ERP 101: What is it and why do you need it?

Business Management software has gone from being a luxury item to a necessity. Whether you’re a small- to medium-sized business or a global conglomerate, having the right accounting and business management system can make or break you. 

Chances are, you’ve already heard of ERP. You may have heard all these wonderful and fantastic things an ERP system does (saves time, saves money). But it can be hard to relate this to your own business without first knowing what ERP is.

An ERP system gives you accurate, real-time insight and information into the daily running of your business, all while helping you reduce administration and operational costs by over 20 percent, according to the Aberdeen Group.

Instead of having different systems to perform different functions, such as stock, sales and administration, you just have one.

The benefit? You save time, money and ensure that all data is correct and up-to-date since everything uses the same data set.

In addition, Management and Human Resources can look at data processes, create up-to-date reports, and make decisions based on the latest information available – all from one system.

Will you benefit from an ERP system?

So now you know what ERP is and what it does. The only question remaining is, do you need it?

If you can relate to at least two of the following signs, then chances are, your business would significantly benefit from an integrated ERP solution.

1. Duplicating work is expensive and harmful to data integrity

One of the biggest wastes of time and resources is the duplication of work. This is often the case when staff have to use multiple separate systems to work.

Does your sales team use the same system to track orders that warehouse workers uses to manage stock? Is this the same system that your accounting staff uses? Is it the same system which integrates into your websites eCommerce? Chances are the answer is no.

This is the definition of inefficiency. In fact, if you find yourself or your staff duplicating data over several different systems, then you will greatly benefit from ERP software. An ERP system can provide your entire team with access to the same, real-time data, thereby eliminating duplication and re-entry errors.

Increase productivity. Improve decision-making speed. Maintain data integrity. Concentrate in growing your business.

2. Struggling to retrieve data?

Recording data is one thing. Having the ability to create and retrieve accurate reports that present all the facts and figures is another. If getting data from your system requires hours of work tediously manipulating data into spreadsheets – you should look into an ERP system.

Why? Because by the time you finish your reports, they’re out of date. So important decisions are made with inaccurate data. With an ERP system you can control when and how often information is updated and extract real time data so you can run accurate reports.

Collecting, transferring and analysing data shouldn’t be a burden or a game of chance. If you want to start making informed business decisions with confidence, the answer is an ERP system.

3. The automation of manual business processes

If your business is stuck in the 1950s using pencil and paper processes, your staff is most likely drowning in paperwork. And you should throw them an ERP life raft. Manual accounting is tedious. Boring, dull, and everything between. Not only that, spending hour after hour manually entering data from paper-based invoices and orders is time that could be better spent elsewhere.

In business, time equates to money. Loss of time means loss of revenue. So if reconciling your financial records takes forever, you will definitely benefit from an ERP software solution. An ERP system can be customised to meet your individual business needs and streamline day-to-day tasks. All while boosting productivity and dramatically reducing your operational expenses.

4. Over stocked? Under stocked?

As a business grows, so does its complexity and the need for proper stock management. Customer demands need to be met while avoiding stock-outs or ending up with warehouses full of surplus stock. If your sales, customer service, and warehouse staff are not using the same data, this is impossible to do.

For example, increased product demand can easily cause stock outs – all because your purchasing team doesn’t know how much stock you really need. Or say a customer calls up enquiring about product availability or a delivery date – if you can’t offer them a correct answer you may lose that customer forever.

How can an ERP system help? An ERP system brings everything neatly together – allowing your staff to access the same real-time information. Sales and customer service staff can give confident answers to customers and warehouse staff can monitor stock levels. 

Decisions, decisions

Deciding to take the plunge is a hard decision and shouldn’t be made on impulse. Some problems are bearable. Or you may be experiencing just one issue in particular, like errors in data and reports.

However, if you can relate to 2 or more of the points outlined, it’s probably time for you to start considering an upgrade to a fully integrated ERP business management system. At the very least, it’s time to start exploring your options. If you need help getting started, you’re in luck. MYOB have researched the essentials on how to evaluate any purchase of business software. Download the cheat sheet for a pre-purchase checklist.

Alternatively, read how businesses just like yours have successfully made the transition to ERP solutions. Read how businesses like Nippy’s, RIMS Engineering and Early Settlers  achieved success moving to an ERP.