When’s the right time for an ERP system?

A robust, fully integrated business management solution is a crucial piece of capital infrastructure. Yet, as Tony Howell writes, it is frequently overlooked.

Successful or growing businesses will experience changes that contribute to both the functional demands and data manipulation requirements put on a small accounting system.

The result is that the business’s simple accounting system becomes augmented by a combination of spread-sheets, third-party software add-ons, sticky notes and manual processes.

A house of cards can be built, supported primarily by the processes and habits of one or two key staff members who hold it all together.

There are signs that let you know your business has outgrown your simple accounting system.

What you should look for

  • Reports cannot be produced that show live data either quickly or in a usable format
  • There is consistent duplication of data or replication of effort (e.g. information is entered into more than one system or re-entered multiple times in the same system)
  • There is a high dependence on spread-sheets to either store data or calculate data (e.g. spreadsheet being used to store additional customer information because it can’t be entered anywhere else)
  • Key business processes can’t be supported properly or at all by the software
  • There is a lack of traceability, accountability, accuracy and reliability

Ignoring these signs is not a wise idea. It has ramifications.

For example, the quality of customer service is likely to decline. In other words, you will have to deal with things like missed or incorrect orders, forgotten backorders, poor communication, irregular or no follow-ups, and inconsistent pricing.

Without a solid business management solution, it is also likely that staff will be under-utilised or poorly utilised. More staff will be required to do the same task.

Over-stocking or under-stocking of products become more likely and the business is likely to be run with little or no visibility into financial operational performance.

The possible consequences of this include cash flow problems, cost blowouts, profit erosion, declining ­revenue from certain income streams, and a reduction in production efficiency.

A sound return on investment

A single, integrated ERP system that encapsulates all of your day to day business functions will streamline your business and improve your profitability.

The return on such an investment is quantifiable: you will have greater ­control over your data, increased efficiency, greater visibility into the business, and a more holistic understanding of operational or financial performance.

Awareness is the key

The requirement for such a change ­often happens slowly and can creep up on business owners who are often too close to the business to see the writing on the wall: an awareness of the ­problem and a willingness to address it are the keys to avoiding costly ­problems.

By looking for the warning signs that your current software is struggling you can prepare for change at your own pace.

[Tony Howell is Managing Director of Accentis]