We know the term “ERP” is still commonly associated to large enterprises and can come with some pretty bad past experiences by many business executives. Hopefully, this article will shed some light on ERP solutions and implementations in today’s small business environment, as systems and implementation processes have evolved. Small businesses are finally taking advantage of this efficient and essential tool and are realizing its real value to their company’s growth and success.
However, there are still business people out there that are hesitant about ERP systems, and that’s only normal. When hearing stories about terrible support experiences, long and costly software implementations, unexpected costs that weren’t originally mentioned, user resistance causing additional stress, work and headaches, can make anyone dread the adoption of an ERP solution.
So, let me begin by answering a few basic questions to get a good understanding of this software management system, and then I’ll move on to the new ERP experience small and mid-size businesses are appreciating.
What is ERP?
Enterprise Resource Planning (ERP) is simply an integrated management software system. It can include base modules and add-ons such as Accounting, Inventory Management, Sales & Purchases, EDI, Warehouse Management, eCommerce Store integration, Business Intelligence & Analytics, Project Management and more. Its purpose is to allow business users to view, manage and track core business processes and resources by using a SINGLE database, in real-time. By having one database, all employees can view the same data set, no matter their department or location. This removes the need to keep updating and sending Excel spreadsheets full of important data back and forth. With an ERP system, the flow of information is seamless between all business functions and all employees.
Who uses ERP?
Originally, the ERP system as we know it today was called a ‘centralized computing system’, developed in the 1960s and sold to large enterprises to manage their inventory levels. As the years went by it slowly developed into an MRP (Material Requirements Planning) system, which later included modules like HR, Finance, Distribution Management and Project Management. In the 1990s, the system had become a full-blown ERP system, with company-wide inter-functional integration. At that time, the system was still primarily sold to large enterprises due to high costs, long implementation times and a large number of resources required. Today, due to the emergence of the cloud and the Software as a Service (SaaS) model, ERP is now available to Small and Medium Enterprises. Everyone gets to benefit from this solution!
What are ERP systems used for?
An Enterprise Resource Planning system is simply a place to collect, store and manage business activities. We like to refer to it as a “data warehouse” or “data hub”. It is a core application that companies use to help employees turn raw data into information. Add-on modules are introduced to further improve process automation (with EDI integration) and turn this information into real business insights (with the use of Business Intelligence tools).
Why are ERP systems so important?
So, what’s the point of having an ERP system at your company? Why is it so important to implement one? These business management systems bring major improvements to any business. Technology advances so quickly nowadays and if companies are not keeping up, they can fall behind.
Overall, ERP systems streamline business processes and bring greater transparency to all users. Decisions are made using accurate, real-time data, where executives don’t need to wait for that ‘weekly report’ from their team or accidentally use an out-dated version of an Excel sheet. Information is right at their fingertips!
Below is a list of some major benefits of ERP:
- Increases accuracy of data; an ERP system eliminates manual data entry and the reliance of Excel spreadsheets and Word documents to store and manage data. Errors are reduced and data is much more accurate and in real-time.
- Saves time; many don’t realize how much time is used up, in a day, on manually inputting data in spreadsheets or in out-dated systems. With an updated ERP system, employees can focus on customer service or on increasing sales.
- Provides awareness and visibility; its real-time capabilities and easy accessibility to employees allow for better awareness and visibility into a company’s operations. Executives can properly track performance, identify trends and make quick, informed decisions. Employees work as ONE unified team, rather than separate teams who aren’t aware of the company’s key information.
- Automates processes; incoming orders can now come in via EDI or from a company’s eCommerce store and go straight into the ERP system. No time on manual data entry is wasted, no chance for errors to be made, and orders can be sent to production right away! Shipments can go out quicker and payments can be received sooner.
- Reduces costs; all of the above, have their own costs associated to them. By eliminating all the inefficiencies that occur at companies today, business owners can realize some big savings. Savings alone can occur by properly tracking inventory levels and reducing overstock and automating payment and ordering processes.
When is it best to implement an ERP system?
Typically, we always encourage companies to begin an ERP implementation project during a slow period. Everyone at the company can then give more time and attention to the project, since, after all, a successful software implementation is the responsibility of EVERYONE involved (the employees at a company, the company’s management as well as the Software Provider). It’s important to realize that there are many steps BEFORE actually going through with an implementation project, even once you’ve found the right ERP Software Provider. A company needs to:
- put together a small internal team to oversee and manage the implementation project
- get the full support from management
- make the right IT budget decisions
- introduce staff to new processes and standards, if any, prior to the implementation
Users must also be trained during (and after) implementation.
On top of the above points, make sure that implementation is not done while key company members are away on vacation or on maternity leave or new staff is in the process of being hired. Employees need to be focused on this implementation project and not on other organizational events going on.
For more information, check out our SlideShare “6 Ways To Achieve An Easy ERP Implementation”
Which ERP system to choose for a great Small Business ERP experience?
We know there are tons of ERP systems on the market and most people are only aware of well-known brands such as Oracle, Microsoft, SAP, Sage, Netsuite, etc. Unfortunately, for small and mid-size businesses, these solutions may not be ideal due to their high costs and unavailable support teams (post-sales!).
Business owners and executives should first and foremost determine the product features they will emphasize and their exact business requirements. This will help in determining which solution may best fit their needs. Features can include:
- System ease-of-use; is the system easy to use?
- User support availability; is the IT Provider’s support team easily reachable via phone, email or in person?
- Software and service fees; are fees for the system itself and all related services affordable?
- Licensing options offered; is the software offered as a Service and priced on a subscription basis?
- Software functionality; are the system’s functions what you need?
- Data security options; does the IT Provider provide appropriate security measures for the sensitive data that will be stored in the ERP system?
- Integration capabilities; is the system able to integrate with other add-ons or applications?
- Customizations; is the IT Provider capable of customizing the system to fit with your exact business needs?
Another big aspect that aids in having a great ERP experience includes the relationship between the company and the ERP Provider. It’s important this Provider treats you as a partner and not solely as a customer that they can use to push sales. The ERP team should be available, determined, attentive, flexible and simply a good fit with the company’s team. Their goal should be to help your business grow by improving and streamlining your business processes and not to push sales.
Nowadays, most small and medium enterprises are choosing to go with a SaaS-based ERP system (Software as a Service), deployed in the Cloud. No additional hardware purchases are required and these companies simply pay a small one-time fee to get setup and then a monthly subscription fee per user. This has made implementing business management systems a lot easier. However, it’s important to realize that an implementation project is a process and can take everyone time to get used to a new system, new business processes and any other changes that occur during this time. It’s about being realistic about the entire process and ensuring everyone is doing his or her part to make it a successful project. To learn more about successfully completing an ERP implementation, download our White Paper.
If you’re interested in having a great ERP experience, contact us today. You’ll meet our team and see how we can help your company implement an affordable, efficient ERP management suite.