The top six signs that your business needs ERP software

The top six signs that your business needs ERP software

As a business grows, it’s inevitable that the administrative workload will increase. Unless proper processes for managing transactions and information are implemented early on, there’s a risk that personnel will become overwhelmed. As a result, cracks can appear and despite everyone’s best intentions, a business can suffer; it’s the old adage of a rapidly growing company becoming a victim of its own success.

These days, most companies will invest in accounting software to automate otherwise time-consuming manual financial management, using these systems alongside spreadsheets to manage other areas of operations, such as sales and customer services.

When a business is small and the number of transactions that need to be managed is relatively low, there’s no doubt that the use of both accounting systems and spreadsheets is key to effective management. It’s when a business grows, however, that using multiple applications can cause problems that become a major headache for team members throughout an organisation.

The next step up from basic accounting systems is Enterprise Resource Planning (ERP) software, which centralises all aspects of business operations within a single system. ERP software includes functionality designed to automate different business areas and improve the flow of information between everyone within a company.

By enabling personnel with different job roles to access and share accurate, up to date information, the likelihood of effective collaboration is increased significantly.

Here are six of the signs that indicate that it could be time for your business to invest in ERP software…

1. The software systems you already have in place don’t talk to each other

Many businesses use a number of different software systems to manage different areas of operations and this frequently expands as a company grows.

Although a single software system may be sufficient for managing the department where it is used, the information it holds may be invisible to the rest of the business.

‘Data silos’ – which appear as a result of departments using software applications that hold information related solely to their particular area of business operations – are commonplace in growing companies.

Much like grain in a silo on a farm is closed off from outside elements, ‘data silos’ remain under the control of one department and are isolated from the rest of the organisation.
For a business to operate as a single entity, it is essential that data can flow freely around all departments.

By investing in ERP software and holding all information in one place, ‘data silos’ are eliminated at a stroke, ensuring that that everyone has access to the same pool of accurate, up to date information.

2. Financial management is increasingly time-consuming and complex

As a business grows and the number of individual transactions increases, ensuring these are quickly and accurately recorded can become progressively more challenging. Effective bookkeeping and accounting is only possible if your financial management team have complete visibility of all incomings and outgoings and are not reliant on other teams to provide this information to them.

If a member of your accounts team, for instance, has to repeatedly remind sales staff to provide up to date figures, or prompt buyers for information about purchases, efficient financial management can be hindered to the extent that is grinds to a halt.

Although most businesses have dedicated accounting software these days, a lack of integration with the applications used outside of the finance department can make accurate accounting unnecessarily complicated and time-consuming.

A fully integrated ERP system makes life easier for financial management personnel by automatically drawing together information about all department’s incomings and outgoings, updating accounting ledgers without the need for additional data entry. This means financial managers have everything they need to produce reports required by third-party organisations such as HMRC or internally by senior managers.

3. Sales and customer services are suffering

In a business’ early years, when the volume of product sales may be relatively low, stock control is easily manageable. Many companies can get by with the basic stock management functionality included in accounting software or by using spreadsheets.

As sales grow, however, there is a potential risk of customer demand outweighing stock availability, resulting in disappointed customers and a damaged reputation.

A sales team may be using a Customer Relationship Management (CRM) system to record customer enquiries and orders. Their colleagues in the warehouse may be using a separate inventory management systems to maintain details of stock levels and plan buying. The purchasing department are using a different system altogether.

If these systems are not integrated, the sales department have no idea of what stock is available for shipment. Meanwhile, the warehouse and purchasing team are unaware of orders and the dates by which goods needs to be shipped to customers.

If you implement ERP software which includes stock control and CRM functionality, your sales team can view stock levels before making promises to customers and warehouse. Purchasing staff will have complete visibility of what products, parts or components are required and by when. This is particularly important for manufacturing companies who need to manage production planning in order to fulfil orders and meet deadlines.

If customers receive orders on time, as promised, they are obviously more likely to become a source of repeat business than if shipments are received late.

4. It’s difficult to analyse information about your business

Effective business intelligence is all about analysing information to make informed decisions but if you can’t gather data in the first place, you and your team members will remain in the dark. If the information you need is located by different people in multiple applications it can be almost impossible to find. By consolidating and centralising all information within a single repository, however, ERP software makes it much easier to gather the data you need.

A sophisticated system will also include reporting functionality and data visualisation tools designed to make it easier for you and your teams to analyse information.

5. Lack of mobile access to software

These days, it’s key that your teams can access the software they need to manage and drive your business from wherever they are working from. This is especially the case for sales staff who need to be able to access and update prospect and account information when they on the move. Their ability to close new business and spot upsell opportunities is underpinned by access to data (such as stock availability) as well as electronic marketing collateral which they need in real-time when they are speaking to customers and prospects.

Your senior management team also need access to data when they are out of the office–perhaps when they’re travelling between meetings – and easy access to up to date information is key to their decision making.

Many ERP software developers – but not all – provide functionality designed specifically for field based staff which ensures they have everything they need at their fingertips. Ideally, you should look for a system that is accessible to people via a range of different devices including smartphones, laptops and tablets.

6. Managing IT systems is increasingly time consuming and expensive

Running multiple software systems is expensive and puts pressure on your IT infrastructure, including the people who manage it. Annual software license and support contract renewals are costly and you may also find yourself spending money on hardware upgrades (e.g. servers) and having to employ more IT staff.

Reducing the number of software systems you use frees up IT resources and reduces the costs related to running multiple solutions. By adopting ERP software, you can remove the need for multiple systems, hardware costs and the need to employ more IT staff than necessary.