Whether you fall under the category of a startup, fully-fledged operation, or anywhere in between, there are elements to your business that require input, tracking, and reporting. An enterprise resource planning (ERP) system is designed to manage daily operations and activities in sales, accounting, inventory, production, procurement, and more. If used effectively, these sophisticated systems can integrate to increase productivity and decrease human error. That sounds like a no-brainer, right? Well, as is the case with most brilliant solutions, ERPs come at a cost… sometimes a hefty cost if your company falls into the territory of requiring a custom solution. In addition to the software purchase, there are the elements of training and the resources that would take from the business to consider.
We most commonly see companies fall into one of two categories:
I’m a startup/small business and my volumes are relatively low. All of my data lives happily in Excel and it’s not broken so, why would I fix it?
Excel is an awesome tool for a small startup and better yet, it’s included with Microsoft meaning no additional cost. However, if you are anticipating any growth, it would be advisable to get an ERP platform on your radar. While the “Excel method” works in the short term, it’s not exactly scalable.
I use an ERP system that I paid a decent chunk of change to implement, but for the practices that have been working efficiently for my business I wasn’t willing to interrupt those procedures to make room for the data input. Now, I feel like I’m paying for a bunch of capabilities that I don’t use.
This is a popular scenario. Often these solutions are packaged and include modules that are not tailored to YOUR business. They’re there, but using them is almost more of a hassle than not which renders the module useless. As a business owner/operator, the most important thing to you is the bottom which is why it’s important that the technology is configured to your specific workflows vs. changing your workflows to match how the technology works. When you see money flowing out and don’t see the value add coming in on the other side, red flags do and should come up.
Q&A with Incipient Corp.
In a sit-down conversation with our partners at Incipient Corp., a technology consulting group that specializes in the implementation of ERP systems among other services, and asked the questions you want the answers to about ERPs.
- There are so many different ERPs, how do I choose?
When it comes to assessing ERPs, it’s all based on your specific business processes and your specific needs. The first step you want to take before you even start looking at any ERP, or any technology solution is to fully identify the specific challenges or opportunities that you’re trying to resolve in your business, document those, and then start your assessment from there. You should have a clear understanding of the outcomes you want to take place in the business and look at the software as a vehicle of how they can get you there versus how the software will solve those problems.
Here is a resource for comparing and contrasting different ERPs: www.Capterra.com
- My company is small. What’s the real benefit to me?
For most small businesses, the biggest benefit is removing manual communications, double entries, or a lot of repetitive tasks. What this will enable you to do is, instead of having to hire one more employee to run the operations, you should be able to start scaling your business, leveraging the same existing employee count or infrastructure that you have because you’ve streamlined the way that they communicate. And previously, ERPs were a little bit too expensive, and it wouldn’t be worth getting into them too early. But now there are ERPs that allow you to take a modular approach or one feature at a time so that you can slowly implement it into your business as you grow versus waiting until you’re at the point where you really need it.
- What can I expect as far as return on investment goes?
Depending on the aspects of the business that you’re looking to improve, our typical return on investment is anywhere between eight months to three years. It’s calculated primarily by looking at the areas where you have friction or bottlenecks in your existing processes. The easiest way that you could identify the cost of a particular problem is by seeing who’s involved in that and what time that person is spending on this non-value-add process. For example, if your sales team is calling the warehouse to find out ”Is this done?”, ”Did it ship to the customer?”, or ”Where is it?”. Right there, an hour a day is wasted doing that, and you have five sales guys, that’s five hours a day! What are their hourly rates? Multiply that across the year and you can use that cost of the problem to assess the cost of the technology and how long will it take to get a return.
- How long can I expect this to take to implement? What about training?
Most implementations, depending on if you’re doing a system-wide overhaul or focusing on a specific function of the business, can take anywhere between three to fifteen months. Three months being around one or two modules and an eight-to-fifteen-month timeline would reflect every single aspect of the business being centralized. This timeframe also depends on if you have data migrations from previous systems. Overall, they can be broken up into phases of three to 12 months for implementation. Training should take place during the implementation so that people are learning as the systems are being built to reduce the amount of training that’s required upon going live.
- We’ve had issues with software on our network infrastructure in the past, what are the requirements out of my system?
It depends on what existing technology you have in place. If your challenges were around legacy systems, that’s because they do not communicate to other systems. The best bet would be to identify a new cloud solution. That will become your new primary solution, while we’ll take all the data of your organization and move it to that system. Now, any issues you had with the previous system won’t be relevant anymore. And if the issues persist with the way that you manage data, then all of those should be your problem statements for how you’re assessing new technology to ensure the solution you choose resolves them.
- Am I going to lose the data from my existing systems?
It’s not quite like copying and pasting. There is a 100% guarantee that we can transfer all the data which is a good thing. You don’t have to worry about not being able to get anything transferred. It’s not like our old iPhones trying to transfer contacts. A lot of it comes down to the structure in which the data is in your current system and then when we migrate it, we just need to convert that data into the structure of the new system. So it’s really just a process of analyzing and exporting your data mapping to how it would store in the system and then physically importing all that data into the new system.
Contact us today to set up a consultation where we can work together to find an ERP system that’s right for you.