Can Small Businesses Benefit from ERP Software?

Large corporations use enterprise resource planning (ERP) software to oversee inventory, product production, and orders. ERP is also used to tie that information into financial, accounting, human resources, and other back office functions that the corporations need to operate efficiently and effectively.

Small- and medium-sized businesses (SMBs) might not perceive a need for the same level of integration with the software that they use for their own operations. Many SMBs get by with just a simple accounting package and a few extra tracking products, but in doing so they are forfeiting the benefits that small business ERP software can provide. Consultants point to a common set of benefits that SMBs can realize through ERP software.

ERP software provides unparalleled transparency and accuracy throughout the SMB’s operations: An SMB operates best when its employees have access to all of the same information in real time. ERP software, for example, gives the same information on inventory and finished product orders to finance and accounting employees, sales and marketing teams, and shipping and warehouse staff.

This enables the company to plan cash flow more effectively, to project future sale, and to schedule customer deliveries with a minimum of warehouse overstock or product shortages. Data is only fed into the small business ERP software once, which eliminates errors from re-entry of data into different systems. How that for transparency and accuracy?

ERP software enhances growth and productivity: More than large corporations, SMBs thrive on lean operations, with little or no non-productive time from human resources and machinery. Small business ERP software gives managers real-time information at their fingertips regarding all parts of the SMB. Delays and logjams will become immediately apparent, giving managers an opportunity to clear them before they affect productivity elsewhere in the SMB’s operations. ERP software also automates processes that might otherwise be handled manually, thus shortening production cycles and freeing up manpower for more productive purposes.

Small business ERP software reduces costs: As SMBs grow, they inevitably devote substantial resources to manage and scale up the fragmented software that they have relied on to run their businesses. Small business ERP software will grow with them; saving time and money in the long run.

Cloud-based ERP software can simplify and reduce the upfront costs of an ERP system because they do not require the SMB to procure dedicated servers or to pay large software license and maintenance fees. Modular ERP software also enables SMBs to add functions, such as customer relationship management (CRM) and human resources, with immediate integration of the data from those functions as soon as they are added.

SMBs that use ERP software make better decisions: An SMB that has a handful of product lines may not be able to determine which of those lines is the most profitable part of its business. Small business ERP software cuts through this and all other opaque elements of the SMB’s operations to give an objective picture of where profits are generated. The SMB’s management can use this information to improve less profitable lines or to cut those lines altogether to focus on the more profitable parts of the business. It’s all about deploying better decisions based on the software-generated findings.

ERP software reduces mistakes and waste in the SMB: When all employees have the same objective information, communications are improved both internally and with customers and clients. This eliminates the prospects of ordering too much or too few raw materials, making commitments to customers that will be difficult to keep, and tying up too many resources in warehousing and distribution. ERP software also reduces the need for paper records and the administrative manpower that is required to reconcile records from different parts of the SMB’s operations.

So, can your SMB benefit from ERP software? The ball is in your court.

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