Why use an ERP Software for SMB?
by QArea Team on Oct 19, 2017
As the business grows, many companies come to realize the necessity of the implementation of ERP software systems.
There is a common belief that the ERP system is something too expensive and unbearable for the SMB market. To further understand the context of the SMB, this is Small and Medium-sized Business. Businesses usually tend to think that it is used only by enterprise companies. Even so, the control and implementation of all the tasks on time are absolutely necessary, regardless of whether you have 500 employees or just two. In the article, we debunk the myths that the ERP system is beyond the power of small and medium business.
What does ERP mean?
Before delving into the peculiarities of the implementation and use of ERP software solutions for small and medium business, let us briefly consider the very concept of the ERP.
ERP (Enterprise Resource Planning) is an organizational strategy for the integration of production and operations, human resource management, financial and asset management for business. It focuses on the continuous balancing and optimization of the company’s resources through a custom set of data and process models for all business activities.
It can be designed as both ready-made solution and customized software product crafted exactly for the company’s specific need with the custom software development services. As you see, there are not any restrictions pointing at limited use of ERP platforms only by enterprises.
Why use an ERP system?
In ERP system, all lists are synchronized – customer data, sales, production, purchase supplies, finance, reporting, and marketing activities. It ensures convenience of all team members working in the same system on their project. According to the estimations, the ERP software market is expected to reach at $ 41.69 billion by 2020. Emergence of new market segments, cloud technology spreading, and operational efficiency and transparency are the main drivers of the ERP expansion for all businesses – from startups to global enterprises.
What’s more important, modern ERP systems are customized to satisfy the need of SMB not limiting only by corporations. Transparent working mechanisms, quick reporting at any time, and complete picture of all business processes in a couple of clicks – these are only a small part of the benefits ERP brings for SMB.
The specificity of software solutions designed for SMBs manifests in relatively fast results of their implementation. Thus, the primary advantage of ERP software for small and medium businesses relates to its ability to combine all processes in one powerful and convenient system. The benefits of ERP solutions can be listed infinitely. Below there are few we consider to be the most significant:
- Data availability
Once entered, the data becomes available within the whole system, without reconciliation, additional reconciliation and verification.
- Increased operational efficiency
SMBs have a significant bonus from the implementation of ERP software in their operational activity. Thus, according to the recent study, ERP can bring 330% revenue increase and 400% in unit volume growth for small business.
- Consistency of the data
The use of a common database avoids the stages of reconciliation and verification of data.
- Control over employees performance
The discrepancy in figures, in this case, is almost impossible since the ERP database excludes the possibility of many abuses and allows revealing any controversial aspects in employee’s performance.
- Human factor errors reduction
The unified system will not allow the possibility of mistake in the general database. Technical parameters and project data will also be transmitted automatically, without distortion, etc.
- Significant number of updates
Virtually, all ERP-systems are very powerful and versatile. They have the capacity to implement a huge number of processes. In most cases, at the stage of implementation, only insignificant part of these possibilities is used. As the company grows and develops, modules are added or bought, allowing the introduction of new solutions, connecting new departments of the company to work.
What ERP systems are used by SMB companies?
The data array in ERP is bulky and cumbersome, and switching from one software product to another always relates to difficulties. ERP systems are usually very expensive, and require exorbitant investments from SMB companies. Luckily, today there are solutions that were originally created for the needs of the small and medium business.
To date, there are several ERP software systems commonly used for Small or Midsize Business. Among them, the most popular are Microsoft Dynamics NAV, NetSuite, and Odoo Online. Let us briefly familiarize with each and conduct a comparative research of these ERP systems designed specifically for SMB.
So, when choosing an ERP system for SMB it is primarily necessary to determine does the particular software satisfy the company’s needs.
Cloud solutions
A cloud-hosted ERP solution offers a number of advantages over a traditional ERP that is installed locally, many of which are especially relevant to small businesses. A cloud-based ERP is often more flexible and able to adapt to a growing and changing business. Most of the time, startup and maintenance costs are much lower as well because they are included in the license fee. Microsoft Dynamics NAV software can be hosted in the Microsoft Azure Cloud (for an additional fee). Odoo is available in three versions, two of which are local while the other is hosted in the cloud. The cloud-based Online Edition of Odoo ERP offers a customized solution specifically designed to solve small and medium business needs.
B2B and Online Sales
Considering B2B sales, the most significant option provided by Microsoft Dynamics NAV is the availability of Quotes to Orders. NetSuite has gone further, providing also Online Payment, Upselling & Cross Selling options, Odoo Online, in turn, combines all features available in Microsoft Dynamics NAV and NetSuite, complementing them with Electronic Signature, Quotation Templates, and Subscription Management options.
Marketing
For SMB, marketing expects ERP to have the possibility of the following actions: Mass Mailing, Blog, SEO, Web Pages development, Event planning, Marketing Automation, Marketing Campaign management, and Contacts Segmentation. All these are presented in Odoo Online, while Microsoft is limited only to Marketing Campaign management and Contacts Segmentation, and NetSuite lacks Event planning and page editor.
Services & Project Management
Despite the common belief that the functionality of ERP system does not presuppose project management framework, for SMB it certainly does. Thus, Odoo Online allows its users to have the options of Basic Project Management, Lean Approach, Kanban Agile Methodology, and Planning. In addition, it also enables customer oriented function, such as Helpdesk or Support Management, Timesheets, and Email Integration. NetSuite also has a great number of features on Services and Project Management, excluding Kanban View and planning. Microsoft Dynamics NAV offers considerably less functionality with Basic Project Management, Planning, and Timesheets options.
Pricing & Conditions
In terms of budget, there are different solutions proposed by ERP software companies – both expensive and average. In any case, the implementation of ERP system should be perceived this as an investment which will pay off due to a significant reduction of routine operations. Moreover, it significantly increases control and broadens the opportunities for optimization.
Conclusion
Often SMB companies feel a software need but are unable to implement one given the high level of overhead and complexity of the tasks. For growing companies, it is much more optimal to start small in a software solution and add new features little by little as the business expands and evolves. In most practical cases, a flexible and modular approach works best for SMB as it provides the business with the necessary freedom to adapt to change quickly.
Business needs will never stop fluctuating, especially in a growing company. Traditional practices for SMB are now becoming obsolete as more powerful and dynamic solutions become available. Selecting the best option is no longer just about which best suits your business today, but also which is best for your business in the future. Planning for long term success with an easily adaptable software solution can be the key decision in the long-term development and growth of your business.
If you consider the possibility of the implementation of ERP software for your business, do not hesitate to contact us. It will be our pleasure to help you customize and automate your business!
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