ERP Systems for Small Businesses
Enterprise Resource Planning (ERP) used to be a big term, for the exclusive domain of big business. Not so anymore! ERP for small businesses is now a buzz term all on its own. As SME’s (small and medium-sized enterprises) have adapted and changed, so too have ERP systems to be tailored specifically to the small business market.
What is an ERP System?
Enterprise resource planning (ERP) is a business process management software that allows businesses to use a system of integrated software applications or modules to manage their business. It automates many back-office functions related to manufacturing, services, accounting, and human resources. The benefits of ERP stem mainly from the automation and interconnectivity of the system. When it comes to data management, automation is essential. The fewer opportunities for human error there are in any business, the better. When information flows from one department to the next in a live environment, everyone benefits and is more efficient. The increased efficiency lowers overheads, improves turnaround time, reduces errors, and creates a level of internal transparency that empowers management and the entire business.
Initially, ERP solutions were bulky and costly. The structure of the software was inflexible, covering only the most critical pillars, and it often required extensive customisation to be truly beneficial. And yet, even with highly individualised customisation, it was not unusual for businesses to rework significant elements of their internal processes just to accommodate a new ERP system. An ERP implementation was a huge- and expensive- undertaking. This made it entirely impractical for small or medium-sized businesses to make use of this technology. The SMB (also known as SME) market continued with manual or separate systems that did not have the same level of integrated, cross-platform functionality of ERP software.
Enterprise Resource Planning for Small Business
However, change and development are constant and new types of ERP systems have been developed allowing businesses of all sizes to reap the rewards of top-tier enterprise resource management. These systems are now more agile, more intuitive, less bulky, and more cost-effective. Implementation is far less of a headache as the new age ERP systems are customisable and scalable. In a competitive market, small businesses are increasingly turning to software solutions to give them the competitive edge, and the research bears this out. According to a 2016 report from the Aberdeen Group, 96% of the top-performing, growing companies rely on an ERP solution. These businesses are twice as likely to have access to custom reporting, enabling them to fine-tune performance in real-time. As a result, their profits rose an average of 10% over the course of the two years in question. It may seem overkill for a small business just getting into its stride, but an ERP solution for a small business has many benefits suited specifically to the smaller organisation.
Automated and Real-Time Workflow
Automating data flow makes it far less likely that human error will result in late orders, inventory errors, or miscommunication. The more a business relies on humans to transfer, enter or relay information in a business, the higher the level of efficiency gaps. ERP systems allow for information to be entered once by employees, and the system distributes that information in real-time to all the departments who need the information, and updates all modules that require that information simultaneously. Not only does this remove a lot of opportunities for error, but it makes your business more time-efficient and reliable- all of this contributes to a better customer experience and a better bottom line. Both are exponential contributors to growth. Further to this, the COVID-19 epidemic has illustrated the power of real-time systems for remote working. Without data being live and centralised it is virtually impossible for employees to work efficiently off-site, making it even harder, if not impossible, for a business to continue in social distancing environments.
The ability to create custom reports is powerful. Knowledge is power, as the old adage goes. No two businesses are alike, and so each business has its own KPI’s (Key performance indicators), metrics, and challenges. Each business needs reporting tailored to its own unique circumstances. This is where an ERP system really shines. An ERP system is able to draw information from almost every single aspect of your business, combine it, and present it to you, real-time, in a format that you can use to make planning and big decisions. It takes the guesswork out of your decision making and helps to bring your business matrix into one picture. Reports of purchasing, manufacturing, stock, deliveries, and returns for example can help you analyse the full manufacturing and purchase cycle for a batch of product. Similarly, you can assess offer profitability by assessing how much was bought on offer, and by who, and when the next repeat purchase occurred. Reports such as these are virtually impossible without integrated business management software such as an ERP system.
Scalable Production and Adaptive Growth
Adapt or die, said Charles Darwin. He could have been talking about business. Nothing is more predictable than change, and if your business is not flexible it is very likely to stumble and perhaps fall. Supply and demand rise and fall sharply, raw materials change and suppliers let you down. You need to be able to handle these shifts. If your company relies on manual processes for order fulfilment, what will your staff do if there is a sudden spike in demand? How will they handle twice the volume they are used to? Is it likely that important tasks will fall through the cracks as your team scrambles to keep up?
While significant changes will cause growing pains for almost any business, a powerful ERP system will help a great deal to smooth the transition and shoulder a good deal of the burden. Automation will help a great deal to facilitate the changes in demand and will keep track of all the information of orders and production and raw material sources automatically, ensuring that you can focus on what’s most important: providing a top service or product to your customers. Live reporting, dashboards and inter-departmental communication mean that you can constantly monitor your business to any locate bottlenecks and inefficiencies, and change swiftly to meet changing circumstances.
ERP is no longer the sole domain of large corporations, more and more it is a standard feature of any business operating in a fast-paced, digital and volatile economy! The competitive nature of most markets means that an ERP system to ensure maximum efficiency and profitability is now almost a prerequisite for any size business.