What is ERP and why do you need it?

Wednesday, July 3, 2019

What is ERP and why do you need it?

Are you a businessperson or a gambler?

We often ask business owners how they would describe themselves. Are you a businessperson or a professional gambler? At first it seems like an odd choice to make. But let me explain. Business people don’t guess, they make predictions based on the information that they have to hand to inform their business decisions. Gamblers on the other hand tend to guess – they may tell you it’s based-on form, previous performance and so on, but it boils down to a guess.

Now tell me how you get the answers about all the different facets of your business – finance, sales, marketing, production and so on. Nine times out of ten, the answers are provided by different people, from different departments of the company, using different systems. And that information is usually out of date, it’s historic, old news if you will.

So, unless the exact same thing happens this month as it did last month, and the figures that you’re basing your decisions on all end up being identical, then you are guessing. I ask you once again, are you a businessperson or a gambler?

Of course, this doesn’t necessarily take into account that most business people also rely on their experience, skill and intuition, as well as the figures to make their decisions, but it raises an interesting point – how much better would your decision making be if you had the right answers, right in front of you, in real time?

An ERP system gives you just that. Put simply, it’s a system that manages all your business processes in one place and in real time. It gives you a single version of the truth that allows you to make better business decisions, quicker.

What benefits will an ERP bring to my business?

Most companies, regardless of their size or the sector in which they operate, depend on five basic processes: A sales process to deliver the customers who will buy the goods or services; a marketing process that promotes the goods or services and generates leads; a fulfilment process that produces the goods or services; a finance process that handles income and overheads and a customer service process that nurtures the relationships on which the business depends.

All these processes will likely run their own unique systems and will employ a range of people who bring their skills and experience to bear.

This model is all well and good, but the problem arises when you need to make a business decision. Like any good business decision, it needs to be based on good information. However, with disparate systems you can receive disparate data. Ask a question like “what is our most profitable product?” and you will get different versions of the truth. Marketing will offer their version of the truth, fulfilment their version, whilst finance offer theirs and so on.

To make matters worse, quite often there is a lead time in generating the data from each department, so you’ll have to wait for each department to provide you with the data you need. Because your systems are not connected and do not speak the same language, not only do you have to wait for the data to be provided, you can also lose valuable information as the different versions of the truth are translated.

An ERP system replaces all of these disparate systems in different parts of the business with one system that speaks only one language and so improves reporting. It offers you a single version of the truth that allows you to be much more agile in your decision making.

An ERP also has the benefit of transforming your business into a learning organisation. Any business relies on both good systems and good staff. However, sometimes your staff are just not available be it through illness or on leave. And speaking of leaving, staff do move on and even if they stay, they’ll eventually retire. And every time your staff are absent or leave you, your organisation loses their experience.

An ERP counters this wastage by systemising your business processes, meaning that what your staff know can now be contained within the system. So, if someone has a day off or leaves the company, you still retain their experience as it is built into your process.

With the addition of an ERP to your business, your ability to report on any part of that business improves immeasurably, as it provides accurate data from one data source in real time. And this allows you to do more of what works for your business and less of what doesn’t.

An ERP will quickly identify what is efficient within your business and what is not. This allows you to stop wasting time and expense on the processes that are not working and to spend those savings on the things that are. This ability to view the whole business allows you to increase your capacity by becoming more agile and efficient, meaning that you can do more with the same resources – achieving growth without additional investment.

So now I'm curious, what do I do now?

Deciding to implement an ERP system is not a snap decision. Our advice would be to do your research, speak to an ERP consultant or partner and find a team that you can trust. A word of caution: a bad ERP system implemented well by a great team is better than a good ERP system that is implemented badly. So please find the right people whose advice you can trust.

Cloud Business Solutions has been helping clients transform their businesses with ERP and manage change since 2005. We are an accredited partner of leading ERP systems including NetSuite, Infor and Microsoft Dynamics. We can support you through the process of integrating ERP into your business from initial consultancy to ongoing aftercare and support. Please contact us to start a conversation.

A word of caution: a bad ERP system implemented well is better than a good ERP system that is implemented badly. So please find the right partner whose advice you can trust.