Myth:

Enterprise Resource Planning (ERP) software is only for large corporations.  True, large corporations heavily rely on ERP software, but there are also ERP systems designed specifically for Small to Medium-sized Businesses (SMBs), so they too can stay faster and sharper than the competition.  If you are an SMB, and you haven’t considered investing in modern ERP software, it’s time to consider taking the plunge. Similarly, if you are an SMB, and you have an old, outdated ERP system, consider plunging in as well.  It will be one of the best decisions your business will make, especially if you are looking to streamline your internal systems and reduce overall costs.

So, what does an ERP system do?  Simply stated, it “aggregates all the areas of your business into one system to streamline processes and data across the organization.”  No matter where your employees are in the organization—inventory and order management, HR, or accounting—they “can rely on a single view of information for their specific needs.1” A centralized database can ensure that all departments have real-time access to accurate data that affects their daily decisions and operations.  So, how do you know if your business is ready for a modern ERP system?  Consider the following 12 questions:

  • Does any part of your sales forecasting rely on guesswork?
  • Do your employees rely heavily on spreadsheets to monitor information?
  • Is your inventory and product costing ever inaccurate?
  • Are you behind in monitoring customer orders?
  • Do your systems communicate with each other?
  • Do you struggle to extract meaningful data?
  • Do you spend too much time and money on maintaining and reporting the proper data to regulatory agencies?
  • Are your customers consistently happy?
  • Is your IT or accounting team too large or too complex or too overwhelmed to effectively manage your system operations?
  • Do you run outdated software because it is too costly and time-consuming to update it?
  • Is your business growing at a slower rate than your competitors?
  • Or is your business growing too quickly for you to keep up?

Diagnosing the Problem: Noticing the Telltale Signs

Not every question may apply to your SMB, but if you answered yes to even some of them, you should explore the advantages of investing in a modern, cloud ERP system. These are the top four signs your business needs an ERP system:

  1. If you answered yes to questions 1,2, 3, 5 or 6, you are using too many manual processes and software applications, which are rendering you inefficient.  If you use “too many spreadsheets, constantly switch between software, or struggle to get your apps to communicate with you or with each other, you’re not alone.2” Many fast-growing businesses face the same challenges, and many are switching to modern ERP system software to meet these challenges. Today’s ERPs contain data analysis tools that work in real-time. They also integrate department software, such as accounting and operations management, which greatly reduces manual labor and improves the flow of communication.
  2. If you answered yes to questions 4 or 8, your customer satisfaction rate is (or is in jeopardy of) falling. If you suffer from late or inaccurate deliveries, or if you do not have a good system to track customer satisfaction, an ERP system will address this problem two-fold. First, it will give you better and faster oversight of your delivery system and will provide alerts when issues arise.  Second, modern ERP systems provide SMBs CRM (customer relationship management) functionality, which is integrated in your ERP software, allowing you to “engage more deeply with your customers and enjoy more positive, growth-oriented relationships.3”
  3. If you answered yes to questions 9 or 10, you are probably adding too much staff as you grow and are spending too much time on outdated technology. Ideally, your staff headcount in accounting and operations management “should increase at a lower rate than revenue growth.” Outdated technology also decreases staff productivity. One survey found that U.S. businesses lose up to $1.8 billion each year in wasted productivity due to obsolete technology4. Aging devices run more slowly, freeze more often, and require more maintenance and pricier upgrades, resulting in additional downtime. They also lack the power needed for new, efficient software programs that can help increase business productivity. Also, outdated technology often lacks the critical security updates that newer software solutions provide, leaving business more vulnerable to breaches in security. ERP systems constantly streamline and update data and reduce security threats, all of which significantly lower training and maintenance costs, user error, and costly security breaches.
  4. If you answered yes to questions 11 or 12, then not only do all the above three signs apply but also you are probably struggling to meet customer demand, and bottom line, you’ve outgrown your existing software. Meeting the needs of your customers is vital to growing your business. ERP software is “designed to store large amounts of data across the spectrum of business operations, including accounting, manufacturing, CRM, and HR, to name a few.2” It expands as your business expands, allowing for continued growth and a welcome peace of mind.

Prescribing the Solution:

Ultimately, for many growing SMBs, it’s not a question of if they need enterprise resource planning software, but when.2 If you’ve answered yes to any of the questions and have identified with the telltale signs that a business may need an ERP, then it may be time to begin researching the pros and cons and assemble an ERP selection team within your company.  Even if the implementation may require a significant investment upfront, maximizing efficiency in every aspect of your growing business will greatly outweigh the cost. Definitely making it worth the plunge.

1. https://www.forbes.com/sites/forbestechcouncil/2019/11/25/what-smbs-should-consider-when-choosing-an-erp-solution/?sh=468e578f3f06

2. https://www.softwareadvice.com/resources/when-does-a-company-need-an-erp/

3. https://www.ccstechnologygroup.com/7-signs-that-you-need-erp-software/

4. https://www.bizjournals.com/phoenix/news/2018/11/15/outdated-technology-costs-businesses-more-than-it.html

Learn More

E-Book: Leveraging ERP for SMB Success:  A 5-Step Guide for Small and Midsize Manufacturers
In this e-book, we’ll discuss how SMBs are gaining an edge in the Manufacturing industry through enterprise resource planning (ERP) software. From advantageous deployment options to game-changing functionality, you’ll learn how to implement an ERP solution that will help your organization reach its long-term goals.

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