Digitalization is a strategic avenue considered by many yet adopted by few. Here are the main reasons behind the use of an ERP.
Main goals of acquiring an ERP
An ERP brings considerable value within organizations of all sizes and industries as soon as they reach the glass ceiling, the inevitable bottleneck.
ERP acts as a tool to empower management, operations and administration in working together, on easily identifiable tasks, based on a commonly accepted set of data.
Here are 7 reasons why investing in an ERP is a promise of higher returns through efficiencies:
1) Sell better, faster (ERP controls the prices, discounts, terms and credit limits across your sales and invoicing departments).
2) Have more liquidity (More efficient sales means more deliveries. An ERP helps businesses plan their stock replenishment in order to hold stock the least amount of time, which in turn leads to more liquidity).
3) Get paid faster (ERP allows the use of automated reminder letters and credit hold, saving your receivables team precious time in communicating the right way to the right debtors. Payments are made faster and the sales teams are prevented from taking new orders from customers that exceed their credit limit or terms).
4) Improve relations with your vendors (ERP allows higher liquidity, and also alert you of the vendor bills that need to be paid first. An improved relationship with your vendor builds mutual trust and leads to better credit terms and shorter lead times).
5) Peace of mind (A properly setup ERP provides its users with the assurance of tracking tax information as well as provide the authorities with the financial reports expected by the auditors, rapidly and without any mistake. Building a strong relationship with the auditors can save you months of constant audits, and free time to work on your key business activities).
6) Make better informed decisions (An ERP allows you to easily spot trends and correlations across your departments. With proper training, this often means making a right decision at a critical time, saving you not only money but also time).
7) Keeping track of your historical agreements, communications and the general pulse of your business. (In a time where labour can leave your office for a better job offer, the leaders of the market have all concluded that training employees was not enough, ERP was the tool selected to keep track of what was communicated from and to your business and your customers/ vendors. This often saves businesses tremendous amounts of time in negotiations at time of recovering money from debtors, or paying creditors.
What are the traps of acquiring a new ERP?
The majority of market leaders agree on the valuable reasons to invest on an ERP, yet the challenge to actually obtain the board’s confirmation resides in the poor judgement and mis conception driven from it.
Here are 5 main misconceptions that can prevent an ERP from being acquired:
1) Decision makers do not value efficiency and have no remorse in having you spend more time than required to accomplish your daily tasks.
2) Decision makers are not knowledgeable of ERP and often settle for open work platforms (Such as Office 365) or half-baked open source systems that list a lot of functionality on paper but has no more value than running your business on excel on a shared drive.
3) Decision makers treat business personally, and limit the company’s potential to theirs. This scenario is often tied to treating investments on an ERP as a personal investment. Without strategic vision, they limit their company to whatever they set the limit to.
4) Decision makers want to operate at national or international levels but ignore global competition, falling behind and bringing their business deep in debt.
5) Personal taste (Customers can turn down a perfectly operational ERP fit for their needs, just because their staff likes the look of another system which is 50% less efficient and secured).
About the Author
Dominique Staub has been learning and adapting best practices from and to SME’s across Europe and Africa for the past 20 years. He works at Cloud At Work Mauritius with the objective of up-scaling companies to the modern reality of globalization and digitalization. Get in touch with us for more insight on strategic digital engineering.