Is ERP Good for Small Business?

PostedOn: 2017-04-10 12:20:47

When you run a small business, you're always on the prowl for ways to make your business run more easily and serve your customers enhanced. You want it to grow and generate increased returns on your investment. You're also looking for ways to streamline operations and get better the efficiency of your business. 

Enter enterprise resource planning or ERP.

Does ERP Work for Small Businesses?

ERP is software. When implemented, it takes the place of different information systems in unreliable departments of a business. It replaces departmentalized databases with programs that work together, using a single, shared database. It allows for the integration of varied business functions less than one single database umbrella.

With ERP, custom business functions such as order processing, financing, inventory and production control combine across one common technology platform. A single database can service the entire small business, integrating departmental activities and streamlining the business process.

The major benefit of an ERP system is that it allows the different departments of your business to share significant business information. But, like everything else in life, there's also a downside to initiating an ERP system in your business.

The Upside of an ERP System for Small Business

The purpose of an ERP system in a small business is to automate primary business processes and streamline others. Some of the positive points in favor of a company implementing an ERP system include the following:  

  • ERP can execute analyses on various processes, such as incoming/outgoing client orders. This information helps improve efficiency in processing and filling orders. 
  • An ERP system can calculate output trajectories, then adjust performance parameters to match. This increases productivity. 
  • The data collected and collated by an ERP system can predict long-term business viability. 
  • An ERP system can enhance business performance by assimilating and condensing core processes. This reduces the risk of wasted time and redundancy of operations across departments.
  • Implementing an ERP system decreases the likelihood of miscommunication problems or duplicated projects.
  • Automation of operations vs. a manual oversight procedure can decrease business costs. Reassigning personnel into other positions further consolidates processes.
  • Because different departments can share information over one system, ERP can improve communication, interaction, and cooperation among departments.

The Downside of an ERP System for Small Business

Implementing an ERP system across your business is a serious undertaking. Not only can it be time-consuming to get up and running, it can also be expensive. Some of the cons of switching your business to this type of management system include the following:  

  • Initial implementation of an ERP system can be difficult and is not without risk. Moving data from your old system to an ERP system can be expensive, with some costs cropping up unexpectedly once the project is underway. 
  • Moving to an ERP system can require a great deal of time and resources. Implementing ERP may be cost-prohibitive if your business has operated in a decentralized format with nearly incompatible business processes.
  • Integrating an ERP system requires staff training. If your staff isn't fully up to speed on all aspects of the system and how the automation inherent in the system will impact the business model, your business will probably not reap the full benefits of an ERP system.

To ERP or Not to ERP

In the end, whether your small business can profit from the implementation of an ERP system will depend on how much time, effort and cash you're willing to put into the installation and training necessary to make it work.

As with all major business decisions, in the end, it all comes down to you.