Posted by admin at December 15, 2014 in ERP Software
No SME business has the benefit of hindsight or the knowledge of exactly what the future holds when it comes to small business accounting or what is better known now, ERP software; however one thing is for certain and that is the existence and increasing rate of change in our marketplace - it is real and somewhat breathtaking.
What your software vendor has provided you with up until today is unlikely to be your enabler for the future. The accounting systems that may have served you well over the last 5, 7 or even 10 years are now likely to be a source of restraint on your ability to grow the business and sustain profitability.
Originally your Enterprise Resource Planning erp software system requirements most probably reflected a smaller and less complex business in terms of processes, product range, legislation and indeed customer imposed quality standards. Most certainly the software vendor will not have included technologies which embrace the internet to support global trading or customer services or consideration of how the mobile e-commerce world impacts on your operations.
Small to medium (SME) organisations when in their infancy adopted software such as MYOB or QuickBooks for their first accounting system. They fit the purpose for accounting and inventory control at the right price. Parts of the operations were probably managed on a point solution or spreadsheet along with your sales pipeline; your quality records were on paper and your customer details in Microsoft Outlook Contacts.
The clock ticks….
You win a new service contract(s) and sales turnover increases
You move from selling inventory products to selling business solutions
Gross margins tighten
New sales channels and market regions open for business
Legislation, often imposed by customers, increases compliance work on several areas of my business
You custom build band-aids to your current “systems”.
The Cloud arrives offering new operating system efficiency opportunities
You employ a dedicated marketing person – suddenly I am in an unfamiliar Digital Marketing and the Social Media world.
Symptoms of system stress appear….
The time taken to undertake month-end reporting generally reflects the absence of integration within your existing computer system. You are compiling your month-end management reports in a spreadsheet and transferring information onto word documents rather than using modern day Applications such as Crystal Reports or Qlikview.
Cash tied up in additional stock lines occurs because your customers hold display and floor stock only and expect you to replenish their warehouse or retail shop within hours. Excess inventories also reflect the absence of critical gross margin analysis by product, by customer and supplier thereby restricting your ability to react to customer needs; in the absence of this enterprise resource planning (erp) information you have delayed making some hard but necessary operational decisions to ensure you remain profitable.
Compliance with industry standards should be seen as a competitive advantage or equally a simple prerequisite of doing business. Without an adequate internal ERP system compliance has become a burdensome cost. Quality recording is being done outside the ERP system and in several separate systems. It is often paper-based and subject to the risk of loss or damage and in most cases creating an administrative overhead which perhaps could be managed more easily, formally and in a structured process.
At first you cope by working longer days, then weekends. Eventually, you hire additional people to undertake what could be best described as manually and duplicated tasks. Before long the information that is needed by the organisation is resting in several different locations. There is an inconsistency in that data in the way it presents to you; it contains errors in places and has varied version updates.
Just which is the correct document we should be using today? Rework becomes the norm rather than the exception. In an effort to keep up with the work-flow, employees now rely on information that is contained in their heads. Tomorrow is an important day; a key staff member is absent and stress levels build throughout the company.
Of all restraints now placed on the business, none are more costly than the lack of visibility by management over key data. Without Business Intelligence and adequate analysis of KPI’s untimely and inaccurate management information is usually the final straw in determining that your current accounting or ERP system has come to the end of its useful life. They still do the job they were originally designed to do but their productivity requirements have changed; you have outgrown them.
It has been great to arrive at work knowing things were getting very busy; however underlying this “noise” was a concern; a sense that a growth plateau was approaching because current processes and systems were reaching their limits. As CEO and/or owner I know I must focus working ON the business; my “free Fridays” are near impossible to keep aside now; so why the delay in upgrading?
ERP Software Today
The current marketplace is becoming more ruthless for those that make the wrong turns. The process of ongoing improvement now is being spoken more in terms of creative destruction. Yes, you know you have to become more efficient; for sales, operations and administration teams to be able to do more with less and work smarter.
Watch for shiny new technologies such as SMAC (social, mobile, analytics, and cloud) and anticipate how the applications, management processes and material benefits will evolve. Trying to stay one step ahead of what is likely to happen next yet not over commit – taking the opportunities of today versus the cost of delaying the upgrade.
There will be a point in time when companies recommence to invest in new ERP software and we observed buying signals in 2014 and predict stronger demand for this to happen in 2015 and 2016 onwards when SME organisations can no longer make do and mend with their existing, restrictive systems. Given Cloud add-on options such as Xero and their partner suite of solutions and very affordable ERP systems such as JIWA Financials, Sage, Microsoft Dynamics NAV and many others which have one integrated database the choices are a plenty.
If ERP and Financials are implemented correctly and with your specific business and goals in mind then most products have the ability to work efficiently. However, different products do have their own strengths and weaknesses and it is wise to choose an ERP software vendor that best suits the needs of your business. With such a range of ERP options existing in today’s market, it can be overwhelming to select the most suitable solution.
So in 2015 what are the key things you should look for from software vendors and their Channel Resellers to guide your decision making when considering an ERP software replacement or upgrade? See this as an opportunity, a transformation moment in your business. Done correctly, it will provide your company with a key competitive advantage and help shape the future of your organisation. In early 2015 we will take you through the steps that will assist you in making the right erp software vendor choice.
Cheers for now. Ride the H2 Wave.