ERP and small business: implement or not implement?

Earlier we mentioned that, according to the research data, 95% of the companies that have implemented ERP-systems really evaluated the efficiency of the tool for business process re-engineering. But is it worthwhile for small business to optimize its work with the help of corporate resource management systems? Let's evaluate everything "for" and "against" together.

Small business: specifics of work

Small business is primarily a stand-alone unit of economy, not a company created to optimize management, control or simplify the taxation system. And, according to the report of The State of SMB Software, in 2018 ERP-systems included the top 3 most popular IT-systems of management specifically for small businesses. But then why is the question of implementation still acute?

Re-engineering of business processes using ERP has a number of difficulties for the company:

• Budget allocation: depending on the tasks, type of systems, availability of additional functions and chains of integration, the cost of the software product and works on its implementation may vary from a few thousand to several tens (and sometimes hundreds) thousands of dollars.
• Preparedness of company processes: often in the company not that there are no polished processes, but there is no even a single standard, as it should happen.
• Adaptability of the personnel: the personnel, usually, very emotionally, sometimes, even with damage to work, perceive introduction of innovations (especially if it concerns additional time expenses for training to work with ERP).

To be or not to be? To be!

Understand whether the risks to future ERP benefits are really justified, business can benefit from such "signals":

1. Producing monthly reports and statistics takes too much time, sometimes with the help of additional specialists. At the same time, the number of errors as a result of the human factor is growing and causes significant losses to the company.
2. Data, documents, company reports are too "scattered". It is sometimes impossible to understand how relevant decisions and information are.
3. Processing of new income, maintenance of warehouse records, accounts, expenses requires the involvement of additional specialists or there is a special need for new software solutions.
4. Analysis and forecasts of the company's work are impossible without involvement of top and middle management, which slows down the overall functioning.

As a result, the company clearly understands that the competitiveness of business and product in the conditions of "operational" obstacles is severely reduced, and the company gets too many unrealized opportunities.

But, even in the conditions of ardent necessity, not all companies are really ready for a "technological revolution". Thus, according to an SAP specialist, 9 out of 10 cases of unsuccessful implementation of ERP occur precisely because of unpreparedness of the company, in particular, administrative resources.

In simple words, if a company does not build a clear strategy and tactics for development, at least for the next couple of years, the digitalization of processes is only a fashion trend, not a real tool for positive change.

We need the money, we need the changes

Another clear criterion that will clearly show whether an ERP is worth implementing is finance. And no, it is not the funds for the software product itself, it is a readiness to grow and change the principles of financial management in the company.

According to The Aberdeen Group, 96% of the growing companies, which hold leading positions each in its industry, use exactly ERP-system. First of all, thanks to competent financial planning.

Any business exists with one clear purpose - to bring profit. But will there be banal transactions that will cover expenses and bring enough funds for management, or capitals that will allow to modify the business?

Below is a model of financial transformation of the business, which will determine at what stage you are at right now.

If your company needs to optimize its management, operational and service processes to move to the next stage, then ERP is really what you need and will show your effectiveness.

How can a small business recoup the cost of its ERP system?

According to Allied Market Research, by the end of 2020 the resource management system in the medium and small business segment will reach 7.9%. But only the right planning, financial management and willingness of firms will justify such growth and business investment.

If you still have doubts about whether your company needs an ERP system, please contact our experts. We will evaluate business processes in your company and develop a system that will meet your goals and development goals.