The rise of the Internet, increasing consumer demands, the pressure to enhance the business process, and the urge to build more collaborative relationships with business partners and key suppliers are all pushing businesses Enterprise Resource Planning (ERP) solution. So, what is Enterprise Resource Planning (ERP)?
What is an ERP?
ERP is an acronym for Enterprise Resource Planning, but even its full name doesn’t shed much light on what ERP is or what it does. For that, you need to take a step back and think about all of the various processes that are essential to running a business, including inventory and order management, accounting, human resources, customer relationship management (CRM), and beyond.
At its most basic level, ERP software integrates these various functions into one complete system to streamline processes and information across the entire organisation.
Why UK Small Businesses need an ERP Solution?
ERP systems were originally referred to as IT Integration systems, which enables a perfect integration across a company’s Information Technology (IT), whereas it has evolved to a point where it has taken on a life of its own, and today, it is a strategic piece of software that is designed to align the operations and identify and achieve business goals.
Ultimately, an ERP system is designed to provide a comprehensive, integrated source of data that has a single version of the truth, and that data is backed by far more than just a computer system.
What are the benefits of ERP systems for small businesses?
- Efficient management:
businesses are able to save on time and labour by integrating various company departments. All the employees can take important decisions and come to a conclusion in an effective manner.
- Cost Saving:
The overall cost of a company is reduced by using an ERP solution. This system requires the company to upgrade their old systems and make use of new tools for businesses such as more advanced equipment and automation which uses smart systems at a cheap price, and can cut down on the time required to manufacture goods. Therefore, it will help small businesses in the long run.
- Better Customer Relationship Management (CRM)
When it comes to customer relationship management (CRM), you need to manage multiple touch points – one of them being an ERP solution as it has a single dashboard for all departments and users. It is easier to interpret the information when you have all of the touch points in an ERP solution. This makes it easy for the business to collaborate to plan and execute strategies that will benefit their business.
- Enhanced business relationship
ERPs help the small business to stay in touch with its partners. They ease the process of sales, and the management and reporting of supply chain and operations into one easy to use interface.
- Increase in Profit Margins
You can easily boost your business with a successfully managed operation. Small businesses can use an ERP system to do just that. It helps in improving the profitability, streamlining the processes and efforts, and making a bigger difference to your bottom line.
- Reduction in Risk Management
When it comes to the risk management, ERP systems help in monitoring, predicting, and controlling all types of risks and ensure that the company makes informed decisions.
- Better Business Decision Making
ERP systems allow the small business to measure and report on its performance. In order to reduce the risks you have to use advanced technology and high-level decision-making methods.
- Reduced in Paper Work
ERP systems help in paper work. Generally small business use different office-ready tools for communication and coordination with various departments. But, ERP systems help in reducing the effort in maintaining and managing a business.
- Integrated Information
In a small business, lots of time is wasted by the employees due to different sources of information, multiple versions of data, and lack of communication and collaboration tools. Also, there are problems common to all organisations, ranging from ineffective sales and marketing to ineffective customer support.
- Reduce the effort in business
An ERP solution helps in reducing the efforts wasted on various processes and managing them. This software comes with business processes that help in reducing the effort.
- Quality management
ERP systems keep everything running smooth and help in quality management with automated and coordinated solutions.
- Easy accessibility
The information is accessible easily with ERP systems. The data is seen with easy access through scanning of records, spreadsheets, and reports. With the available information, the management is able to make the right decisions to deal with the challenges of the business.
- Streamlined Processes
When it comes to business process management, focus should be given on to an integrated solution instead of using multiple applications. ERP systems ensure that it is all done at once.
- Reduced Risk on Project Management
The system helps in project management, which involves a team of people from many departments. Hence, ERP systems help in reducing the risk of the project as various organisations have the same communication channels and single point of communication with the team.
- Enhanced information security and safeguarding
ERP systems provide with flexible options to store data, including on multiple servers, which is a great help to small business when so much data needs to be stored. Moreover, they help in securing confidential data from intrusion.
- Help in better forecasting decision
When it comes to forecasting, it becomes easy with an ERP system at your disposal as the decision-making process is much faster. With an ERP system, everybody has access to the necessary information for decision-making.
- Support in workflow management
ERP systems provide with the necessary support when it comes to workflow management. They keep everyone updated with the workflow, status, and future plans of a certain event, task, or project.
- Easy tracking of inventory
While it is easy to track inventory, it takes a lot of efforts to manage the inventory. ERP systems help in streamlining the process of tracking inventory, and it saves a lot of time.
- Support in business forecasting
ERP systems provide with a convenient way of getting reports and analysis of the performance of a company compared to the competition. With the available information, it becomes easy for the management to forecast the future performance of the business.
- Easy to communicate
ERP systems provide with the opportunity to communicate with the external parties. In a big business, where there are multiple people from various departments working together, it becomes easy to maintain a smooth communication between these people.
How to Implement an ERP solution at a UK Small Business
If we go by the statistics, the implementation is the core phase of any software program. Proper and timely implementation, backed with sufficient knowledge and resources, is the key to success of any project. For this reason, we have prepared some information for people who want to implement ERP, and the challenges they might face.
The time it takes for the implementation of an ERP solution depends on the nature of the program. If it is for a small business, in which the majority of information is available in the hard copies, it would not take more than two weeks for the implementation process. For bigger companies that store a lot of data and information online, the implementation time would go up.
- When it comes to using different ERP systems, experts suggest that the user should prepare for the implementation process. The person should know the business and the processes that needs to be implemented so that it could be simplified for effective use.
- Another important factor is the user interface of the system. If the user can understand and control the program easily, it would make the implementation process a lot easier for the user.
- It is the three D rule, where the user should be deliberate, definite, and disciplined when proceeding with the implementation of the system. Without any of these practices, the project would not be successful.
- It is important for the user to understand that software systems are not just going to load themselves onto the user machine. If you have an intention to use a specific ERP system, you need to download it and install it on the computer. If you are not able to do so, You have to call the experts to do the job for you.
- Before even thinking about using an ERP system, the user should have some information about the inventory systems that it uses. There are many systems available in the market; Make sure that you check the inventory first.
- Mobility is the new trend in ERP system. People prefer a way to do business anywhere and anytime. People demand mobile system more than the stationary systems.
- You need to do a proper study and planning before implementing any ERP solution. If you are going to use one, it would help to go through the implementation process of successful projects of similar projects. Ideally, the success of any project is 80 per cent due to right planning.
- All the people involved in the implementation process should keep one thing in mind that the project is going to be committed to the system. For this, it would be better if the users can keep few days in hand for the testing of the system and resolving any glitches in the system.
- Any ERP system would involve integration with other systems and this is where experts can help. ERP implementation experts know to deal with the tasks need to be done in the integration process. It would be better if a user can choose the experts and do the integration process with the help of them.
- During the implementation process, there are many things that require certain modifications in them. The user should keep at least one person, not involved in the implementation process of the system, who will be making all the changes to the system.
- It is also important for the user to understand that the implementation process cannot be done in restricted time. It would be better if a person can allocate at least two to four weeks exclusively for the implementation of the system.
- The user should know that there are many other software programs that are running in the background. So, a user should have a clear idea about how these software programs would be interacting with the new one.
- During the implementation process, the user needs to handle project documentation with care. The project would be wrong if the documentation is not maintained properly. The user should take extra care when documenting the processes.
- Shorten the time, and expand the functionality – that’s the motto of any person planning to implement an ERP system. Many users think that they are not going to get enough time to do all the things that they want to do with the new system.
- The user should understand the importance of planning, especially when it comes to implementing ERP systems. If the business does not plan well, the user will find a lot of problems in the system and that will kill all the benefits that the new system is expected to bring in.
- In order to implement the ERP system successfully, the user should make a contingency plan. Any failed system means lost money, that’s for sure. So it would be better to take a backup of the existing system, and then build the new one. That way, if there are any glitches in the new one, the user can go back to the existing system, and then proceed further.
- Make sure that the system can support the workflow. The workflow is a huge aspect of any business, and the user should find a way to modify the new system in such a way that it is in sync with the workflow.
Should you hire an ERP Consultant?
There are few basic reasons why a user may need to hire an ERP consultant. It is critical for the user to understand all the benefits of hiring ERP consultants.
Some of the benefits of hiring ERP consultants are listed below:
If you are not sure about the way ERP works, you should consider hiring an ERP consultant. He or she is going to work with you for the implementation of the system and help in the implementation process.
The user is also going to be able to use the services of a consultant for the setting up the payment process. If you have never used an automated payment system, it would be better if you hire a consultant to get the job done. The consultants would be aware of the relevant aspects of the process, that’s how they can guide you on how to perform it.
It is important to have a backup of the data in the new ERP system. If the user wants to do a smooth transition in the new system, it would help if you keep a backup of the data in the old system as a backup. It may be helpful if you are having problems in the new system.
These are some of the benefits of hiring an ERP consultant. You should understand the importance of hiring an ERP consultant in the case of ERP implementations.
What challenges should you be prepared for when implementing ERP?
ERP is one of the most effective ways to capture information and process data in an organized manner. This is where the experts would play a role to ensure that the implementation is successful. Some of the challenges that would be faced while implementing ERP are:
It is important to understand that there would be a lot of financial transactions involved in any ERP implementation. In order to manage these transactions, you need to check the budget you have and how it would be allocated to the ERP. ERP implementation experts can help you with this aspect.
Try to find out whether you can have a better option in software and if the option is based on open source or not. It is really great if you are able to find an affordable ERP solution. Try to check the pricing by running a few searches online. You may be able to save few bucks if you do a proper comparison.
If you are not sure about the way you want to handle the shift from the old system to the new system, the implementation of the new system would be a bit challenging. You may want to have a strategy set out as you would be definitely facing problems during the transition phase.
Everything would be dependent on process rather than any technology. So just make sure the process is manageable. If the process is manageable it means ERP implementation would be successful.
The user should understand that doing everything manually is not the way to success. So a user should have a clear idea about how automation can help in converting manual tasks to the automated ones.
The user should also have a clear understanding of how the team should involve with each other. Try to include new members along with the old ones. Make sure that they are all getting along well with each other.
This is how a user can avoid some of the challenges they may face while implementing an ERP system.
Ways to Experience Successful ERP Implementation
First, choose with care: We are living in a time where businesses of any size must have an ERP system for management, accounting, and business needs. Solutions like Microsoft Dynamics NAV aims to provide all businesses with the latest, most user friendly ERP solution at affordable prices. However, this solution requires an experienced professional on your side. If you are having trouble deciding whether to go with an ERP package and need recommendations for the best ERP options, you need to choose your ERP provider with care.
Make an Association: Once you have chosen your solution, you should purchase from an organization that is certified by Microsoft themselves. Microsoft Dynamics NAV is the most popular of these packages, so making an association with a certified provider is the best way to ensure that your business will be up and running in a matter of months, not years.
Install Easy to Use: One of the most important aspects of your ERP implementation is the installation itself. Make sure that the system has a user friendly interface so that users can quickly maneuver between navigations. You should also choose your ERP provider based off of their customer service support. It is most important that your ERP Solutions provider feels like a one-stop shop, not just another vendor to pay.
Get the Transition Right: Once your ERP solution has been installed, the next step of the implementation is to get started on the process of making the transition from your old enterprise system to the new one. If you’re not careful with all of the details, a good percentage of users may not be able to easily adapt to the new framework. This means you could lose customers and revenue while you wait on the transition to complete. Before completing the transition, send your ERP solution provider a list of all possible user concerns and watch how well they handle your requests.
Have a Back-Up: Even if you and your ERP solution provider are completely at ease with one another, you both have one thing in common: you cannot predict the future. A good ERP solution is one that offers both ongoing support and a backup for when something goes wrong. To get the best ERP solution though, it may mean that you need to make a few concessions in order to have the best possible pricing.
How does ERP implementation help in the future?
ERP implementation is not just a way to improve business operations, it is a path which takes you towards success in your business. It is going to help you in the following ways:
1. It is going to help you get a strong hold on competition. When you have ERP solution in place, it means you are going to be in control of your life, the future of your business and the financial aspects of your business as well. And that is not it! You can also hold your customers and the financial aspect of your business in a good manner.
2. It also has a lot of benefits of inventory management. Inventory management plays a major role in the success of any business. So this is a major benefit.
3. It plays a major role in the automation and secured connection. If your business is dealing with modern technologies, you may need a secured connection which would be absolutely necessary for the continuity of your business and to hold your customers in a better way.
4. It helps you with the development of your business and the better working environment. You would not want to be in a competitive atmosphere and you want to create a better working environment for all your employees. So a solution like ERP can help you in this aspect.
5. It is going to help you with better finance and higher profitability, because it would be able to reduce the work load of your finance department.
6. It will help you in maintaining and controlling your inventory as well as the information, which will prove to be very beneficial to your business. According to a report of about 35%, the inventory saves a business because of the increase efficiency and accuracy.
7. It will help you a lot with the business analysis, which will help your business to grow in a faster way according to the growing trends of the market.
8. It will help you in budget planning, which will help in the plan of future as well as the profit margins.
9. And last but not the least, it would help you in the human resource. It will help you to make a better HR planning system, which would be beneficial for your business and the future working of your employees as well.
So these are some of the ways through which ERP implementations would help you in the future.
Pros Vs Cons Of ERP: ERP System
There are numerous advantages and disadvantages of implementing an ERP system. In the present global business scenario businesses are facing a lot of problems and they are looking for a quick solution to their problems. An ERP solution is an effective solution to the majority of the problems. It aims the reduce the total cost for the business and improve the operational efficiency and brings the business on track. An ERP system is very helpful in the following aspects of business.
An ERP deployment is a process of change management; it works as a catalytic for change. It has the power to transform businesses and help them in better ways. Deriving benefits from such an ERP solution is not an easy task. It takes a team of skilled individuals to evaluate the objectives of a company and customize an ERP solution accordingly. There are many benefits of such an ERP solution but there are certain disadvantages too.
The benefits and disadvantages in detail are mentioned below.
MAKE YOU FASTER
Every single individual in business is focused on one thing alone that is maximizing profits. Companies are getting more and more efficient in every step. An ERP solution can help an organization to improve overall efficiency in manufacturing, distribution, sales and supply chain of a business.
When ERP is implemented it brings about changes and improvements in all areas of business, from front to back office. The application would help in streamlining operations, computerizing inventories, streamlining the invoicing process and much more.
It helps in the following ways;
Order processing refers to the process of sales, purchasing, estimating and shipping of an item. It helps in processing and storing of such orders in an efficient and accurate manner. In order to streamline the process of order processing and make the system more efficient, ERP provides the ability to modify the capacity of a particular employee to hold his/her inventory in an efficient manner.
Managing and processing orders takes place in the sales and purchasing modules of an ERP solution. Sales and purchasing modules are interconnected and this allows the sales application to access the purchase and inventory information.
Businesses take up various responsibilities since it is the job of the business to ensure that there are sales to the customers and a return on its and the investors’ investments.
Every business has a system of budget planning and monitoring of marketing efforts. An ERP system takes this to the next level and allows you to plan for the future.
ERP helps in budget planning in the following ways:
- It allows provision of budgets of individual departments and hence financial management is made more transparent.
- It enables easy preparation of budgets and providing real-time updates on projected budgets.
- It enables easy preparation of budgets and providing real-time updates on projected budgets.
- Improves resource planning and management as well as the smooth flow of resources.
- Improves cash flow planning and business communication.
- Manual processes are eliminated and integrated financial information is collected and displayed.
- Products and services costs are tracked to help in the prediction of overhead costs.
- Costs per activity are provided to help in cost benefit analysis.
- Advanced forecasting allows in decision making for future and in developing strategic planning.
- Focusing on profitability and concentration of budget on activities, which would prove beneficial.
- Budget forecasts for each department as well as for the whole business is also provided.
- It allows easy understanding of the demand and supply of the products over a period of time.
- Improved planning for the agency workers.
- Integration of budget for forward orders to forecast estimated sales and financial factors.
- Expedite decision making and provides better access to information.
- Enhancement of investments.
- It reduces the time in budget planning and forecasting period.
SALES AND MARKETING
Every company has its own set of marketing strategies which will help it to create a brand image and target the desired customer base. With the help of an ERP system, businesses can be better at creating strategies and an effective marketing campaign can definitely lead to greater sales and profitability. An efficient ERP solution helps in the following areas to get the results.
1. It would provide real-time analysis of the customer behaviors and represent accurate and prompt customer service.
2. It helps in managing the sales team effectively.
3. It provides and improve organizational efficiency to process orders, track time, create sales reports, effectively manage delivery of products and negotiate more effectively.
4. ERP software provides information to the management on which products are more saleable and which are requiring more advertisement and attention.
It helps in the areas of customer service and helps in increased profitability.
ACCURACY OF INFORMATION
ERP provides the accuracy of information in a quick and efficient manner. Information and data that is shared between various departments, for example, human resource, finance and accounts, supply chain, sales and production can be accessed in a quicker manner and in an efficient manner.
However, this has to be implemented in an appropriate manner and an ERP deployment is in fact a process of change management. An ERP solution is a process of aligning all activities and dealing with reduction in activities of various departments. ERP implementation brings about change; it is a process of aligning with the goal of the business. This is an important factor to be given consideration.
It is important for every business to take into consideration that if there is harmony and consistency in the workflow it will have a positive impact on the business and the business will start to grow. An ERP system provides the uniformity of the workflow, which helps a business to grow and prosper in the present competitive world. An ERP system is a flexible solution, which assists the business in creating their own customized business process and workflow so that the business is not adversely affected.
The companies that make decisions fast are the ones which are able to survive in the present market scenario. An ERP deployment would provide an effective system, which would allow for quicker decision making and provide effective analysis in order to take the correct decision in the right direction.
A decision made by a company on time would make it an effective competitor. ERP helps in taking effective decisions in the following ways: It provides balance and easy flow of information and data to the management which is used for decision making and effective manipulation.
- It aligns the business processes of various departments.
- It provides a rational analysis to the managers and provides complete information about a product, service or a process.
- It provides skills and efficiency to the sales team members at the front line.
- It provides inputs on how new products and business opportunities can be taken up.
- It provides information on potential revenue generated by various products and services.
- It provides an in-depth analysis of sales, transport, and distribution channels.
- Financial forecasting is made more accurate and efficient.
- It provides information on the cost of a particular product, service or process.
There are numerous approaches that can be used to design and deploy an ERP system. Every company is given the freedom to work according to their needs and requirements. However, it always recommended to take up the approach of the industry standards.
That is, when one is designing and deploying an ERP system one should consider the industry practices and best practices. The approach of industry practices should be followed only to have the consistency of the system and to protect the entity’s domain or place of business.
Disadvantages and Challenges of ERP for Small Business UK
A completely effective ERP is an upcoming trend but it can’t be said that every organization could successfully implement an ERP. ERPs have a greater potential, but there are still some challenges associated with it.
Some ERP systems fail to implement because initially, the processes are not mapped correctly. Although ERP provides organization with less time and money, it has the potential to reduce risk.
One major challenge that companies face is the lack of technological sophistication to be able to use modern technology effectively. Many companies have a hard time acquiring the technology to perform ERP effectively.
Some of the companies might not know where to start when it comes to finding a good ERP solution. There is a problem of vendor selection in ERP implementation. This can cause potential buyers to lose trust in ERP system. Appropriate planning and purchasing process should be taken into consideration when one is going for ERP.
SPREAD OF SUCCESS
The spread of the ERP system is very important and that is why the management must be fully dedicated to the ERP system. A great ERP system can lead to the success of the company. A lot of companies are enabling its employees to develop the ERP, but the management should know the final outcome of the ERP.
Implementation barriers are a very crucial issue that an ERP implementation faces. The ERP implementation process can be complex to some extent, so the management must be prepared to address all those barriers and solve them. Sometimes it helps a lot if an administrator has enough knowledge about the ERP software.
New policies can be very difficult to pass for the company if there is an integration issue. Policies must be set if the ERP implementation is allowed. If the ERP implementation, then it must be clearly stated in the policies. Policies also help the users to focus on their work and not divert their attention. Some of the policies can be lost and their implementation can be difficult.
It can be very difficult to convince all the users to start using and administering the ERP system, especially if some of the users are not convinced about the need for the ERP system. The users must be convinced for the successful implementation of the ERP system. The behavior of the users and the ‘buy-in’ factor is very important when it comes to ERP implementation.
Employee engagement is very essential for an ERP system implementation. A lot of users will be working away from their desks, performing different tasks. Without engagement, it will be difficult to implement the ERP system. The ease of operation and the operability of the ERP system are considered to be essentials for employee engagement.