If small companies expect to thrive in today’s competitive business environment, they must be willing to take the necessary steps. That includes investing in software that can make their business operations more efficient and give them a competitive edge. Enterprise Resource Planning (ERP) software is one such system that small businesses must seriously consider.
Is ERP too “big” for small businesses to handle? Not necessarily.
Small business owners must rather be worried about what they’re missing out on by not incorporating this type of system in their companies. ERP systems enable organizations to become better equipped at navigating the competitive business landscape.
Larger businesses understand the value of this system and it’s high time smaller companies realize it too. Many small business owners view an ERP as expensive—which it is. But it only takes a look at the benefits associated with this system to realize that it’s a worthwhile investment.
What is ERP?
ERP is a key software product designed to manage a company’s productivity, order processing and inventory. This system handles and manages business aspects such as:
- Revenue management
- Materials
- Orders
- Staffing
- Manufacturing capacity
And the best part is that the above-mentioned functions are handled by a single interactive database management system.
Still skeptical about investing in this system? Maybe answering the following questions will get rid of all uncertainty.
Which Small Businesses Can Invest in ERP Systems?
You’re probably thinking this system is only designed for businesses specializing in specific industries. But ERP can be used by small businesses across all industries which include but aren’t limited to:
- Manufacturing
- Retail
- Human resources
- Accounting
- Construction
- Agricultural
Are ERP Systems Really Suitable for Small Businesses?
Small business owners cite funding limitations and lack of technical support when it comes to investing in ERP systems. Frankly, both reasons were valid in the past, but not anymore.
Granted, there weren’t many ERP systems suitable for small business back then, but thanks to recent technological advancements, there are more practical solutions available.
What Benefits Can Small Businesses Expect from ERPs?
Costs aside, what are the benefits you’ll forfeit as a small business by not investing in an ERP system?
Increased Efficiency
In the absence of ERP software, chances are that each department has its own information system. This means relevant data can’t be shared and accessed across all departments. ERP systems are designed to integrate this data across you departments which:
- Eliminates duplication of efforts: No two departments will have to re-enter the same data.
- Minimises errors: Because there won’t be a need to constantly export data, you’ll notice a significant reduction in errors.
- Reduced expenses: Since data is automated, you don’t need to assign many people the task of capturing data. This reduces costs associated with human resources.
Quick Decision Making
Fast decision making is crucial if businesses want to keep up with their competitors and satisfy customers. If departments have individual information systems, you can expect delays—and red tape—before decisions are made. This is because most decisions can only made based on available data.
That’s where your ERP system comes in; it provides real time data to the relevant departments. As a result:
- Decisions are made quickly
- Obstacles and loopholes affecting productivity are detected on time
- Relevant departmental heads are always in the loop regarding the overall production picture
Increased Productivity
Is your business slacking on productivity? Maybe staff are spending most of their time entering and re-entering data. ERP streamlines business processes so that staff can focus on increasing volumes and devising new strategies that can improve productivity.
When to Consider Investing in ERP Systems
We get it; businesses set goals. And one of yours may be to invest in ERP systems in the third year of your business operations. While we respect adhering to your strategic plan, there are some cases that warrant immediate implementation of ERP systems and can’t wait for the three-year mark.
Consider investing in an ERP system right away if:
- You now find it time-consuming to process a large volume of data. Are you now heavily relying on the use of Excel spreadsheets?
- You’re overwhelmed by keeping track of client interactions.
- Processing orders and updating inventory has become a tedious & cumbersome process.
- Your sales forecasts are now based on guess work.
- Accessing solid facts needed for decision making has become problematic.
What to Consider Before Picking an ERP System
Congratulations for deciding on investing in what may very well be one of the biggest investments for your business. But don’t pick the first system you come across. As a small business you want to invest in a system that’s specific to your industry and meets your needs. Opt for software that’s manageable and cost-effective.
Answer the following questions before making your final investment.
Is it User-Friendly?
Ideally the ERP system you pick must have a responsive interface that your staff will find easy to navigate
Is it Customisable?
The software must be scalable according to your business objectives. It must allow you to pick the features you want to use and have room to adapt with business growth.
Does it Need Frequent Upgrading?
With any software, regular updates are mandatory. However, you must pay attention to the terms regarding upgrades. Do the updates attract a certain fee? Opt for software which has locked upgrade fees that don’t increase with future releases.
Is it Secure?
Are the passwords strong? Who is authorized to view certain data? Pick a system that’ll keep your data secure and only accessible by relevant parties.
Does it Come with Support Services?
Software that comes with sufficient technical support is ideal. Pick a vendor that provides you with personnel for set up, training and ongoing maintenance.
Source: TMW, 2021. https://twm.com.sg/should-sme-invest-erp