You may be ready for ERP When Basic ERP or Spreadsheets Will Not Do
Small businesses will need a more comprehensive and functionally more powerful software solution when any one of several indicators is present. These include:
Headcount has grown, yet management can no longer oversee and control all personnel and functions. Often the owners/managers of small businesses can stay on top of all manner of financial and operational issues simply because of their full-time presence at the company and their close working relationship with their employees. But, as companies grow in size and take on ever larger numbers of employees, the owners/managers cannot adequately supervise the activities of every single employee. This is a critical juncture in the evolution of the business, as it indicates the need for the company to adopt more stringent controls so that the potential for fraud, poor customer service, supply chain disruption or other adverse business outcomes are reduced.
The time required to enter, update and/or reconcile information and current systems is growing out of proportion to the growth rate the company is encountering. In a nutshell, simple systems, like that of a spreadsheet, work best for simple business environments. As a small business evolves into a larger, possibly midmarket firm, it needs systems that were designed to reduce errors, increase worker efficiencies and worker effectiveness.
The simplest solutions on the market often fail to support some of the basic industry functionality a growing firm may need. As firms grow, nuances within certain business functions become ever more critical to the business and must be addressed appropriately. For example, a Midwest metals processing firm migrated from a very basic small business system to an SMB (small to midsize business) ERP solution because of the old software’s inability to handle inventory and inventory variances. Many small business solutions may come preconfigured with a number of different charts of accounts for different industries; however, this is not the same as providing deeper vertical industry functionality (e.g., manufacturing scheduling or warehouse picking). New ERP systems, at this stage of a business’s evolution, are often required because of the growing and significant vertical industry business requirements.