An Enterprise Resource Planning (ERP) system is an integrated suite of business management software that brings all a company’s key operational information together in one centralised database.
An ERP’s ability to share real-time data across its system means more business processes can be automated. This improves operational efficiency, while also providing management greater visibility of how the business is tracking.
When do you need an ERP?
It’s a big step for many companies to move from basic accounting software to an ERP, particularly as there is a significant price differential between the packages. However, if you want to scale your business or you’re undergoing rapid growth, it may be essential to your ongoing profitability.
While most small and medium-sized enterprises want to increase their revenues, the reality is fast growth can put a company under tremendous stress. This is particularly the case if the company keeps doing things the same way, maintaining systems and processes that are no longer fit for purpose.
When this happens, the work environment becomes increasingly frustrating for employees who need to work harder to achieve less. When systems and processes fail, staff are tasked with putting out fires, which is often a thankless task. Eventually, good people leave the business to feel more supported elsewhere, and to do more rewarding work.
As a result, you need to invest in an ERP before your systems and processes are at breaking point. To scale a business effectively, you need software that will support your growth. Equally though, having strong automated systems and processes also help drive growth; they enable salespeople, for example, to be out selling, rather than doing sales admin work.
In essence, it’s the right time for an ERP when you decide that you want to be a bigger, more profitable business, and are ready to invest in it to take it to the next level.
Benefits of an ERP
A major benefit of the ERP is that it can handle multiple entities simultaneously, where small business accounting software is designed to manage the finances of a single entity. This means it’s particularly useful in multi-site businesses.
When data is added to the ERP it flows through the system, informing all connected functions and allowing the following:
- Consolidated reporting across multiple entities
- No more double handling for accounting staff
- Reduced risk of keystroke errors
- Greater visibility and control over the business
- Improved risk management
- Time and cost savings through process automation
- Informed and agile decision making
- Improved employee satisfaction
- Renewed focus on revenue-generating activities.
How to select an ERP?
There are many different ERPs on the market, which can make selecting the right one for your business challenging. It may be a good strategy to work out what your requirements are first, including which modules you would like in your package.
Then you can reach out to vendors, set up software demonstrations, review their proposals, and work out whether you’ll get the value from their system that you require. Beyond your business requirements, other things to consider include:
- Cost – How is the package priced? Is it affordable for your company and does it represent good value for money?
- Implementation time – Will there be downtime in your business? How will its rollout time impact your return on investment?
- Track record – Does the vendor have significant expertise and experience? Do they have satisfied customers to vouch for them?
- Support – What technical support options are available? Does this give you adequate assurance?
- Security – Where and how is the ERP hosted? How is your data protected?
- Accessibility – Is the software cloud based, allowing for off-site work? Are some functions mobile compatible?
- Flexibility – Does its architecture allow for easy integration with third-party applications? Does the ERP offer a range of modules that can meet your current and future needs?
- User-interface – Is the ERP attractive and easy to use?
With an ERP being a significant investment for your business, these questions provide a starting point for your selection process.
How to select an ERP?
Many small and medium-sized businesses find less interference with their day-to-day if they implement an ERP in stages.
For example, it may make sense to start with finance and then add on modules – procurement and inventory management, customer relationship management, project management, human resources management, e-commerce, marketing automation, and others – as the need arises. This may allow for a staged and more manageable implementation with less disruption to the business.
What comes next?
Implementing an ERP may be the first stage of your digital transformation. Having this software in place provides a platform for future business process optimisation and automation, and additional efficiency gains and cost savings.
For example, an end-to-end accounts payable automation solution can integrate seamlessly with an ERP, offering automated data capture, validation, and processing, before passing information to the ERP for posting and payment. An accounts payable solution can manage your complete invoice processing requirements, or supplement your ERP as required to fully meet your needs.
An ERP marks the start of a new chapter for your business!
Read more: Why integration is vital in AP automation