What are ERP systems?
With an efficient and centralized database management system, built-in analytics and a dashboard, ERP systems can monitor business resources such as revenue, materials, orders, staffing and manufacturing capacity. It can handle the entire accounting infrastructure. Some of them even come with excellent Customer Relationship Management (CRM) platforms.
Why do SME’s need them?
Most SMBs have begun with a “Start where you are. Use what you have. Do what you can.” approach. When the companies are small with a limited number of transactions, they typically begin with cheaper tools like spreadsheets. Data is keyed into these spreadsheets, making it increasingly vulnerable to errors and leakage of confidential information as well as misinformation, as the organization grows in scale.
The general perception that SMBs have about ERP systems today are that they are best suited for large-scale enterprises due to the high cost of ownership, the complexity of implementation and the subsequent maintenance costs. The last decade, however, has seen the advent of ready-to-use, off-the-shelf ERP packages specially designed for SMBs, offering easy implementation. The emergence of cloud computing, pay-as-you-use options and minimised requirements of skill sets, has made ERP systems a more comfortable consideration for SMBs hoping to become leaner and more efficient.
How can ERP systems help SMB’s prepare for the future?
Maintaining data over spreadsheets may seem cheap. However, as SMBs grow, the additional cost of human resources and individual software systems for each department to manage data eventually eat into the revenue significantly. In this competitive business environment, the lack of integrated business software can have a negative impact on the business due to a lack of control over its data and thereby its operations. Here is how ERP systems can prepare businesses for future success:
1. More informed decision-making
Core business decisions can be taken promptly due to the availability of accurate information when it is needed the most. ERP systems provide centralized data on a real-time time basis. The most current data can be accessed easily in standard formats by authorised individuals. ERP makes it possible to take quick and accurate decisions with more confidence. One can even compare past and current data easily. ERP systems can also provide analytical data. Therefore, budgeting, planning and forecasting activities also become more natural.
2. Increased productivity
An ERP system can store a variety of data in one place. A wide range of critical inter-departmental data such as information about vendors, customers, products and materials, bills and invoices are all available on a single system. One need not coordinate with various departments, wait for them to update their information, and collate data received in Excel sheets into the desired format. ERP saves time and leads to consistent and reliable information with a minimised scope of human error. Most operations become streamlined, leaving people to focus on the actual business itself.
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Article Credit: SR