Pros and Cons of ERP Systems for Small to Medium Businesses
ERP, or enterprise resource planning, software enables small businesses to replace different departmental information systems and databases with programs that work together and utilize a single database. ERP software is available for key business functions such as order processing, production control and finance.
By using a common technology platform and database throughout the company, small businesses can integrate departmental activities and achieve a range of cost, operational and productivity benefits.
Implementing an ERP system requires careful planning to achieve the target benefits and minimize the risk of project failure.
A key benefit of ERP software is that it provides the various departments of your company with the same snapshot of important business information.
In many small companies, departments have their own information systems, creating information silos that other departments cannot access or share.
When an order progresses through the company, for example, departments such as order processing, production control and dispatch have to re-enter data and search for information about stock levels, lead times and customer requirements.
With an ERP system, all relevant data is available to those departments, eliminating the need to re-enter data, reducing the risk of error, improving productivity and speeding up the time to fulfill orders.
The availability of consistent data improves the speed and quality of decision making.
Your management team can identify any potential production bottlenecks that might affect delivery times or affect productivity levels.
Financial controllers obtain an immediate, up-to-date picture of orders, work in progress and stock levels to improve financial planning.
Production planning staff can manage stock levels efficiently in line with orders and delivery schedules. Human resources staff can identify the need for recruitment or redeployment in line with changing business needs.
Senior managers have an overall picture of operations so they can make effective decisions on investment and resource allocation and respond quickly to changing business opportunities.
Deploying an ERP system can help you transform different aspects of your business and cope with the challenges of growth.
By reducing duplication in administration, streamlining processes such as order processing and production planning, ERP systems free staff to concentrate on more important tasks and deal with increasing volumes of business efficiently. By equipping employees with powerful business tools, ERP systems enable your team to make a greater contribution to efficiency and profitability.
ERP systems offer small businesses many important benefits.
However, implementing an ERP system carries significant risk.
A company-wide deployment represents a major investment in time, effort and capital.
The cost of a complete ERP system may be beyond the means of a growing business.
Although you can deploy individual modules for different departments as funds are available, you would not reap the full benefits of a company-wide system for some time.
Deployment also can lead to disruption as employees go through a learning process to adjust to the new system.
To achieve a balance between the risks and rewards of an ERP system, you need to identify priorities, lead the change from the top and allocate resources to training and project management.
Seek advice from a consultant with experience of ERP in small businesses so you select the right system for your company and manage the change effectively.