Small Businesses Looking to ERP to Increase Efficiency

Enterprise resource planning (ERP) systems used to be a tool reserved mostly for larger companies, but that is quickly changing. A recent survey by Aberdeen Group found that small businesses are adopting ERP software at more frequent rates.

Businesses with under $50 million in annual revenue are looking towards ERP software because they need to be more agile when making decisions and interacting with customers and business partners. At the same time, they must keep costs low. They need to continue expanding without losing track of what made the organization successful in the first place.

Mobile and cloud-based solutions, among other new technologies, have made ERP systems more accessible to small businesses. According to the study, the biggest issues with pre-ERP systems include the inability to track business processes (cited by 49 percent of respondents), the lack of collaboration tools (40 percent) and the lack of access to these applications outside the office (34 percent).

Meanwhile, the report highlighted three ways ERP software can benefit small businesses:

• Standardization, which helps organizations develop the best business and financial practices.
• Visibility makes important data available to members across the company.
• Efficiency in many different areas, from managing finances to improving the supply chain for manufacturers.

Nearly 40 percent of respondents cited managing growth as a major factor with regard to implementing ERP. Improving customer response time (29 percent) and decision-making (30 percent) were also popular motivations.

Cutting costs with ERP

The Aberdeen Group survey found cutting costs to be the top-cited reason for small businesses to adopt ERP software. However, because these systems tend to have high initial costs – in particular, ERP implementation requires substantial resources – smaller companies may want to start by adopting cloud-based solutions.

There are several financial benefits of implementing cloud-based ERP. To start, cloud computing technology generally has lower upfront costs and, unlike on-premise packages, users only pay for the products they use. In addition, fewer IT professionals are required to run cloud-based servers when compared to legacy systems.

Meanwhile, over the long haul, power costs will also likely be lower, and cloud computing’s scalability typically makes upgrades cheaper as well. As a result, companies will have an easier time achieving a return on investment for cloud-based ERP systems.