This far-reaching functionality is core to one of the most essential—and consequential—benefits of ERP software: its role in helping businesses achieve regulatory compliance. Businesses that violate industry rules, wittingly or unwittingly, could face crippling financial penalties. Yet keeping track of and adhering to all applicable rules is no small task for any organization, let alone a small one with limited resources.
The solution? ERP software.
Businesses that invest in ERP software will increase the visibility, security, and traceability of their data—the best way to facilitate regulatory compliance.
How does ERP do this, exactly? Let’s take a closer look.
Increasing visibility and control
By streamlining business processes into a single system, ERP software yields more consistent data and greater workflow efficiency throughout the organization. This, in turn, means more control over your most consequential business information.
With an array of built-in dashboards and customizable reports, ERP software offers unprecedented visibility into the health and performance of your business. Users can drill down into relevant KPIs with more breadth and detail than, say, a standalone CRM or accounting system offers.
What’s more, ERP software’s forecasting functionality can illuminate the relationship between disparate business functions (e.g., how investing in new hires would impact production and generate revenue).
Project dashboard in NetSuite (Source)
This increase in visibility means more accurate bookkeeping, which not only gives you a more realistic picture of business performance, but the general public and shareholders as well. This is a key component of the Sarbanes-Oxley Act (SOX), a 2002 regulation designed to protect consumers from fraudulent practices.
Protecting the security of your data
ERP systems are home to lots—lots!—of data, including super-private stuff like bank account numbers and personal health information. It’s incumbent upon businesses to manage your data—and the software that houses it—responsibly, and the reason we have laws like HIPAA and GDPR on the books.
As the first line of defense against potential security breaches, ERP software offers tools designed to keep this data out of the hands of those who would exploit it. Common security features include:
- Access control. The management and distribution of user permissions, including periodic reviews and the automation of rights-related processes.
- Internet of things (IoT) endpoint security. An inventory of company equipment such as computers and smartphones, often with the capacity to segregate devices and analyze network traffic.
- Compliance management. The enforcement of industry-specific regulatory compliance and the ability to track, verify, and audit transactions.
Protecting your ERP data is a multi-pronged endeavor, one that demands the capacity for mitigation as much as prevention. But it’s always good practice to stop threats before they start, and ERP software can help your business do just that.
Enhancing traceability and quality control
In the manufacturing industry, tracking products through each stage of the supply chain is a key component of regulatory compliance. ERP software’s inventory tracking and supply chain components help ensure products are in tip-top shape, from acquisition of raw materials to distribution and everywhere in between.
This is especially critical for food and beverage companies that need to maintain a certain degree of freshness for all their perishable goods. If a business produces guacamole, for example, it can use ERP software to source its avocados, plan production cycles around acquisition and distribution dates, and adjust processes to minimize food waste and ensure the product meets regulatory standards.
Next steps: Putting your ERP to work
Now that you know how ERP software can help your business achieve regulatory compliance, it’s time to put that knowledge into action.
Here are some things to do right now to get started:
- ✔ Define what compliance looks like. Broadly speaking, the laws that apply to your organization depend on the line of work you’re in; bank regulations, for example, look different than those applicable to the manufacturing industry. The first step in achieving regulatory compliance is knowing how to comply, so be sure to identify all applicable regulations—including—if necessary—consulting with legal experts.
- ✔ Find the right ERP software. Once you know which laws apply to your business, assess whether your current ERP system (if you have one) is sufficient. If not, it’s time for an upgrade—and our list of more than 170 ERP software vendors, complete with a buyers guide and reviews from verified users, is a great place to start.
- ✔ Give us a call. If you still need help choosing a specific ERP system, our advisors are here for you. They provide free, fast, and personalized software recommendations, helping companies of all sizes find products that meet their business needs. Schedule an appointment with an advisor here.
Note: The applications selected in this article are examples to show a feature in context and are not intended as endorsements or recommendations. They have been obtained from sources believed to be reliable at the time of publication.