Do You Need ERP for Your Small Business?

Traditional ERP was designed for Fortune 500 companies, but now there are solutions for small and mid-sized companies.

Benefits of Small Business ERP

Many entrepreneurs have begun to explore ERP, because it allows you to integrate all the key function areas of a business into one system including HR, sales, finance, transportation, shipping, inventory management, vendor management and more. ERP often runs in real-time, mediated by software and technology.

By leveraging ERP, business managers can make small or large changes to operations to drive higher productivity in real-time. As you consider scaling the business or acquiring smaller competitors, it will be important for you to have a smooth back of the house operations to integrate with a new company.

Use ERP to Facilitate Growth

Once you implement an ERP system you’ll be equipped to grow the business based on your new strategic plan. Runaway growth is a danger to any business. Your growth needs to be planned and forecasted. You don’t want to find yourself drowning in cash flow issues because of unexpected growth. As you move forward with selecting an ERP system, you’ll need to choose software that will scale with you. It’s all about simplifying the way you do business.

Taking on new software can be challenging. Your No. 1 goal has to be to get everyone trained and actually using the software. Once you and your team start using the system you’ll pick it up faster than you think. Just make sure you invest in training — using just 10 percent of the software’s functionality is a waste. If you leverage all the ERP features your business will likely grow much faster than you think.

Buy or Rent?

You can invest in an ERP system in two ways, buy the software or rent it via a subscription model. Deciding on what type of ERP system to invest in depends on your in-house technical expertise, any customization needs and your budget. It’s expensive to buy the software upfront, but in the end you own the software. That allows you to customize it, but it also makes you responsible for the security and maintenance of the system. If you rent software from an ASP (Application Software Provider), your initial price is low, but you’ll have monthly rental fees. The ASP’s do provide regular software updates, and technical support. However, since you don’t own the software, it’s likely you’ll not be able to customize it. You also do not have as much control with any security issues you may encounter. Finally, your software is cloud based, so it won’t be housed on your office server.

Benefits of Buying Software

1. Many software options: There are thousands of software options so frequently you will find a software solution designed specifically for your industry.

2. One-time investment: It’s a one-time payment for the software. There will be ongoing upgrade and support costs, but you won’t make additional payments to use the software.

3. Customization: You can tailor the configuration, change defaults, and customize it to best compliment your business processes.

4. You manage security: Since you have control over your system, you control the security of your data and who has access to the system.

5. Find local IT companies that service the software: You need a local company that offers training, support and software solutions.

Benefits of Renting Software

1. Pay a low monthly service fee: Paying a low monthly service fee per user is a cost effective investment option.

2. Rental fees include support, upgrades, and security: All of the maintenance responsibilities are in the hands of the provider, and they are all included in the monthly fee. The ASP also typically provides daily data back-ups of your data.

3. Decrease the need to install and maintain the software: Since tech support responsibilities will be done by your ASP, the staff needed will be limited. That means less time spent getting your company started using the system too.

4. Access your data from anywhere: If you have access to the internet, you’ll have access to your software.

4 Tips for Selecting an ERP Vendor:

1. Get advice from other businesses: Reach out to others in your industry to get a suggestion for what ERP vendors they are using.

2. Look for Flexible: It’s going to be important to find a vendor who can customize specific functionality for your business needs. They must be open to ‘tweaking’ the system.

3. What training is offered? Ask about how much training is offered and how often more training can be provided as you add new staff.

4. What are the customer service practices? Will you have a dedicated customer service rep? Do sales reps change often? Do they offer 24 hour, 7 days a week support or just M-F, 9 – 5 p.m. support?

Executing this kind of software will be a challenge. Research vendors thoroughly. Look for a provider that offers customization and ongoing training to help make the implementation more seamless. The complete process can take at least four months and will involve everyone in your company. Once the ERP system is deployed, use the executive dashboards to make more informed decisions about your business. Once the software has wide adoption, you’ll be able to just focus on serving your customers.

Republished by permission. Original here.

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This article, "Do You Need ERP for Your Small Business?" was first published on Small Business Trends