How can ERP solutions benefit small businesses?
A research paper from the Aberdeen Group has revealed how smaller organisations can utilise enterprise resource planning (ERP), showing that cost reduction is the primary driver impacting an ERP strategy according to survey respondents.
The report, entitled “ERP and the Small Business”, focused on 261 small organisations in its ERP Benchmark survey of 2012 and uncovered key reasons why companies should adopt an enterprise resource planning solution:
- Standardisation – ensuring the best practices of the organisation are followed, with 71% of the best-in-class organisations having standardised financial procedures
- Collaboration – “essential for the growing business as employees become more and more focused on specific functions”, notes report author Nick Castellina
- Visibility – ERP helps in this matter as it can provide all the data needed to run an organisation in one place, “from quote to cash”
- Efficiency – covering the other topics; an example cited in the report was providing vital customer data to employees instantly
43% of respondents cited reducing costs as the main driver for an ERP strategy. Managing growth expectations was a popular choice with 38% of those polled, with delays in decision making (30%), improving customer response time (29%) and making the company easier to do business with (27%) rounded off the top five.
Yet it’s perhaps a surprise to note that, according to the Aberdeen research, 18% of companies with less than $50m annual revenue have not utilised ERP, instead favouring spreadsheets or accounting applications.
“While there is functionality contained within these tools that can help a small business, growing organisations may find that they quickly grow out of these tools,” Castellina wrote in the paper, adding: “Organisations that use a set of multiple disparate applications, however, lack this unique advantage of ERP”.
So with all that in mind, what do enterprises see as the worst excesses of outdated pre-ERP business systems? Not being able to track business processes (49%) was the most popular response; an understandable one, given that this is pretty fundamental to business growth.
Other interesting issues included a lack of collaboration capabilities (40%) and not being able to access data outside of the office (34%).
So what’s the answer? “Organisations with under $50m in annual revenue are looking towards ERP because they need to be more agile when making decisions and interacting with customers and business partners,” concluded Castellina.
He added: “At the same time, they must keep costs low. They need to continue expanding without losing track of what made the organisation successful in the first place.”
But do you agree? Is ERP a solution for everyone?
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