How does it work?
The goal of ERP is to have a computer system that is fully integrated: the secret sauce is that all the functions or applications can interchange, update, store, and report from the same database. Traditionally a business might have one computer system for inventory tracking, one for order management, one for accounting, one for payroll, one for marketing, and so on. If the computer systems cannot communicate with each other, the data must be manually transported by accessing the data from one system and re-keying it into another system or application.
This time-consuming task is potentially an error-prone activity. ERP eliminates this step by centralizing and standardizing the information that each system uses, so instead of having separate databases for each application, there is one central database for all the applications. ERP also automates many business processes that were once manual.
ERP completely removes the step of porting. The process of porting data from one system to another requires a repeated labour expense and introduces a high possibility for errors to creep into data. ERP by nature also automates business processes. Any aspect of the process that involves the ERP application can be prescribed so that any task is performed the same way each time, thus increasing efficiency and reducing errors. It also allows for best practices to be built into the system, increasing employee productivity. The ability of an integrated system to provide real-time, big-picture data can also be of great benefit to marketing, accounting, and management teams, enabling them to make decisions with more accurate and up-to-date information.
How to start an ERP Project
Your business system is the template for profitability and growth for the immediate and long-term future. Getting started requires several things beginning with a clear vision and buy-in from senior management. First, a company must map out the entire structure of the business from the perspective of their process requirements. There are often times where data is re-keyed from one system to another? Are there processes that could be automated but are not? Is there data usage overlaps with the system? Is their process that does not capture the right data? Are IT costs too high? The goal is to determine how detrimental these inefficiencies are to the operation of your business.
If the effects are significant, the next step is to determine whether your business has the resources to complete the implementation, capital or otherwise. If it does, you need to select an ERP solution that matches your industry and current business practices, offers a full range of options, including integration with your accounting system, Finally, the ERP must be able to pay for itself. If a business can foresee a return on investment, an ERP solution can significantly increase efficiency and reduce errors, allowing your business to become more competitive and reduce its costs.
How do I calculate my ERP return on investment?
ERP investments should pay for themselves in savings and future profitability. There are ERP vendors that will do a complete business process analysis and guarantee the return on investment (ROI) on the cost of the project. Each business process is mapped and analysed for potential labour, time savings and efficiency gains.
All businesses are unique; however, many Small Business ERP systems will pay for themselves in a matter of months. From then on, the savings contribute to profitability in many ways. For more information contact us today.