What is ERP?
ERP stands for Enterprise Resource Planning (although the name doesn’t give much away). ERP is a catch all term for business software which encompasses back office and front office functionality. An ERP System is a single unified business software system which you can use to run your sales function, your finance function, projects, manufacturing, supply chain, procurement, ecommerce and pretty much any other functions you might have within your business.
Why do I need an ERP System?
You might need an ERP system if you find that
you are running your business from multiple and disparate software systems. In a typical business this might look like, Sage for finance, Salesforce for customer relationship management, maybe Microsoft Project for project management or Magento for e-commerce, as examples.
The consequence of using all these systems (which are all good in their own right) is that your business intelligence suffers. In order to get all the relevant information required to run your business you need to start pushing and pulling information back and forth between the systems through manual intervention or system integrations. This becomes expensive and/or time consuming.
Sometimes the tipping point comes when duplication (or triplication) of effort becomes too much. Sometimes the tipping point is when it takes days to extrapolate the correct business intelligence from the disparate systems. In some cases the justification comes with an identified profit leakage – something slipping through the net, too many convoluted processes which leads to human error etc.
In any circumstance, the move to an ERP system usually corresponds with a desire to become more efficient and more effective and crucially more profitable.
Is it expensive?
Of all the software you can deploy, ERP is the one which is most likely to dramatically reduce your costs and improve your profitability.
- Consolidated systems means you can lose much (if not all) of your existing software
- If you get a cloud based ERP system like SAP Business ByDesign you can ditch much of your hardware and IT maintenance costs too
- Improved processes create efficiencies in time and money. Better customer experience and reduced effort alone can create big boosts in profitability
- The competitive advantage of better business intelligence is a compelling cost benefit
I’m an SME – do I need an ERP system?
Many of the problems encountered by big businesses, which leads ultimately to ERP implementation, are as a result of investing in a growing software estate over a number of years. Many ERP systems are modular or are offered as a service (SaaS: Software as a Service). You can consume what you need now but rest assured that the software has the capability to grow with your business. There is no reason why a small or emerging business can’t deploy ERP early in the business growth cycle. You can start with CRM only and build out to include finance and other modules. It’s not uncommon to create a “road map” towards your ideal system. Better to start as you mean to go on.
How difficult is it to find the right ERP system?
Although the search and select process can feel quite arduous if you break it into bite sized chunks it is quite manageable.
You can enlist the help of independent advisors such as local authorities or IT Management firms to help you make an informed decision. You should also be guided closely by your selected partners who should be giving you honest and straight forward advice about whether the products in their portfolio achieve what you need it to.
Just make sure that you find software that is extensible; something which will suit your current requirements but which will also futureproof your business.