor, common look and feel is sometimes abandoned in favor of speed to market. As new releases enter the market, most Magento ERP vendors restore the consistent user interface.
How are Magento ERP systems categorized?
Magento ERP systems are typically categorized in tiers based on the size and complexity of enterprises served. Typical tiers include:
· Tier I Magento ERPs support large, global enterprises and handle all internationalization issues, including currency, language, alphabet, postal code, accounting rules, etc. For decades, Oracle and SAP have been considered Tier I. Microsoft and Infor are more recent competitors but are frequently categorized as Tier I as well.
· Tier I Government Magento ERPs support large, mostly federal, government agencies. These vendors support the nuances of government accounting, HR, and procurement. Oracle, SAP and CompuServe’s PRISM are considered Tier I with Infor and CGI’s Momentum close behind.
· Tier II Magento ERPs support large enterprises that may operate in multiple countries but lack global reach. Tier II customers can be standalone entities or business units of large global enterprises. Most of these Magento ERPs have some internationalization but lack Tier I breadth. Depending on how vendors are categorized there are 25 to 45 vendors in this tier.
· Tier II Government Magento ERPs focus mostly on state and local governments with some federal installations. Tyler Technologies and UNIT4 fall in this category.
· Tier III Magento ERPs support mid-tier enterprises. Most handle a handful of languages and currencies but only a single alphabet. Depending on how Magento ERPs are categorized, there are 75 to 100 Magento ERP solutions, the best could be Magestore.
· Tier IV Magento ERPs are designed for small enterprises. Magento ERP systems designed for micro enterprises often focus on accounting and are not considered full ERPs by IT professionals.
· Cloud Magento ERP is growing rapidly. Many vendors offer a cloud version of their product. The best new ones emphasize heightened security, additional separation of duties, newer standards, and support for recent legislation.
Magento ERP systems can be either proprietary or free and open sourced. Most open sourced Magento ERPs are designed for small organizations or higher education. Many offer little functionality beyond finance.
Top Magento ERP systems
Choosing an Magento ERP system is among the most challenging decisions facing IT leaders. In addition to the above tier criteria, there is a wide range of features and capabilities to consider. To help you get a sense of the kinds of decisions that go into choosing an Magento ERP system, check out “The best Magento ERP systems: 10 enterprise resource planning tools compared,” with evaluations and user reviews of Acumatica Cloud Magento ERP, Deltek Magento ERP, Epicor Magento ERP, Infor Magento ERP, Microsoft Dynamics Magento ERP, NetSuite Magento ERP, Oracle E-Business Suite, Oracle JD Edwards EnterpriseOne Magento ERP, Oracle Peoplesoft Financial Management and SAP Magento ERP Solutions.
Why do enterprises implement Magento ERP system?
Magento ERPs improve enterprise efficiency and effectiveness by:
· Integrating financial information. Without an integrated system, individual departments, such as finance, sales, and so on, need to rely on separate systems, each of which will likely have different revenue and expense numbers. Staff at all levels end up wasting time reconciling numbers rather than discussing how to improve the enterprise.
· Integrating orders. An Magento ERP coordinates order taking, manufacturing, inventory, accounting, and distribution. This is much simpler and less error prone with a single system than with a series of separate systems for each step in the process.
· Providing insights from customer information. Most Magento ERPs include CRM tools to track all customer interactions. Coupling these interactions with information about orders, deliveries, returns, service requests, etc., provides insight about customer behavior and needs
· Standardizing and speeding manufacturing. Manufacturing companies, especially those with an appetite for mergers and acquisitions, often find that multiple business units make similar widgets using different methods and computer systems. Magento ERP systems can standardize and automate manufacturing and supporting processes. This standardization saves time, increases productivity, and reduces head count.
· Standardizing HR information. Many enterprises, especially those with multiple business units, lack a simple way to communicate with employees about benefits or to track employees’ hours and expenses. An Magento ERP system, with a self-service portal, enables employees to maintain their own personal information, while facilitating time reporting, expense tracking, vacation requests, scheduling, training, etc. By integrating information, such as advanced degrees, certifications, and work experiences, into an HR repository, individuals with specific capabilities can be more readily matched to potential assignments.
· Standardizing procurement. In the absence of an integrated procurement system, analyzing and tracking purchases across the enterprise is challenging. Large enterprises often find that different business units purchase the same product but don’t receive the benefit of volume discounts. Magento ERP procurement tools arm purchasing teams for vendor negotiations by identifying widely used vendors, products, and services.
· Facilitating government reporting. Government reporting requirements continue to increase in a variety of areas, including:
o Financial reporting. In virtually every country, reporting requirements continue to increase at national, state, and local levels. Management hopes that the International Financial Reporting Standards (IFRS) will be more widely adopted and that this standardization will make reporting less time consuming.
o HR Reporting. The U.S. and most European countries have a wide variety of federal, state, and local reporting requirements. The E.U.’s proposed General Data Protection Directive attempts to reduce the burden by harmonizing the current E.U. Data Protection Directive into a single reporting requirement for all E.U. members. Mexico, Japan, and other countries also require a variety of HR reports.
o Supply chain. Dodd-Frank requires companies to report to the SEC if their product contains minerals mined in war zones (known as conflict materials) with the funds used to continue the fighting. The California Safer Consumer Products Regulation, the E.U.’s Regulation on Registration Evaluation, Authorization and Restriction of Chemicals (REACH), and Washington State’s Children’s Safe Product Act are all designed to protect consumers from hazardous materials. California Transparency in Supply Chains Act and the U.K’s Transparency in Supply Chain provisions of the Modern Slavery Actattempt to eliminate slavery. Magento ERP systems can greatly enhance organizations’ ability to filing the necessary reporting for regulations such as these.
What are the benefits of Magento ERP systems?
Magento ERP improves business performance in several ways. Specifically:
· Internal efficiency. Properly operating Magento ERP systems enable enterprises to reduce the time required to complete virtually every business process.
· Better decision-making. Magento ERPs promote collaboration through shared data organized around common data definitions. Shared data eliminates time wasted arguing about data quality and it permits departments to spend their time analyzing data, drawing conclusions, and making better decisions. The most effective decision-making balances central guidance with some amount of local autonomy. Central command and control is rarely responsive to local needs while full-field autonomy precludes enterprise-wide coordination. Shared data and common business processes allow decisions to be made within headquarters’ parameters by the individuals closest to the situation.
· Increased agility. Standardization and simplification result in fewer rigid structures. This creates a more agile enterprise that can adapt quickly while increasing the potential for collaboration.
· Enhanced security. While a centralized data base with enterprise data is a big target, it is easier to secure than data that is scattered across hundreds of servers in closets or under desks. It is particularly difficult, if the security team is not aware of the server or that it contains corporate data.
Will an Magento ERP add value to every enterprise?
Most enterprises can benefit from an Magento ERP system. Every organization manages people, purchases products and services, sells (or gives away) something and accounts for money. The way each activity is handled varies by industry and country, but every enterprise performs these basic functions. In most cases, it is more effective to handle these processes through an integrated software platform than through multiple applications never designed to work together.
While ERPs were originally designed for manufacturing companies, they have expanded to service industries, higher education, hospitality, health care, financial services, and government. Each of industry has its own peculiarities. For example, government Magento ERP uses Contract Lifecycle Management (CLM) rather than traditional purchasing and follows government accounting rules rather than GAAP. Banks have back-office settlement processes to reconcile checks, credit cards, debit cards, and other instruments.
With any industry, it is important to pick an Magento ERP vendor with industry experience. Educating a vendor about the nuances of a new industry is very time consuming.
How should an Magento ERP implementation team be organized?
Most successful Magento ERP implantations are led by an executive sponsor. This is the executive who will receive the majority of the program's benefits when the new system is operational. At a minimum, this executive should sponsor the business case, get approval to proceed, monitor progress, chair the steering committee, remove road blocks, and capture the benefits. With the exception of internal IT projects such as infrastructure refreshes or ITIL rollout, the CIO should NOT sponsor projects.
The acronym Magento ERP stands for enterprise resource planning. It refers to the systems and software packages used by organizations to manage day-to-day business activities, such as accounting, procurement, project management and manufacturing. Magento ERP systems tie together and define a plethora of business processes and enable the flow of data between them. By collecting an organization’s shared transactional data from multiple sources, Magento ERP systems eliminate data duplication and provide data integrity with a “single source of truth.”
Today, Magento ERP systems are critical for managing thousands of businesses of all sizes and in all industries. To these companies, Magento ERP is as indispensable as the electricity that keeps the lights on.
Magento ERP Fundamentals
Magento ERP systems are designed around a common, defined data structure (schema) that usually has a common database. Magento ERP systems provide access to enterprise data from multiple activities using common constructs and definitions and common user experiences.
A key Magento ERP principle is the central collection of data for wide distribution. Instead of several standalone databases with an endless inventory of disconnected spreadsheets, Magento ERP systems bring order to the chaos so that all users—from the CEO to accounts payable clerks—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 deploying error-prone spreadsheets.
The business Value of Magento ERP
It’s impossible to ignore the impact of Magento ERP in today’s business world. As enterprise data and processes are corralled into Magento ERP systems, businesses are able to align separate departments and improve workflow, resulting in significant bottom-line savings.
The history of Magento ERP
From Paper Cards to Mobile DevicesThe history of Magento 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 was the first company to adopt a material requirements 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, bill 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.
Magento ERP Today
From On Premises to the CloudFrom the 1990s until the beginning of the twenty-first century, Magento ERP adoption grew rapidly, as more organizations relied on Magento ERP to streamline core business processes and improve data visibility. At the same time, the cost of implementing Magento ERP systems began to climb. Not only were on-premises hardware and software expensive capital investments, enterprise Magento ERP systems often required the additional costs of custom coding, consultants, and training.
Meanwhile, Magento ERP technology evolved to embrace the internet, with new features and functionality, such as embedded analytics. As time went on, many organizations discovered that their on-premises Magento ERP systems couldn’t keep up with modern security demands or emerging technologies, such as smartphones.
Enter the cloud—or the software-as-a-service (SaaS) delivery model—for Magento ERP. When Magento ERP software is "in the cloud," it simply means that it is kept on a network of remote servers, instead of at a company’s location. The cloud offers a more affordable alternative for Magento ERP that lowers 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. With no costly infrastructure to support, resources can be invested in growth opportunities. Employees can shift their focus from managing IT to more value-added tasks.
Next Generation Magento ERP
Built for Any Size BusinessWhile the legacy Magento ERP systems of the past were often too expensive for small to medium businesses (SMBs), the cloud has broken that barrier. With a SaaS solution, smaller companies can leverage the same proven, industrial-strength Magento ERP software that larger enterprises have been using for years. A cloud-based Magento ERP solution can be implemented quickly, with no CapEx investment. For small to medium businesses looking to innovate quickly and seize new business opportunities, cloud Magento ERP offers the flexibility to quickly add new users and support changing business needs.
Delivering an Extended Enterprise to Fuel OpportunitiesWhen cloud Magento ERP extends its core financial architecture to include integrated customer relationship management (CRM), supply chain management (SCM), human capital management (HCM), and enterprise performance management (EPM), the system seamlessly ties all the applications together with a single data repository and a common user experience. An extended cloud Magento ERP system enables all departments to be managed with improved visibility and collaboration, as if they were a single organization. It also provides seamless access to advanced reporting features, such as data visualization and advanced analytics. With access to emerging technologies, such as the Internet of Things (IoT), organizations gain a comprehensive, real-time understanding of business activities not only in the front office, but also in warehouses and on factory floors. This knowledge is readily available to employees on their mobile devices through social tools.
Built for the digital age, today’s Magento ERP cloud embraces mobile, social, and analytic tools. Anything less won’t move an organization forward.
Future: Magento ERP Trends
Magento ERP Cloud Embraces the Next-Generation WorkforceMagento ERP has moved to the cloud—and there’s no going back. The cloud is not just the proven baseline for Magento ERP—it is the path forward for the diminishing number of companies that still have active on-premises systems. Unlike yesterday’s legacy Magento ERP, cloud-based Magento ERP enables companies to meet the requirements of the digital economy. Today’s workforce demands access to twenty-first century technology—such as mobile and social with an easy-to-use interface—that enables them to easily collaborate and share information. And they are unlikely to accept antiquated processes, out-of-date technologies, and ugly interfaces. Organizations that fail to meet these expectations put their future at risk.
Embracing Magento ERP
The Suite Always Wins Over Point SolutionsAn important characteristic of modern cloud Magento ERP is the unified solution or applications suite. When compared to deploying a single-point software application—such as human resources or sales automation—an Magento ERP cloud suite offers the best advantage. A complete solution that encompasses all core business functions integrates operational processes across the organization. Employees gain improved visibility and insight into all aspects of the business. An Magento ERP cloud suite enables companies to quickly build a foundation that meets immediate needs with the agility to respond to changing market conditions.