Why do successful businesses use an ERP?

If you read our posts about entrepreneurship which highlights importance of business training, how impactful it is to take on this path, and the smart tools successful business owners use, you will realize the weight and gravity of responsibilities that an entrepreneur carries. Building a business is a combination of complex processes, risks, and personal exploration. It is a journey that reveals your weaknesses, strengths, limitations, and durability. But this is not about the triumphs and hardships of being an entrepreneur. This is about a powerful resource that successful businesses use.

Before I head on and jump on to that matter, let us quickly go through some of the key areas of a business and its functions. In a general point of view, a business is composed of different departments which goal is to add value to the company and its clients. Under each of these sectors have subdivided tasks that aim to fulfill its overall goals. In finance, for example, its function is to manage the financial heath of your company, allocate money, basically to maintain sufficient funds to keep the business up and running. In marketing, yearly campaigns are prepared, production of publicity materials, audience engagement analysis are all under the marketing roof. As for the HR, recruitment of employees, payroll, resolving of labor cases are what is expected of this section. These may all be independent duties to be done by you or your staff but if you look at the big picture, all of these rely on one another because each contains information that the other needs and vise versa.   

ERP or Enterprise Resource Planning is a system that is being used by both big and small companies that enable them to smoothly perform the functions of business’s key areas like accounting, sales, logistics, and customer data. According to Panorama Consulting, a company that is geared towards business transformation and implementation of ERP systems, 95% of businesses improve some or all of their business processes after properly executing ERP. For this content, let us refer to business units as “modules”. ERP is an integration of all the modules that are needed to carry out tasks all in one platform. The main feature of ERP is it consolidates and organizes a database of information and functions from different business units which you and the rest of your staff from different divisions have access to. Imagine doing your tasks in an automated manner instead of exerting repetitive manual data entry. Sounds relieving right?

In a nutshell, ERP is what binds different modules together bringing all the processes of your business in one suite. Instead of having different separate systems for each task that has to be done, you use this as your advanced tool that encompasses all of the business modules with one interface. Plus, you can gain access in your ERP through its website making it even more convenient and accessible for you. Base on Aberdeen Group, an international marketing company situated in Boston, ERP reduces operation costs as 23%, administration expenses are lowered by 22%, and logistics has increased 24% on time deliveries. These are immense improvements that happen to companies after successfully implementing ERP.

There are different kinds of ERPs depending on the complexity of your business operation. For big companies, you have the liberty to upgrade it in a way that it can support and assist you with your needs. On the other hand, for small businesses, an entry level ERP is more than enough.

Moving forward, let me provide you an overview of how you can benefit from ERP whether you are managing a mature business or running a small / start up company.

Since ERP is a suite that allows you to perform business tasks in one platform, it creates a standard procedure of how you get things done. Each department in your business has a list of tasks to do and information to be disseminated across other business units. Hence, it is essential in business management to create a system where its components are well oiled and fluently working side by side. Your ERP enables you to do just that because it implements a synchronized process of how deliverables should be performed which benefits both staff and company.

Moreover, this is a helpful tool to hasten the growth of your sales revenue through catering to more clients. Your ERP is a beneficial tool to engage into more customers in your pipeline since tasks are finished immediately. You can give more time to attend other customer’s needs immediately. Since ERP allows your company divisions to function in a united and systematized way, operations cost is lowered by 23%. It also prevents you from wasting time which improves your profitability. Thus, it enables you to supplement your lead generation approach and turn potential clients to real paying customers. This leads you to the second point – ERP promotes consistency.

Consistency is the key to retain customers and acquire new clients. As a provider of product or services, it is important to maintain quality service for your patronizers. Otherwise, losses may occur. Being consistent means you are able to produce the same amount of value that is expected of you; being consistent in what you do builds the idea of being a reliable company. Your clients and partners are availing your services because they trust and rely on you, so do not make them feel any less. Part of providing consistent services is to monitor your performance and the progress you make for each task. You can do so through the use of ERP because it has high mobility. You can easily access and keep track of your projects anytime because ERP is accessible through website. By using ERP, you are capable to address concerns or pressing issues immediately and rectify errors in no time. This combined with the efficiency ERP brings to your workforce – which I will explain more about in a while, you are capable of ensuring that tasks are completed in the utmost manner.

Successful businesses are successful because they have learned the right mix of knowledge and effort to advance their companies. This includes making the employees perform efficiently. How can you do that? One way to do this is by furnishing your workforce with tools such as the ERP to ease the way tasks are carried out. The use of ERP supplements your workforce with procedures that hastens the completion of responsibilities. It maximizes the amount of work that can be done while enforcing a little amount of manual labor. Not only does it improve employee performance, but also logistics processing time. There is a 24% increase in on time deliveries after ERP has been implemented. When your workforce is encapsulated with proper resources, they are trained to work smart and at the same time their abilities are enhanced which gives you a favorable outcome – such as practicing cost-efficient techniques.

How does ERP enable you to be cost-efficient? It’s simple. As aforementioned, ERP is an all in one suite – an integration of different processes that is done by different business units in one platform. Each task is performed in different approaches and through various platforms. ERP allows you to accomplish all that in one single software.  Meaning, it saves you from purchasing multiple systems which can be very expensive and time consuming as it requires maintenance and training. Plus, the job automation that ERP holds reduce the need to conduct manual data entry. It is designed to automize and streamline the flows and different business activities which enable you to cut down tasks that has to be delegated to your employees.  It minimizes your expenses by lessening the need to hire more staff to do the job for you. Getting an ERP is a long term investment where you can reap abundant results quickly.

Sadly, like all other things in the world, ERP has its own disadvantages. Scroll down as we weigh each one.

1.       The intention of ERP is to streamline business processes, information, and functions of different business units. Studies show that 50% of ERP users fail to successfully execute the program. As per Datix, a premier software consultant located in Missouri, most software disasters result to poor project planning, implementation, and weak communication. In order for your company to be successful in engaging in ERP, you must meticulously observe, apply necessary efforts, and take immediate action pre, during, and post ERP implementation. It will become complex at some point because this is a whole new system wherein your whole company is taking part of so all hands must be on deck.

2.       TEC or Technology Evaluation Center who’s designed to provide analysis and recommend business software solutions conducted a study. It says 65% of the time, companies go over budget when engaging in ERPs because of the upgrades, customization that it needs only to realize it after implementation has started. Which brings you to number 1, failure to properly plan for the application of ERP.

3.       ERP is an automated software that allows you to perform various tasks from different business units. Like the other software or computer engineered tools, there is a likeable chance that this ERP would malfunction while you are in the process of using it which is critical to the performance of your company. Encountering system errors is likely in different heavy computer software.  It also jeopardizes the data that is contained in that specific tool because it can be corrupted or deleted. You can also encounter strong computer virus that can affect your suite and put in danger all kinds of information that are stored in this tool.

4.       Sharing of confidential information may become a problem because this tool exposes sensitive information about each department. It can cause delay in relaying data across involved modules which will slow down the processes in completing tasks. Not only can it prohibit your from functioning efficiently, irresponsible sharing of information to different people has the power to leave a serious or permanent damage to your company.

5.       Though ERP is cheaper compared to availing various kinds of systems that help you accomplish tasks, installation, customization and maintenance of ERP can be expensive too. Features to be added to your ERP depends on how complex you run your company. You must also ensure proper maintenance of ERP so that you can get a full and smooth experience while using it.

Danger can always be there when it comes to business management but you can keep such things at bay with proper precaution and safety measures. In a nutshell, ERP is a key tool to advance your company in its field and put more value towards it. Because of its system and key features, you can develop your company the soonest.