Enterprise resource planning–or ERP for short–is a business management tool that helps companies improve productivity by streamlining and automating various operations. When it comes to ERP, people commonly think of giant machines in big companies, but that is no longer the case. Today, even medium and small-sized businesses can implement an ERP system within their premises or on the cloud for remote collaboration.
Small businesses, in particular, can feel at odds when using such a complicated software system for their daily processes. However, this is often a necessary step in their growth. While manual processes and data entries could work for a time, growing businesses need extra tech power to keep up with demand and improve their methods as they become bigger.
To prepare your small business for ERP implementation, here is a quick rundown of the key ideas you and your team need to know.
ERP Integration in Small Businesses
Quick research on ERP will show that there are many benefits to using an ERP system. Keywords such as “ERP Philippines”, “ERP suites”, and “ERP pros and cons” will give you a bigger idea of its advantages and disadvantages.
The general list of perks your company can acquire from implementing ERP include:
- Saving on repeated operational costs (e.g. double data entries)
- Reducing frustration in inefficient processes
- Supporting company growth
- Getting a technological advantage over competitors
Indeed, using ERP can be a game-changer for small businesses if they implement it properly.
Another thing they have to consider is timing. Getting an ERP system too early or too late can drain company resources if not handled well, so businesses must time their ERP implementation right.
The following are some clear signs that your small business should implement an ERP system:
- There is an explosion in customer demand, and it has been difficult to keep up with it.
- The business acquired increased funding (such as from investors or partners) and is seeking to further improve its operations.
- Employee count is rising fast, and managing them manually is no longer effective.
If your company is experiencing any of the above, it is time to seriously consider ERP integration and look for ERP vendors and solutions.
Forming a TOM
TOM is short for Target Operating Model. It refers to the vision that you would like to achieve for the business, and it differs from one company to another. To form a TOM, you need to do the following things first:
- Form a dedicated in-house team that will oversee the ERP integration process from start to finish.
- Go to each department and ask for crucial details, such as the number of users for the new system, the features they need, and the job positions that will use the software.
- Spot ambiguities, gaps, and pain points in operations, and determine how ERP can address them.
- Find a trusted ERP consultant that will help the team move forward with the project.
With a clear vision of what the company wishes to address and achieve, the team will have a better idea of what type of ERP solution to implement.
Selecting the Right ERP Solution
It is easy to imagine ERP as a single giant, complex program, but that is not the case. ERP software comes in various shapes, sizes, and applications. For example, the ERP that a multinational retail store uses can be very different from what a local grocery store would use.
To help you in the ERP selection process, use the guide questions below:
- Which type of program suits your company best? On-premise, cloud, or hybrid?
- What are the functionalities the program offers? Do they address the pain points the team has listed earlier?
- What are the available modules and features? Are any of them specific to your industry?
- What is the background of the program? How long has it been around? Which companies use it?
- What are the reviews of other companies who have used the ERP program?
- How much will the program and implementation cost? What about follow-ups and further maintenance?
- Does the vendor offer ongoing support and training plans? For cloud-based ERP providers, are they actively developing the system?
With these in mind, you will be able to narrow down your ERP software prospects and determine the most suitable program that will fit the company’s needs and goals.
Common Challenges in ERP Implementation
As discussed earlier, ERP integration brings several perks to the table, but it is important to note that there are downsides as well. For one, ERP programs are notoriously expensive, even without implementation and maintenance costs. Another is that improper planning and execution can significantly drain resources and leave the company at odds with an incompatible system.
Thus, it is critical to keep note of the common pitfalls that several companies fall into when implementing ERP. They are:
- Incompetent project governance
- Lack of support and dedication from the enlisted team and the company itself
- Not preparing for potential problems after ERP deployment
- Inaccurate data quality and integration from previous data entry methods
- Forgetting about regulatory compliance on security, data privacy, etc.
Fortunately, having a proper consultant and a trustworthy vendor can significantly help you address these issues. The ERP vendor will ensure that you are getting the program you asked for and implement it as issued while the consultant will guide you throughout the work-extensive implementation process.
Overall, integrating an ERP system is a significant company-wide change that will affect operations on all levels. As such, it is crucial to research and plan in detail to avoid problems and make the most of the company’s investment. In this manner, your small business can transform effectively and flourish in a highly competitive market.