Should Small Businesses Go For Enterprise Resource Planning?
Enterprise resourcing planning (ERP) software systems offer many benefits to small businesses. You can read in-depth reviews of ERP software solutions as well as stay up-to-date with B2B news by browsing a reliable SaaS directory.
The global ERP software market is predicted to top $41.9 billion by the year 2020, growing 7.2% during the period 2014-2020. In this article, we look at the key benefits and as well as drawbacks of ERP software for small businesses, and analyze the latest trends in the ERP software industry.
The Benefits of Using ERP Software
Helps in Efficient Planning of Operations
ERP software can help small companies to replace the disparate information databases and systems used in their different units with a single, integrated solution and database. It can be used for business functions like finance, production control, and order processing.
Small businesses can utilize a single ERP solution and database to integrate departmental functions and get productivity and cost benefits.
However, they need to plan carefully to implement the ERP system to get the intended benefits and reduce the chances of failure.
Improves Information Sharing
ERP software can provide the same key business info to your different units. In many companies, each unit has its own information system that cannot be accessed by other departments.
To fulfill an order, units such as production control, order processing, and dispatch need to re-enter information and look for data about customer needs, lead times, and stock levels.
An ERP solution offers all this relevant info to the concerned units, eliminating the requirement to key in data again. This minimizes manual errors, boosts productivity, and helps the company to fulfill orders in quicker time.
Makes Smarter Decisions
Companies can use the consistent data offered by ERP systems to make faster and smarter business decisions.
Management teams, for example, can spot potential obstacles that may affect productivity levels and delivery times. Finance managers can improve planning as they get an up-to-date view of orders and stock levels.
The production unit can also handle stock levels more efficiently and ensure enough items are available to fulfill orders.
The human resources department can recruit or redeploy employees according to changing requirements.
Additionally, senior managers also get a 360-degree view of operations which helps them make intelligent decisions on resource allocation and investment, and respond more swiftly to changing trends and opportunities.
Helps with Company Transformation
An ERP solution can help your company to transform and improve operations, and empower employees to manage challenges and growth.
You can reduce duplication of work in administration and streamline processes like production planning and order processing.
Additionally, you can also free your employees to focus on important work and efficiently manage increasing business volumes.
Thus, ERP systems are powerful tools that can help your staff members to make greater contributions to productivity and efficiency.
The Risks Involved
Though an ERP solution offers many benefits, there are also significant risks involved.
Companies need to invest a lot of capital, time, and effort for the deployment and implementation of the system.
Many small and growing businesses may not be able to afford the costs of investing in a top rate ERP platform.
If you start deploying the solution one by one in different units, you may not get the full advantages of a unified, company-wide product for quite some time.
Deployment and implementation can also disrupt work as you need to train your employees and get them to adjust to the installed system.
ERP Trends to Follow in 2017
The ERP software landscape is evolving swiftly.
Many small and growing businesses are investing in this type of solution to understand how their customer relationship management (CRM) initiatives are impacting their revenue, track sales from point-of-sale, and to manage research and development.
To help them achieve these goals, ERP providers are striving to make their solutions less complex, and more robust and affordable.
Let’s take a look at the key trends that are expected to dominate the ERP software industry this year and beyond.
SaaS is Ruling the Roost
Traditional ERP systems are installed on your company’s servers and you need to shell out for hardware expenses, maintenance, expansion, and data recovery and backup.
SaaS apps offer more advantages as they are less expensive, quicker to scale and update, and don’t need any office space.
This means small businesses can save a lot of money. For these reasons, Forrester Research reports that more companies will opt for SaaS ERP in the next few years.
If your company has already invested in an on-premise ERP system, then you can find out if your vendor offers a convenient method to migrate to SaaS.
There are Mixed Options Available
There are also mixed options available which means you don’t need to abandon your on-premise tool. You can collaborate with your vendor (if they offer the option) to create a mixed system and add SaaS tools and capabilities to your existing on-premise solution.
For instance, if your on-premise ERP system works well but you wish to add CRM and document management functions, then you will be able to plug SaaS tools to your installed ERP. This option is becoming popular as business IT is increasingly shifting to the cloud. Talk to your vendor to find out more about this mixed model.
There is an ERP for Subsidiaries
Companies that have been using on-premise ERP historically are switching over to SaaS-based apps in a phased, incremental manner.
They are not replacing on-premise ERP wholly, but are trying out SaaS ERP on their subsidiaries.
This method enables them to track the performance of SaaS ERP and learn how it can be combined with their existing on-premise ERP.
Experts expect this model to accelerate SaaS usage in small and mid-sized operations.
The Internet of Things (IoT)
More products are devices are getting linked to the internet, which enables users to automatically funnel more data to their ERP solution. The benefits include getting deeper insight into aspects such as appliance performance, supply chain, and your company’s shipping partners. This data and insight can thus prove beneficial for all industries.
Many companies are now looking to develop their IoT infrastructure and use their ERP solutions to effectively utilize the data generated by this linkage.
To get the most out of an ERP system, you should identify priorities, create a mindset that welcomes change, and allocate money and resources for implementation and training. You can consult an ERP expert to select the best product for your company’s needs and handle the required changes quickly and easily.