Debunking misconceptions about ERP in real-world applications

Never has there been a better time to deploy an enterprise resource planning (ERP) solution than right now.  Today, it is difficult to imagine a business without an ERP system, with the tool now firmly integrated into many organisations’ vocabulary.

ERP software is a digital tool that organisations use to manage their business operations, from the shop floor to the top floor. The application controls all business processes, maintains accurate accounting and manages the company as a whole.

However, as knowledge of this business software has grown so too have the ERP misconceptions. To understand what’s true and what’s not true about ERPs, we will explore how these ERP myths fall flat in real-world applications.

A few years ago, it was true that ERP systems were too expensive and complex for small and mid-sized businesses (SMBs). They were often discouraged by initial implementation costs and worries around hidden costs that may arise down the line.

When an ROI is uncertain, taking such a large scale business decision could be the difference between success and failure, especially for a small enterprise.

But in recent years the barrier to entry has been significantly lowered thanks to the advancements in modern technology. ERP comes in all shapes and sizes and is more granular than ever. This allows organisations to pick and choose the systems and applications they want, customising a solution specifically for their business needs.

Modern ERPs are built for use over the internet, with entire systems now able to be run in the cloud, removing the need for an in-house server and allowing smaller enterprises to implement them with ease. With Software-as-a-Service, you can pay monthly, turning a capital expense into an operational expense.

Another thing SMBs need to consider is the hidden costs of the status quo. A small company may think an ERP system is expensive, but how much time and money are you wasting due to manual processes, double-entry of data, too much or not enough inventory, expenditure, and delayed order to cash cycles? Moreover, business leaders struggle to make critical business decisions due to a lack of timely and accurate information.

Manual processes require employee’s time and attention. It is still extremely common for businesses to double, if not triple enter information for different departments such as accounting or inventory. The chance of a human error occurring at some point in this process is inevitable, leading to additional costs and possible worse consequences for the organisation. Much like an old car that requires constant maintenance and breaks down regularly, how long will the owner endure before making the decision to replace it?

The fact is that each and every business requirement differs from one another and so does the price. While high-end, innovative ERP solutions can still carry a hefty price tag, technical advancements such as mobile and cloud computing are expected to make ERP software more affordable. Business applications can be run on mobile devices, with employees from all levels of the organisation benefiting.

Empowering your employees is all about making their jobs easier and more efficient. It’s about having tools that provide them the ability to make better decisions and improve the company. Have access to the information not just when you’re sitting at your desk in your office, but also while you’re at home or traveling for work.

The last myth I will address is that price is the most important criteria when selecting an ERP system. While price is always a consideration within business decisions, the truth is that the relationship and support that vendors are able to provide should be the top priority.

This is because you are not just buying a piece of software. You are buying a critical business system that will underpin your entire business for years or decades as it grows and changes. Your ERP vendor will be your trusted business advisor and a supportive relationship is far more important than the price.

The importance of vendor relationships was borne out by a study done by Deloitte on first-time vs. second-time ERP buyers. The top two criteria for first-time buyers were price and ease of implementation, whereas the top two criteria for second-time buyers were vendor’s level of support, and vendor’s performance track record. Second-time buyers understood the importance of relationships.

A vendor who has a good understanding of both your business and his products can properly fit the system’s features to address your requirements. Although this mainly applies during the implementation phase, both your business and the software will continue to evolve, making it even more important that the relationship must continue to grow with it.

Buying an ERP system can be one of the most significant investments your company will ever make. Knowing the truth and facts around ERP are essential, as it is a critical business system that will support your business for many years to come so you want to make sure you have a successful implementation.

 Mark Wilson is the Chief Executive Officer, SYSPRO Europe, Middle East and Africa

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