The limits of your software equal the limits of your business
If you are running a successful business, chances are that over years, you have developed robust processes along the way to manage your myriad business processes.
You probably haven’t had the time or bandwidth to perfect them, but they work well enough to keep you up and running. These usually consist of multiple applications that have been procured along the way, with a bunch of manual processes filling in the gaps.
It is apparent when tracking the history of a company, problems that have arisen are often tackled one by one by implementing new processes or looking to the applications marketplace for an individual solution. The result, for the most part, is a bunch of disparate applications that are not at all integrated or loosely integrated, with some manual processes on top of them doing some data replication.
The problem with manual processing is that it’s usually done intermittently in batches. This means that systems are rarely real-time, and, even with the most careful consideration, errors accumulate through typos, naming conventions and duplicates. For example, reporting. Manual reconciliation requires time-consuming data manipulation in excel just to get the data to a state in which it can be analyzed. As a result, decision makers look at this crucial information less frequently.
The business becomes less dynamic
It spends its time and resources keeping pace, instead of using the reporting data to make predictive decisions or build more competitive advantage. A vicious cycle is easily then created. As a result, the quality and frequency of data going into all these systems becomes less important, as fewer decisions are being made because of doubt regarding their accuracy and timeliness. Low adoption then ensues throughout the organization as it becomes apparent that management is not doing anything with the information they have in these systems.
One compelling alternative to this stagnant state of affairs is to select one of the handful of enterprise resource and planning (ERP) systems available for small to medium businesses. These highly configurable platforms integrate most functions of a business, including quoting, planning, managing customers, manufacturing, service, sales and marketing. They can also cover activities like stock control, order tracking, customer service, finance and staff.
The objective of enterprise resource planning is to drive the flow of information between all internal business functions, while managing connections. How many business owners would choose an ERP platform as their first or best choice to streamline their business? Small to mid-sized business owners and decision-makers with a corporate past may have been exposed to ERP and understand the benefits of these platforms.
What they may not know is that these benefits are now within reach, and no longer just for large enterprises. The value proposition for ERP to the business is huge. The Cost of ERP systems Without question, the main obstacle for any business assessing whether it should move to a ERP system is price.
Even with a multitude of licensing costs across many internal systems, an ERP platform will be at least five times the annual subscription cost of the business’s entire application landscape. This initial cost may be difficult for every business to wrap their head around, but how much the platform costs is not the only question to ask. For example, the trigger point for decision-makers to go to market for a new platform is usually the result of a series of either inefficiencies, stock losses, missed billing, lack of transparency, after-the-fact discoveries and integration failures. Any of these have an attached commercial impact to the business. Decision makers need to understand what the real cost of this is having on their business.
Of course, the initial cost question still has to be asked as to whether an investment in an ERP system is the best allocation of capital, given the commercial constraints every business has. Every business should still take a moment to assess the value an ERP platform would offer to their business. Like any business investment, investing in an ERP system should not be looked at as simply “buying software”. Implementing an ERP system is a business transformation project that engages all levels of the organization.
The value is derived from both tangible and intangible results. Business owners should have a good idea as to where these will come from. They need to understand that ‘Systems’ within any business is one of the key areas of competitive advantage — therefore, a business that develops superior systems will nudge out those competitors with less efficient ones.
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