Do I need to upgrade to an ERP system?
Not all businesses need the complexity, or functionality that an enterprise level software can provide (I have advised companies to use a very simple accounting program as their business model simply doesn’t need that level of sophistication).
It is only when a business is going through its growing pains, and information starts falling through the cracks, that the benefits of this type of systems comes into play.
The unusual suspects.
The main suppliers of ERP for small to medium enterprises within the UK are Mamut, Sage, NetSuite amongst others. Each has different functionality, entry levels and price ranges to match. With Mamut they have advanced product and stock management which allows for increased control over inventories. Ability to raise purchase orders for stock below minimum level allows for just in time deliveries. It can target customers that have bought one type of product but have not bought a related item (e.g. bought a television but not an aerial). A group email can be sent to those customers that meet that criteria, offering them add-ons to their original purchase. For example: Sage Line 200 it includes a Bill of materials which allows the true cost of a product to realised. It can track the costs of components, cost of any processes to bring the materials to market (i.e. assembly) and the labour time involved. In having that information management can know their true margins when pricing a product. With NetSuite, the benefit is that is a cloud based solution so the implementation prices are easier and it has no hardware dependencies. It also has the ability for campaign management of promotional stock and measures the financial return from that marketing activity. These are just a few examples that can be achieved and are not necessarily mutually exclusive as each software has different way of achieving the same result. Each ERP program has its own benefits and foibles and business owners should contact the vendor for a demonstration to see to see if it meets their distinctive needs Most are open to plug-ns (Application Program Interface) to be added onto the system for custom built solutions to meet individual functionality requirements. Each has similar functions, but tend to lean towards certain sectors rather than others. It’s not so much better or worse as what is the most appropriate fit for what you do.
Which one is right for your business.
To evaluate each software, it needs to be seen in the context of a clear business model. Functionality should be compared with the desired result for both now and in the future. Many costly financial and managerial mistakes are made when people don’t fully appreciate the pros and cons of the software or how that is going to impact on their business. A few years ago, the UK government had to pay out over 8 billion pound for breaking a contract with a private provider of a unified IT system for the NHS. This came about because the result was not clearly defined for the many stake holders involved. For a comparison we have developed an interactive chart in our downloads for users to see the benefits of each.
About the Author.
Malcolm Ford has advised and implemented enterprise level solutions across the UK for over 9 years. Sectors include manufacturing, professional services, biotech and construction industries.