Cloud ERP Systems for SMBs: Size Doesn’t Matter

Not too long ago, only large organizations could afford to invest in enterprise resource planning systems (ERP’s), but that has all changed. Thanks to continued innovations and improvements in technology, small to medium-sized businesses (SMBs) now reap the benefits of implementing similar versions of these highly effective ERPs, especially cloud-based ones. But navigating the SMB Cloud ERP market can be tricky. Under pressure “to remain competitive while cutting costs, SMBs adopt ERP systems to diversify their business models, enable descriptive and predictive analytics, and improve supply chain operations. Furthermore, SMBs have less tolerance for drawn-out implementation projects” to configure and adapt their systems. But, as the footprint of an ERP system within an organization grows, so too does the potential value,” especially for an SMB[1].”  However, with value often comes risk, and many SMBs are still hesitant to implement a modern ERP system, citing three main obstacles:

Obstacle 1: My Business Doesn’t Operate Like a Large Corporation
While many small businesses believe most of their operations are unique and cannot be standardized for an ERP system, quite the opposite is true. That’s not a bad discovery.  According to findings by Deloitte, “roughly 85% of all business processes are the same across companies” and can benefit from using industry best practices and processes. The other 15% can be customized to fit a small business’s differentiators[2].” By developing a plan with both business and IT leaders, as well as relying on an ERP consultant, any small business can formulate a technology plan to move from back of napkins or manual spreadsheets or an old/legacy on-premises system to a modern cloud-based ERP or ERP software as a service.

Obstacle 2: Saying Goodbye to My Legacy System
Sometimes parting can be a sweet sorrow, especially if you’ve invested heavily in your on-premises system. But one thing is constant, and that is change: on-premises systems will not likely be supported forever[2], and your best bet will be to adopt a cloud-based ERP system. But moving forward can be daunting, especially when you are worried about the time you’ll invest in switching over. It’s a well-based fear; a long implementation can distract staff, delay growth and can cost a lot of money which is why a quick implementation is crucial to the company’s survival.  Luckily, modern cloud-based ERP systems with industry best practices built in along with rapid implementation models can be deployed within weeks or months and not years when implemented correctly. With time to value greatly increased, SMBs will reap the benefits of a cloud-deployed ERP more quickly than they will an on-premises solution.

Obstacle 3: My Workforce is Already Efficient: Will an ERP Provide That Much of a Boost?
You’re building a workforce to take you into the future…not to keep you in the now.  Your employees “want to interact with systems at work similar to the ones they interact with in their personal lives and on their mobile devices.[2]” One of the biggest enemies of a rapidly growing SMB is time, specifically the lack of it. Cloud-based ERPs can help companies gain back valuable time lost by keeping employees from replicating data across systems and often from having to enter it manually.  More-so than older on-premises solutions, modern cloud ERPs better utilize robotic process automation (RPA), machine learning and Artificial Intelligence (AI) to enhance every employee’s ability to perform tasks and analyses at a much faster rate, freeing up time to pursue new goals and opportunities.  In addition, at the rate SMBs can grow, their subject matter experts (SMEs) can rarely assess what their business will look like in a year, much less three years.  SMBs can grow quickly, expanding into new customer territories, adopting new revenue streams and business models, and increasing sales volumes[3]. If their technology cannot grow and evolve at the same rate, then it will hold them back. Cloud-based ERP systems with constant updates and regular releases of new features ensure that the technology can handle growth and change to support SMB requirements, with no disruption to the existing service and more importantly, the business[4].

Overall, when SMBs commit to implementing a cloud-based ERP, they can expect faster results. Accounting will simplify financial reports and better manage resource allocation. Inventory management will accurately track product supply to ensure optimal stock levels. Manufacturing will improve forecasting and operations, helping the company to better allocate its budget. And analysis and reporting will provide comprehensive data to “ensure better decision making.5

So, what evaluation criteria or questions should a SMB use when selecting their Cloud ERP system[5]?

1. Ease of use: Can I easily navigate complex ERP features?
2. Inclusivity: Will employees across all departments and disciplines be able to use the ERP system features to enhance their productivity anywhere and at any time?
3. Integration: Will the new system contain built-in features that easily integrate with other software suites?
4. Value: Will the benefits of the ERP system outweigh the cost?
5. Risk Mitigation: Will the new system incorporate security features that greatly reduce fraud and cyber security threats?

Cloud-based ERPs, more so than on-premises ones, can overcome all three obstacles as well as meet all five criteria, especially value. A cloud-based software subscription, considered an operating expense, helps free up capital while giving a company the flexibility to meet evolving operational needs.  No business is too small for an ERP solution — just because you are a small business doesn’t mean that you can’t operate like a Fortune 500 company.

1. ©2022 Nucleus Research Inc.
2. Overcoming Cloud ERP-as-a-Service Obstacles | Deloitte US
3. Cloud ERP Scalability
4. ERP Systems for Small Business
5. Why Move to the Cloud