What Makes a Good ERP System? Essential Features and Architecture Principles

What Makes a Good ERP System? Essential Features and Architecture Principles

Enterprise Resource Planning systems have been around for decades, yet many business leaders still associate ERP with frustration rather than value. Expensive projects, clunky interfaces and endless workarounds have left a legacy of scepticism. But the definition of a “good” ERP has changed dramatically in recent years.

In this article, we’ll explore what makes a good ERP system today, focusing on practical and architectural considerations rather than abstract theory. We’ll look at how expectations have shifted, which principles really matter in the 2020s and why modern platforms like Microsoft Dynamics 365 Business Central exemplify this new standard. The goal is simple: to help you recognise an ERP that genuinely supports better decisions, smoother work and long-term growth, rather than one that just records transactions.

The Shifting Definition of “Good”

Historically, ERP systems were viewed as unavoidable infrastructure. They were systems of record that were rigid, expensive and often unpleasant to use. Implementation projects ran for years, customisations were deeply embedded in the core code, and user adoption was poor. Finance teams tolerated them; everyone else worked around them. In this world, “good” meant stable. If the system didn’t crash and the month-end closed eventually, it was considered a success.

That definition no longer holds. Today’s businesses operate in faster cycles, with distributed teams, digital sales channels and constant change. A good ERP is no longer judged on stability alone, but on agility, usability and intelligence.

A modern ERP should not just tell you what happened yesterday. It should help you decide what to do tomorrow. That means real-time data, forward-looking insights and tools that support decision-making, not just compliance. A good ERP must stop behaving like an isolated island. Users spend their working day in Outlook, Excel and Teams, not inside ERP menus. The system needs to meet them where they work, embedding business processes into familiar tools instead of forcing constant context switching.

Finally, the monolithic “do-everything” ERP is fading. Modern systems are built around a strong, flexible core that can be extended with specialised apps and integrations. The future belongs to composable platforms, not rigid giants.

With that shift in mind, let’s look at the essential architectural principles behind a modern ERP.

The Foundation of a Modern ERP: Architecture Principles

True SaaS vs. "Fake Cloud"

Not all cloud ERPs are the same. A good ERP must be cloud-native and built as a true multi-tenant SaaS solution. Hosting a legacy on-premise system on a remote server does not provide the same value. True SaaS delivers built-in scalability, removes the need for hardware maintenance and ensures ongoing performance and security improvements.

This distinction matters because only a true multi-tenant SaaS architecture makes it possible to deliver continuous updates, shared innovation and consistent performance across all customers without disrupting extensions or customisations. (Source: Microsoft Learn, 2022)

The "Evergreen" Concept

One of the most critical principles is the separation between the core application and custom code. In Microsoft Dynamics 365 Business Central, the core is updated automatically, much like a smartphone app. Customers are always on a supported, modern version.

In the past, customisation meant modifying source code. That locked systems into old versions and made upgrades painful or impossible. Today, extensions built with AL language sit on top of the core, protecting system integrity and making upgrades routine rather than traumatic.

API-First by Design

Connectivity should not be an afterthought. A good ERP is designed API-first, making integrations with CRM, e-commerce, logistics or industry-specific tools straightforward and robust.

Security and Compliance

Modern ERP systems also shift the security burden. By running on Microsoft Azure, Business Central benefits from global security architecture, enterprise-grade monitoring and compliance frameworks.

The practical advantage is clear: instead of managing ISO standards, GDPR controls and server security internally, much of that responsibility moves to Microsoft’s cloud infrastructure.

Deep Integration: Reducing the “Context Switch”

One of the biggest productivity killers in day-to-day work is context switching between email, spreadsheets and ERP screens. Users find this frustrating and it slows processes down. A good ERP tackles this by bringing data to the user, rather than forcing the user to constantly move between systems.

Business Central achieves this through deep integration with familiar tools, including:

• Outlook, where users can identify a contact from an incoming email and create a quote or sales invoice directly within the email, without rekeying data or switching applications.
• Excel, where the Edit in Excel feature allows users to bulk edit data in a spreadsheet and publish those changes back into Business Central, rather than relying on one-way exports.
• Microsoft Teams, where live Business Central records can be shared in chats using Loop components, enabling colleagues to view up-to-date information without needing a full ERP licence.

This is further supported by native connectors to e-commerce platforms, CRM systems and other modern business tools, helping to reduce friction across the entire value chain and keep everyday work flowing smoothly.

Data Intelligence: From Reactive to Proactive

The Shift

Legacy ERPs are reactive. They tell you what happened last month. Good ERPs are proactive. They help you anticipate what’s coming next.

The Structural Foundation: Dimensions

This is a crucial but often misunderstood point. In Business Central, Dimensions allow transactions to be tagged by department, project, region or any relevant attribute. Instead of creating an overly complex Chart of Accounts, you create clean, flexible data structures. This is the “secret sauce”.

Self-Service Business Intelligence

• Analysis Mode: Users can slice and dice live data directly in the browser, similar to a PivotTable, without waiting for IT-built reports.
• Role Centres: Dashboards use visual cues and real-time KPIs instead of static PDFs.

The AI Layer: Copilot

Modern ERP intelligence now includes AI capabilities:

• Predictive: Late payment prediction and cash-flow forecasting
• Generative: Drafting item descriptions, reconciling bank statements, summarising unstructured data

The ERP evolves from a ledger into a decision-support system.

Scalability and Democratization Through Low-Code

Business processes tend to evolve much faster than traditional development cycles can keep up with, which often creates a developer bottleneck when every change has to go through specialist resources. A good ERP addresses this by empowering so-called citizen developers, allowing knowledgeable business users to adapt and optimise processes safely without attempting to rebuild the underlying platform. In practice, this is achieved through low-code tools that sit alongside the ERP and extend it in a controlled way, such as:

• Power Automate, which enables users to create automated workflows, for example triggering a notification in Teams when an invoice exceeds a certain value.
• Power BI, which allows ERP data to be combined with information from other systems to create richer, more insightful reporting.
• Power Apps, which makes it possible to build lightweight, task-specific or mobile applications, such as simple warehouse scanning tools, that feed data directly into the ERP.

Together, this approach strikes a balance between flexibility and governance, giving the business room to move quickly while keeping the core system stable and secure.

Conclusion

A good ERP system in the 2020s is no longer defined by long feature lists, but by the principles it is built on. It needs a cloud-native architecture that stays evergreen and easy to extend, an ecosystem that integrates naturally with Microsoft 365 tools, and an intelligence layer that turns clean, well-structured data into real-time insights supported by AI. When these elements come together, the ERP fades into the background of daily work, quietly supporting better decisions, reducing friction across teams and scaling as the business grows. The real challenge, then, is not to choose software that simply counts numbers, but to invest in a platform that truly connects your business.

If you are evaluating your next ERP move, now is the time to look beyond features and explore how Business Central can support the way your organisation actually works.

FAQ

1. Do I buy Business Central directly from Microsoft? Who supports me?
No. You purchase through a Microsoft Partner. Microsoft runs the cloud infrastructure and updates, while your Partner handles licensing, implementation and day-to-day support.

2. Can my finance manager really build the whole system using low-code tools?
No. Low-code tools empower users to build workflows and reports, but core architecture and logic still require professional development.

3. My business is unique. Is “standard” Business Central enough?
Standard Business Central covers around 80% of needs. The remaining gaps are usually addressed with AppSource apps or targeted extensions.

4. Is SaaS actually cheaper than buying a perpetual licence?
In most cases, yes over the long term. You replace large upfront costs with predictable subscriptions and remove server, maintenance and upgrade expenses.

5. How do I move 15 years of data into a new ERP?
Best practice is to migrate master data and opening balances only, keeping legacy systems as read-only archives.

6. What happens if the internet goes down?
Business Central requires connectivity, but modern fibre and 5G backups are typically more reliable and secure than on-premise servers.

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