Are You Ready for Your First ERP?
1. Qualified business decisions
Depending on the individual, decision-making can, in general, pose all sorts of challenges, and even more so in a business context, where things are rarely “on track,” as they ideally should be.
This means that it can get especially difficult when there is a lot of interdepartmental work for people to keep up with what the other groups need.
To help with having everyone on the same page, the go-to solution of many small business owners is the use of spreadsheets, and to be fair they can come in quite handy when the staff numbers are not that big.
But as your business grows and you get to work with increasingly larger groups of people, unchecked access to potentially sensitive data might easily backfire.
How so? Because non-IT personnel don't have much practice when it comes to aspects related to file storage or backup, and so they lack the knowledge on how to best navigate the data recorded in such a way.
From this to accidentally compromising important datasets is just one negligent step.
An ERP software will save you the trouble by incorporating all your prized information in a single system. Not only that but you also get to work within an automated framework that takes the burden of repetitive tasks off the busy shoulders of your staff.
2. Staying compliant
When running a business, forgetting to stay within the confines of the law is not an option, and ignorance, willful or not will come with its respective consequences.
As challenging as it is for just about any entrepreneur to keep up with the legalities of their business, it’s admittedly more troublesome for those who are still very new to the business arena.
It’s commonly the case that the CEO will take it upon himself to ensure that compliance requirements, in the many forms that they can present themselves will be overseen by somebody on their staff at all times.
But as the business continues to grow, the potential for human error will too. When a company expands, its structure, inevitably, gets quite the remodeling too, and this is most likely to include more compliance specificities that need to be supervised.
This is precisely the kind of scenario that can be smoothly navigated with the help of ERP software because it would allow the CEO to have the regulatory-related tasks of their choice integrated within the system.
All that would be required on their part, thus, would be to set the metrics correctly once and then keep an eye on it for good measure.
3. Streamlined processes
With the relevant ERP installed, your business can safely rely on the speed and accuracy of automation while at the same time gain quite the operational momentum.
Isn’t that the dream of all entrepreneurs? To have all the administrative work efficiently handled so that they can focus solely on the next big thing they want to get done? Selecting the proper ERP can actually make that kind of difference for your company.
Additionally, it’s not just systems and processes that get improved, but, indirectly, the competences of those in charge of the company’s ERP also get refined as a consequence of overseeing the system. Moreover, by working closely with various datasets that are up-to-date and meticulous in nature, as a correctly set ERP will deliver, it will become easy to spot patterns of what’s working and more importantly, of what’s not working.
The natural result is that you have the advantage of taking quick action - whether that means pushing for a wonderful opportunity or preventing avoidable losses.
Thus, working with an ERP can give you a degree of foresight which can turn out to be invaluable in the world of business.
What about the costs?
Let’s talk about costs. More precisely, let’s figure out what kind of sums should one really be thinking about when in the process of selecting an ERP.
Well, there’s a 2019 report concerning ERP software stating that on average, users pay around $7,000 per user. But this number can definitely vary according to the factors that are being taken into account, the relevance of which is usually dictated by the size of the company.
For a small SME with around 200 employees, this brings the cost of using an ERP to about $1.5M, which is common for a tier 1 ERP like Oracle, SAP or Netsuite. On the other hand, if we’re talking tier 2 software, then the cost would reach around $400,000 over the course of two years.
As a general rule, the larger the company, the more specific the needs and so the more of an opportunity for the implementation of a customizable ERP there is.
A more attentive approximation, one that takes into account any potential additional costs including one of the installations of the system, could go well above $150, 000 in the case of a mid-size business, for instance.
Keep in mind that your biggest costs are usually going to come during the implementation phase of your ERP project, since this stage generally requires larger, upfront payments.
For instance, if your ERP total cost of ownership for five years is estimated at around $500,000, you’re very likely to spend $300,000-$400,000 in the first year for implementation. The rest will be spent on just paying a per-user cost and software maintenance.
So, when it comes to managing your company’s budget in a way that would allow you to justify the acquisition of an ERP, here are the aspects you should consider as possible expenses:
- licensing fees
- new hardware
- conversion of data
- transfer of data
- unique customization
- training of staff
It’s a good sign if while reading through our take on what an ERP software can do for the way you run your business you’ve been nodding along in agreement.
Why? Because it means that you’re more than in tune with your company’s needs and you’re only lacking a will for action and solid enterprise resource planning to fix the pain points and head toward progress.