There are many benefits to ERP, or enterprise resource planning, software so it is no wonder that it is among the systems that small businesses invest in (apart from marketing solutions). According to the State of SMB Software 2018 Report, it is a popular choice because entrepreneurs can run their operations from it.
And as an article by Technology Evaluation Centers shows, one of the main reasons companies purchase a new ERP platform is to replace legacy systems, update to the latest innovations, and bring disparate solutions under one umbrella, which coincides with the reason why it is popular among new business owners.
As mentioned above, there are plenty of benefits to be gained from having an ERP solution. We discuss more of them below.
- Centralized Information
When it comes to ERP software, centralization means storing data in a single repository and making it available for access to any member of the organization provided they have the right access permissions. It can also be a system that aggregates data and streamlines the flow of information in a company.
With this approach to data storage and access, everyone can work with consistent and accurate data. Even if different departments interact with customers at different times, having a centralized information repository or data aggregator allows them to have logical conversations. This also means that clients do not have to give information or repeat their queries again and again. This way, you can enhance your business’s customer service.
Moreover, easy access to information assists decision-makers in making the right choices. While some decisions are made in lower-levels, they would still have an impact on the greater whole. When they have guides, managers and even staff members can ensure that they are taking the right path for the success of a transaction and the growth of the company.
- Cross-Departmental Efficiency
Silos are bad for business because they mean the inability of departments to work and share information with each other. This can also result in lost deals or subpar outputs because of the lack of collaboration.
And speaking of collaboration, Queens University of Charlotte released an infographic that shows 3 out of 4 employers rate collaboration as an important aspect of a business. However, 39% of employees who participated in the survey said that they do not feel they collaborate enough.
An ERP application is one of the solutions to this problem because it also provides tools that can streamline teamwork and cross-departmental cooperation. This is especially true with its capability to update information in real time. As a result, as soon as one person makes changes or adds new information to the software, this becomes available to the rest of the organization.
A use case is for childcare centers to streamline the billing process with the right tools. Administrators can save time from generating invoices, collecting the payments, and recording the transactions manually.
- Accurate Business Forecasts
Information is the backbone of any business and the wrong one can lead to great monetary losses. Hence, it is important to keep accurate data. This is truer in the case of business forecasts.
Business forecasting involves the analysis of historical data and present conditions to generate inferences regarding the business or industry. Without facts, accurate ones at that, precise conjectures would not be possible.
Among the many ERP system examples you will encounter, you will find analytics, reporting, and forecasting features. The latter is a possible tool that can assist you in assessing the risks of opening a new branch or launching a new product, for example. It can help you in utilizing every kind of resource available efficiently. And most importantly, it can aid you in determining the health of your finances.
Furthermore, there is even the possibility for your business to create another revenue stream through a side income online. That is, as long as you meticulously plan for it with the forecasts as guide.
- Complete Regulatory Compliance
There are penalties and fines for not complying wholly with regulations and standards set by different governmental and industrial bodies. At least, your business would have to pay an amount or at worst, you could be stopped from continuing your operations for a period or completely.
When you are learning how to use ERP software, you can find that it can help you track regulations and even changes in the rules. Since they can change quickly even before you have complied with them fully, this can benefit you, as it can streamline your transition. With this, you do not have to fear inadvertently not complying with the rules.
Having an ERP system also means that everyone is made aware of the standards that the organization has to meet. The manufacturing industry especially has stringent ones, from the handling of materials to the safety of the workers. Since employees themselves can keep themselves up-to-date with the rules, they can stay safe and be accountable at work.
Whenever a business expands their operations, it likely would need a new software that could meet its new requirements. But when it comes to an ERP system, it is not necessary to do so. That is because the best ones are built with scalability in mind, thus enabling you to grow without interruption.
Taking Care of ERP Implementation
Though ERP is designed to streamline business processes, improper implementation can lead to failure and losses. One of the reasons it happens is because of monetary limitations that may be triggered because of unforeseen costs. This happens because they fail the first time they are implemented. And even if they succeed the first time around, they take 30% longer than planned (as per Technology Evaluation Centers). On top of that, budget expectations do not meet reality, i.e. it ends up costing more than planned.
Other times, ERP implementation has usability and user-friendliness hurdles. With that, businesses need to roll back the system or have it modified, which can both be costly in time and money. And the problem is, they often realize they need to make changes after the system has been put in place.
Apart from that, users also encounter issues regarding data accuracy and analytics. These would require additional changes or they could warrant the search for a new system. Either way, the business would suffer losses due to interruptions and bad analytics.
All of those problems, and more, can be mitigated as long as you are careful in choosing the right ERP. You can also check out this FinancesOnline.com guide of ERP pricing to plan your budget for the ERP software cost. This way, you can deploy a powerful system smoothly and make sure that users enjoy using it and maximize its capabilities.