Whether it’s eCommerce or physical, B2B, B2B or D2C, and in whatever sector, managing business processes and information efficiently is a key factor for your bottom line. That’s why we are exploring the importance of Enterprise Resource Planning (ERP) systems in this article. We cover two main areas: the potential issues and challenges with legacy ERP systems, and how Product Information Management (PIM) systems can complement and enhance not only ERP, but other areas of your existing technology stack.
What is ERP? Meaning, examples and how a PIM can complement your legacy tech stack
Table of Contents
What is ERP?
Enterprise Resource Planning (ERP) refers to a software suite which organisations use to manage daily business activities, including:
- Accounting
- Procurement
- Project management
- Risk management, and compliance
- Supply chain operations
- HR management
- Finance and accounting
ERP systems also consolidate an organisation’s shared transactional data from multiple sources, eliminating data duplication and ensuring data integrity with a ‘single source of truth’. ERP systems are indispensable for managing the complex operations of modern businesses, as the backbone for efficient, data-driven decision-making.
ERP: Main features
ERP systems in 2024 offer a broad range of functionalities to support various business processes – Let’s look at the principal ones in more detail:
- Supply chain management: ERP systems streamline procurement, manufacturing, and logistics processes, ensuring smooth flow of materials and products through the supply chain. This includes inventory management, order processing, and supplier coordination.
- Manufacturing: ERP integrates planning, production, and quality control, helping businesses manage the end-to-end manufacturing process. This includes tracking production schedules, managing resources, and ensuring fulfilment of quality standards.
- Inventory and warehouse management: Automates stock tracking and warehouse operations, ensuring optimal inventory levels and efficient warehouse operations. ERP systems can monitor stock levels in real-time, manage warehouse space, and streamline order fulfilment.
- Finance and accounting: Manages financial transactions, budgeting, and compliance. ERP systems offer tools for financial reporting, accounting, budgeting, and forecasting, helping businesses maintain financial health and regulatory compliance.
- Human Resources: Supports payroll, performance management, and employee data. ERP systems handle employee records, payroll processing, benefits administration, and performance tracking.
- Customer Relationship Management: Some ERP systems include CRM capabilities to manage customer interactions, sales processes, and customer service. Businesses can thus maintain strong customer relationships and drive loyalty.
- Project management: Provides tools to plan, execute, and monitor projects. ERP systems help businesses manage project timelines, resources, budgets, and deliverables, to assist project completion.
- Reporting and analytics: Offers comprehensive reporting and analytics capabilities, enabling businesses to make data-driven decisions. ERP systems can generate real-time reports and dashboards, providing insights into various aspects of the business.
These features enhance operational efficiency, reduce costs, and improve data visibility across the organisation.
Potential Issues with Legacy ERP Systems
ERP systems are powerful in themselves, many companies have had their ERPs for a long time, and these legacy systems can present challenges:
- Inflexibility: Older systems may not possess the features to adapt easily to new business processes or technologies, limiting their ability to support evolving business needs.
- Complexity: Managing extensive and complex data can be cumbersome, leading to inefficiencies and errors.
- Data Silos: Without integration, data can become siloed, leading to inconsistencies and inefficiencies in data management.
- Cost: Maintaining and upgrading legacy systems can be expensive, requiring significant investment in time and resources.
In fact, even in 2024, some businesses still find themselves using Excel spreadsheets to manage product information, leading to inaccuracies and inefficiencies.
Differences between a PIM and an ERP system
Now let’s introduce our friend the PIM system. ERPs and PIMs serve different but complementary roles within an organisation:
Purpose and focus
- ERP: Primarily focuses on back-office functions, managing internal resources such as inventory, supply chain, finance, and HR. ERP systems ensure the smooth operation of internal processes, providing a unified platform for various business functions.
- PIM: Specialises in managing and enriching product data for external use, supporting marketing, sales, and customer experiences. PIM systems centralise product information, ensuring that accurate and enriched product data is available across all customer-facing channels.
Data management
- ERP: Consolidates transactional data from multiple sources, providing a single source of truth for internal operations. ERP systems manage data related to inventory levels, order processing, financial transactions, and employee records.
- PIM: Aggregates and optimises product information, including detailed descriptions, images, videos, and other digital assets. PIM systems ensure that product data is consistent, accurate, and enriched with the necessary details to create compelling product experiences for customers.
Data structure and flexibility
- ERP: Uses a relational database model with predefined data structures, making it less flexible for handling more complex modern product data. ERP systems are designed for structured data management, with rigid data schemas, which can limit their flexibility.
- PIM: Uses a non-relational database model, providing greater flexibility for managing and organising product data. PIM systems can handle complex data relationships, such as variations in product sizes, colours, and attributes, making them ideal for dynamic product information.
Integration and Scalability
- ERP: Often integrates with other business systems to streamline operations but legacy ERPs will probably require significant customisation to support new functionalities. ERP systems can be complex to integrate with other applications, and scalability can be challenging.
- PIM: Easily integrates with various eCommerce platforms, marketplaces, and other marketing channels, as well as internal business systems, providing seamless data flow. PIM systems are designed for scalability, accommodating growing product catalogues and increasing data volumes.
Customer-facing capabilities
- ERP: Limited in managing customer-facing content, primarily focusing on internal business processes. ERP systems are not designed to handle the rich media and detailed product descriptions required for effective marketing and sales.
- PIM: Enhances customer experience by ensuring that accurate, enriched product data is available across all channels, including websites, catalogues, marketplaces, and apps. PIM systems provide tools for managing digital assets, creating compelling product narratives, and supporting omnichannel marketing efforts.
How modern PIM solutions can work in tandem with legacy ERPs
Integrating a PIM system with a legacy ERP will significantly enhance business processes in 2024:
- Streamlining workflows: Automates the flow of product information from the ERP to the PIM, reducing manual entry and errors.
- Enhancing CX: Provides accurate, enriched product data across all channels, improving customer satisfaction.
- Cost-optimisation: Extends the life of legacy ERP systems by adding new capabilities without the need for a complete overhaul.
Integrating PIM with legacy ERP and other tech stack systems
Successful integration of PIM with legacy ERP may involve several enabling elements:
- Middleware: Acts as a bridge, enabling seamless communication between ERP and PIM.
- Integration with APIs: High-limit APIs facilitate the rapid two-way exchange of data among systems, ensuring up-to-date information.
- Scheduled synchronisation: Regular syncs between ERP and PIM maintain data consistency and accuracy.
- Workflow management: PIM systems often include workflow features to manage tasks and ensure efficient data processing.
By leveraging these integration strategies, product-focused businesses will significantly enhance their overall efficiency and quality of data management.
Final thoughts
ERP systems are the backbone of business operations, but they aren’t built to handle the complexities of modern product data management. That’s where PIM comes in. By integrating a PIM with your ERP, you ensure that product information is accurate, enriched, and seamlessly distributed across all channels—whether that’s your eCommerce store, marketplaces, or internal teams.
Instead of wrestling with outdated systems or scattered spreadsheets, a well-integrated PIM-ERP setup lets you focus on growth: launching new products faster, improving customer experience, and staying ahead of the competition. Whether you’re upgrading an existing ERP or looking to future-proof your product data strategy, investing in the right tools today will set you up for long-term success.