Benefits of an ERP System
Over the past thirty years or so, we have called our accounting and financial software by many names.
Things have evolved a bit during that time and we expect more from our software programs than we ever have.
Here are some of the questions we hear from our clients all the time, especially if their company has had the same software package for over seven years.
What is an ERP System?
An Enterprise Resource Planning (ERP) System is a collection of applications and tools that allow all areas of your company to communicate effectively, integrating everyone within one comprehensive information system.
Employees in different departments all have access to the same data based on their specific needs. All data is available in real time which allows everyone to make better, faster, more informed business decisions.
In an ERP System, every vital business function shares a central source of information.
The right ERP system can help you collect and store data in one centralized location, regardless of how many offices your company has or even which countries around the world they are located in.
Applications within an integrated ERP System might include finance and accounting, human resources and payroll, customer relations management, business intelligence and industry specific modules to name a few.
It’s not unusual for an ERP System to have around 100 modules and many thousands of industry specific modules available, allowing for an exceptionally rapid deployment phase.
Finding and choosing the best software for your company’s needs isn’t especially difficult, but it can be quite a complex process.
Why might my company want one?
Growing Pains start to surface when the business has lots of different software tools and processes that aren’t integrated with each other, or worse yet, aren’t being addressed by your software at all.
Some typical red flags include: you and your team are spending way too much time on processes that could be automated and streamlined, you don’t have easy access to the data you need to make informed decisions.
You and your team are spending way too much time searching for information, you can’t access information when you are off site, you aren’t able to be as proactive as you’d like in order to address issues and keep things running smoothly.
Last but certainly not least, you’re not a fan of having the same information entered into multiple unintegrated programs, not to mention that sometimes that duplicate entry process means that the data isn’t necessarily entered the same way into all the programs.
If this sounds all too familiar, then you may need an ERP System.
Isn’t my company too small to consider an ERP System?
Not necessarily. The way to know is to consider what things you would change about the way your software handles your company’s data right now.
What’s causing your team to stress out? Typically this might include things like your monthly closing always takes longer than you’d like, or you can’t easily drill down on the totals on your financial statements, or you aren’t able to easily track and measure your company’s performance.
Budgets might be a hassle to load or revise. KPIs (Key Performance Indicators) might not be easily trackable, and without the right tools, it’s easy for a CFO or CEO to struggle with knowing what the numbers actually mean.
Too many companies only produce a financial statement every quarter, and then often, it’s only because there’s a bank requirement to do so. Worse yet, some small companies only know if they made or lost money after the year is over, when their CPA tells them how they did.
At that point, their financial software is little more than a scorecard. They have missed a dozen or more opportunities to review, assess and correct the company’s direction, all because they aren’t using or don’t have the tools they need to see trends and make needed corrections.
The question is, why?
All too often, accounting and financial software is seen as a necessary evil, a sunk cost. Often, the software is in place when the CFO joins the company, and his first task is to get to know the company’s history, what it does, how it does it and what all the transactions mean.
S/he gets to know their team, and the strengths and weaknesses of the team; finding out who covers which areas, how they accomplish their tasks, and what the challenges are. Almost the last thing that gets any attention is the software, and there is often no appetite or budget to make changes; even if the accounting team is working too many extra hours.
Assuming the department can make time to quantify the areas that need additional support, and can calculate the Return On Investment (ROI) for those changes, often those changes alone can pay for a new, updated system in less than twelve months.
If the time period is longer than twelve months, the project can be accomplished in phases, by making upgrades over several years or until the company has all the programs in place that it requires.
Do I need a consultant to work on the project with our team
Most often a CFO has specialized, in depth knowledge about a company that most consultants wouldn’t necessarily have. Migrating to a new software system isn’t something that the average CFO does every day, and s/he and their team members most likely have fairly full schedules already.
Adding an experienced consultant to their team will organize the project, remove obstacles and help everyone accomplish more than they could without the experience of someone who does it every day; and the entire project will be completed on time and on budget, which is always an important outcome to have.