With technology revolutionizing every industry, businesses need a reliable system to manage their widespread operations. ERP systems have emerged as an effective solution. They allow effortless management of all business processes, thereby helping you reduce operational burden and costs.
But the benefits of ERP remain questionable. Many MSMEs and enterprises use ERP solutions, but only a handful of them manage to achieve the desired outcomes. This problem arises mainly because companies end up implementing the wrong ERP software.
In this post, we’ll discuss how you can determine if you’re using the right ERP system or not, along with how to choose the right software.
What is ERP?
Many businesses have implemented an ERP system without understanding its real benefits and utilization. The concept of ERP is intricate and goes beyond the general perception that it’s nothing but the management of business processes.
Enterprise Resource Planning (ERP) refers to implementing and utilizing the technology or software solutions to manage core business operations. Some common enterprise operations included in ERP are supply chain, services, manufacturing, and finances. Advanced ERP solutions also include functionalities like accounting, customer relationship management (CRM), compliance, and risk management.
The adoption of ERP is continually increasing. The global ERP market is projected to reach $78.40 billion by 2026, according to research by Allied Market Research. The surge in demand for ERP can be attributed to the following factors:
- Business expansion to different countries
- Increased reliance on technology
- The need for mobility, integration, and unified management
A survey from Mint Jutras suggested that the success rate of ERP implementation is more than 67%.
However, only 31% of the 67% of businesses who achieved successful ERP implementation said their implementation was “very successful.” Hence, companies across the globe are still struggling to unleash the true potential of ERP systems. And it all starts with picking the right ERP software for your business.
ERP Software Checklist: Are You Using the Right Solution?
Every company is different, and so are its requirements, objectives, and challenges. Therefore, an ERP system that works well for your competitor might not produce the desired results for your business.
Here’s how you can determine if you’re using the right ERP software.
1. Conduct a Process Review
ERP is a business initiative implemented with business processes, strengths, and pain points in mind. To check your ERP system’s efficiency, see if it’s helping you eliminate your hurdles and capitalize on your strengths. If you haven’t witnessed a significant improvement in your business operations, maybe it’s time to upgrade to a new ERP solution.
2. Technical Hurdles
Adopting a new ERP system comes with a technical shift. Your team will need to adapt to the new system and the corresponding operations. Usually, it takes around 2-3 months for an organization to get accustomed to the change.
The problem arises if a company takes longer to adapt or doesn’t adapt to the new system at all. This issue is common with non-technical organizations.
If your staff is struggling to use the ERP software, maybe it’s too tricky to use. Hence, replacing it with an easy-to-use alternative would be a better option.
3. Evaluate the Cost of Ownership
An ERP tool is intended to reduce your operational costs. Sadly, it isn’t the case always. ERP systems are associated with a myriad of additional costs, such as implementation, hardware upgrades, software maintenance, and backfilling resources. These costs can be hefty and can increase your overhead expenses.
See if your cost of ERP ownership is exceeding its overall value. If yes, then it’s time to go for a more efficient ERP system.
4. Track the Benefits
How will you achieve it if you don’t measure it? The same goes for ERP projects. As discussed, the main objective of ERP implementation is to reduce costs and increase revenue. If you aren’t achieving tangible benefits consistently, the chances are that your ERP isn’t aligning with your business objectives.
5. Examine the Integrations
Software integrations are the most powerful feature of ERP software. For example, it should seamlessly integrate with an accounting and billing software solution so that you can create invoices online. Similarly, it should also integrate with your CRM system to provide a comprehensive view of your marketing campaigns.
If your ERP software doesn’t integrate with major enterprise platforms, you’re missing out on efficiency and functionality.
Must-Have ERP Features
After evaluating your current ERP performance, you might feel the need for an upgrade. If so, here are a few features to look for in an ERP software solution.
1. Purchase Optimization
Efficiently processing orders is the key to success for any retailer or distributor. However, distributors often struggle with managing inventory and invoices, which slows down order fulfillment. To overcome this hurdle, look for an ERP system that optimizes the purchase-sales cycle.
2. Logistics Management
Managing logistics has always been a challenge for retailers. According to Statista, high logistics costs, last-minute changes, timely delivery, and rebounds are common roadblocks in the distribution process.
It’s crucial to find an ERP solution with robust logistics management features. It should provide enhanced visibility across orders, inventories, and shipments to help you make informed decisions.
Many advanced ERP systems come with in-built CRM and accounting functionality. But even if the software doesn’t, it should allow seamless integration with tools like CRM, HCM, and receipt maker apps for iPhone and other devices. With robust integration capabilities, you can manage your entire business operations from a single dashboard.
In the end, it’s all about the bottom line. Your ERP software should provide a comprehensive insight into your business’s performance. It should have an in-built reporting system that automatically collects and organize data into intuitive graphical representations for clearer understanding.
Modern-day ERP systems come with so many features that they overwhelm business owners. As a result, they end up opting for a solution purely based on features.
While features are important, it’s equally essential to understand your business requirements and challenges. Therefore, create a strong implementation plan and put all factors into consideration before selecting an ERP solution for your company.