Small businesses are now moving from paper-based systems and Excel spreadsheets to modern ERP automation, including digital scheduling and analysis of production tools. It has been observed that the development and emergence of several ERP software programs over the last decade has made business operations easier. As per a report byÌý, the ERP market is expected to grow at a CAGR of 9.8% from 2020 to 2027 to reach $86 Billion by 2027. The bulk of the growth is expected from ERP systems from SMEs.

Inventory Management, Invoice Tracking, Market Research, Accounting, Capacity Planning, Quality Control, etc., are a part of an integrated system that can be shared and managed through a centralized database to streamline business operations. With the help of a Cloud ERP suite, manufacturers can turn their daily data into actionable business intelligence and automate processes on the cloud.

Key benefitsÌýof incorporating ERP solutions for SMEs

The ERP software allows enterprises to condense workflows, streamline processes, and automate, eliminating the need for manual input. ERP system from SMEs is benefiting the SMEs through –

• Cost Reduction:ÌýWhen employees have fewer manual processes to weigh them down, they’ll be free to take on more innovative, profitable projects. Ease of workflow increases, with less turnaround time and high production capability.

ERP is a solution that provides transparency about how problems affect the rest of the process, allowing managers to analyze, gain better insights, and make effective decisions. It provides real-time financial data that offers a competitive advantage, increases efficiency, and helps ensure cost savings.

• Custom Reporting:ÌýOrganizations rely on reporting to track KPIs across every department. If one department or functionality falls behind, it can affect all the other departments. However, you can’t produce useful reports without a proper system. An effective ERP solution generates reports that clearly show where you’re already efficient and where there’s room for improvement.
• Scalable Production: ERP brings a game-changing level of scalability to business processes. The automation of operations takes the burden off employees and guarantees a solid record of workflow. That frees your most valuable resource – your people – to handle the other important operations. A cloud ERP suite can be used to scale the business processes easily by automation of businesses processes on the cloud.

Successful ERP implementation case studies

Ìýis a beverage company in Washington State. Before adopting the ERP system, they wasted a lot of time via manual processes. To assign a customer’s purchase to the corresponding account, employees had to manually populate the table with data from individual tables for further analysis. To perform historical analysis, employees must re-enter the information from the system into the table and compare it to the same data for the year. Extracting data for a month’s corporate transactions can take up to 15 minutes. This led to a loss of productivity.

To improve their productivity level, they installed a new ERP solution, so all company information was now stored in one system, not in myriad spreadsheets. This solution is used for accounts payable and accounts receivable, financial reporting, and production planning and scheduling. This includes processing the entire inventory turnover, from the start of job orders to the planning, consumption, and shipping of these orders.

They can now run ad hoc reports and queries in minutes instead of days. It reduced the risk of out-of-stock, late delivery, and lost invoices and orders, significantly improving customer experience. Sales have also grown by double digits; the new system has certainly given the company a competitive advantage.

, a civil engineering consultancy, was facing difficulty measuring which projects and segments were the most profitable. They decided to implement a new ERP system which increased the cash flow and profitability between jobs by connecting the entire company, including projects, finance, and material management.

They are now able to track sector-level performance and adjust the budget in order to manage project costs and maximize resource utilization. The ERP system measures performance against set goals and provides executives with the reports they need to focus their business development efforts on.

The company reduced its monthly closing from 5 days to 2 days and now pays twice a month in just 2 hours. In addition, easy access to historical data makes bid estimates more accurate, attracting more profitable contracts.

Western Digital is a technology company offering products in the areas of data storage, data systems and data solutions. The merger ofÌýWestern Digital, SanDisk and HGSTÌýin 2019 was a major challenge for the company. Western Digital aimed to centralize its ERP system so that all the three companies could be managed together. The company chose an ERP software which led to the integration of the business units in the areas of Information technology, HRM, Payroll, Customer relationship analysis, etc.

Drawbacks of ERP system

To get the maximum benefit from an ERP system, there are some challenges that enterprises must overcome.

Cost:ÌýThe main deterrent to ERP is the cost of pre-integration and ongoing subscriptions and licenses related to technology. Depending on the size of your company, purchasing, implementing, and maintaining your ERP system can be expensive. On-premises systems also require enterprises to consider infrastructure costs such as IT support and server hardware. As your organization grows and operational needs grow, companies may need to purchase additional supplementary services or software.

Implementation Challenges:ÌýEven with the complete implementation checklist, running an ERP system requires time, money, and resources. Organizations need to allocate internal staff resources to determine which ERP system to purchase. This can be a detailed process involving managers of finance, operations, IT, and in some cases, sales, marketing, and human resources. For companies with diverse spreadsheets and stacks of paper files, there may be a long data migration process that may require the hiring of an integrated specialist.

Conclusion

The need for a cheap, well-designed ERP system for small businesses is recognized in the current competitive organization culture. Small businesses require ERP systems to perform fast-paced and complex manufacturing processes. SMEs must carefully assess their requirements and select theÌýÌýthey want to use to enjoy the maximum benefits such as reduced costs, operational planning, CRM, etc.

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Among the most important benefits of an ERP system is the ease of use it brings to a business. The advantages that an ERP offers have led to massive adoption, and now no business is without it to run day-to-day operations.Ìý

ERP systems use intelligent technologies to help organizations transform their mission-critical processes. This is achieved through technologies including artificial intelligence, machine learning, and advanced analytics. Equipped with these technologies, ERP can help transform business processes with intelligent automation that offers real-time processing speeds and a dramatically simplified data model. These advantages of ERP systems allow an organization to improve its operational and functional facets. These include improvements in the operational, managerial, strategic, IT infrastructure, and organizational aspects of a firm.

ERP systems also enable the organization to adapt to changes in the market rapidly. This is especially helpful for big businesses, which are not agile because of their size. ERP systems, such as the one fromÌý, achieve this through features such as-

• Built-in machine learning and digital assistantsÌý
• Advanced analytics
• Continuous innovation and updates delivered via the cloudÌý
• Flexible, scalable, and maintenance-free platforms
• Fast deployment and ease of use on any deviceÌý

An ERP system or module can therefore be handy for any business and help it to deliver

• Better customer satisfactionÌý
• Improved vendor performanceÌý
• Increased flexibility
• Reduction of lead timeÌý
• On-time shipments
• Increase of inventory turns to over, cycle time, and works in progress
• Reduction in quality costs
• Improved resource utilityÌý
• Improved information accuracy, andÌý
• Improved decision-making capabilities

But ERPs aren’t for large enterprises alone. Irrespective of whether you are a growing business or a medium-sized enterprise, implementing an ERP system brings myriad benefits. Here are the topÌý10 benefitsÌýof implementing an ERP system.

1. Helps streamline all business processes

Organizations comprise of multiple functions that need to work in coordination with each other to ensure smooth operations and profitability. However, achieving synergy among the different departments of an organization is not easy. As the processes going on in different parts get more complex, the efficiency of the entire enterprise can get affected. This might result in reduced efficiency.Ìý

Therefore, it is imperative for your business to keep a centralized node where information can go to and from all other parts of the business. An ERP module does just that. As information is shared and work coordinated with others, each department attains optimum levels of functioning. This increases efficiency.

2. Helps improve employee efficiency

By implementing ERP systems, the companies can attain strategic benefits in the human resources department too. These benefits are achieved throughÌý

• Aligning individual and team goals with the corporate goals and strategiesÌý
• Standardizing and better organizing employee reviews and appraisalsÌý
• Effectively identifying and rewarding good performers
• Devising optimal compensation frameworksÌý
• Helping ensure safe working conditions for all employees in your maintenance department
• Maintaining the reliability of the technical system of an organization

Besides this, by providing real-time access to customer and market data to the employees, ERP systems help them make better-informed decisions. This also increases the efficiency of the workforce.Ìý

3. Helps manage assets betterÌý

Business assets include capital, raw materials, and infrastructure for the workforce as also information and data resources. These assets require a framework under which they can be managed.Ìý

By sharing data and information with the stakeholders within and outside an organization, ERP systems help manage assets better and improve operational performance. As ERP ensures all stakeholders have visibility into the same information and process flow, getting the best out of assets becomes easier. This is done through

• Integrated scheduling to allocate and optimize resources. These resources include people, tools, and materials
• Comprehensive management of environment, health, and safety data. ERP systems also perform response and analysis functions.
• Proactive task identification, management, and execution. These help to improve safety, environmental impact, and operational results.
• Completing planned and unplanned maintenance tasks in an efficient manner
• Addressing emergencies quickly and effectively
• Enabling maintenance planners to proactively monitor important and time-sensitive work across maintenance activities and spare parts inventory
• Enhancing maintenance efficiency with fast access to analytics on costs, breakdown rates, and damages
• Building schedules by simulating scope and workload, and track work status

4. Helps in avoiding wastage of resources

The implementation of an ERP system allows businesses to track demand from customers. The ERP systems make this possible by accessing the data from different departments like sales, service, and marketing. Tracking customer requirements will help manage inventory better. It also ensures that stocks are available, that manufacturing meets the demand, and that the company does not produce too much or too less. In fact, ERP is a boon for just-in-time production, a model that manufacturers are increasingly adopting the world over. ERP systems also provide and process customer behavior data for an organization. This helps the firm to get a better understanding of the customer needs for customized products and services.

Achieving optimum production levels also saves resources and prevents losses on account of wastage. Maintenance operations in an organization are also optimized through ERP systems. This enables the technicians to detect, report, and resolve malfunctions in time. ERP systems also automate processes for inspecting, maintaining, and restoring infrastructure. These help to reduce costs and avoid wastage.Ìý

These systems also allow for the planning, scheduling, and execution of maintenance procedures with integrated and coordinated processes. This reduces reaction time and strengthens the organization’s problem-solving capabilities.

5. Increases customer satisfaction

ERP systems gather and help your organization analyze data from customers. This is done byÌýanalyzingÌýcustomer experience strategies. Accurate data about customers’ purchase history, buying behavior and feedback can be used for this purpose. This helps in identifying the product and service mix that best satisfies your customers. It also helps your organization to deliver a better interactive experience for the customers.

ERP modules also allow your firm’s employees quick access to all this data, so that they can understand the needs and serve the customer on the go. Better customer service leads to greater customer satisfaction. This, in turn, develops customer loyalty and helps spread good word of mouth for the company.

6. Ensures compliance with all regulations

Every industry is governed as per regulations. It’s imperative that organizations comply with regulatory and statutory requirements. Violating these regulations can lead to fines, bad publicity, and other adverse outcomes. It can even lead to the shutting down of the business. A sound ERP system can take care of all the regulations by preventing errors and mistakes that can lead to violations. For example, ERP systems can help an organization to ensure compliance throughÌý

• Providing alerts and reminders for all aspects of a businessÌý
• Ensuring compliance with environmental protection regulations by making sure that all equipment is running at optimum standardsÌý
• Creating and managing all the contracts in one solution
• Deploying enterprise-wide legal document management for increased transparency
• Simplifying and automating contracting processes to ensure complete legal protection and compliance.

7. Automatically executes tasks

The data generated by different processes in a company is immense. This data needs analysis, and other functions like scheduling tasks, deciding operations, making amendments, and devising strategies depend on how well the data is processed.

The processing of all this data traditionally required a manual workforce. However, the time and human resources spent on data processing can be saved by implementing an ERP system. As an ERP system automates data processing and executes assigned tasks without the requirement of human interference, precious time and other resources are saved. It also leads to better customer service as automated platforms can interact with them independently.Ìý

8. Provides flexibility and adaptabilityÌý

ERP systems centralize data processing and sharing between multiple units of your business. This infuses agility and flexibility in your business. As each department knows its own functions and becomes responsive to the functioning of others, adaptability is also achieved through better problem detection and solution capabilities.

For example, with the help of the data processed through ERP systems, your organization can streamline accounting and finances. This allows for better consolidation, scheduling, workflow management, and collaboration in the workforce of a firm. Using ERP modules, you can also keep track of payments and cash flows. Through analyzing and allocating cash and payments in real time, you can even set up in-house banks or payment centers.

ERP modules also help an organization to increase the agility of its finance processes. This can be done through the end-to-end analytics abilities of the ERP system, which includes

• Unified transactions, analytics, and planning to enhance the entire financial and accounting framework
• Streamlined, intelligent automated processes for greater throughput
• Subscription and usage-based billing models to fit any business’ individual needs
• Actionable insights and recommendations at the point of decision for real-time evaluation.

9. Saves costs

ERP systems also help in cost management through comprehensive analytics, reducing loss and increasing profitability. ERP systems also enable an organization to assess profit and margin contribution with real-time reporting, predictive analytics, and integrated business planning. Other ways through which an ERP system can help you save costs include

• Delivering consolidated invoices, managing credit scoring, resolving disputes with a complete view of the customer, and simplifying accounting and financial processesÌý
• Combining financial and management accounting and profitability data into a single universal journal
• Managing joint venture accounting and closing your books in real time with less effort
• Complying with new statutory regulations for revenue recognition while supporting existing requirements
• Gaining flexibility by decoupling revenue recognition rules from order entry and billing systems
• Improving treasury and financial risk processesÌý
• Manage enterprise risk and compliance effectively
• Integrating and automating processes for risk management, compliance assurance, and international trade
• Optimizing space utilization, cost, and occupancy by actively managing lease agreements, investments, and construction projects.

Through better use of data and information, ERP systems also help devise strategies and plans for risk prevention, mitigation, and management. This can be done by better managing investigations and follow-up activities to reduce injury, illness, and incident rates. Other potential costs, penalties, fines, and unplanned downtime associated with environment, health, and safety can also be reduced with the help of an ERP system.

10. Develops better decision-making abilities

Availability of accurate information is an asset in itself. ERP modules not only provide this information, but also help you organize and analyze the information quickly and in time. This helps your company’s decision-making process to become fast and accurate.Ìý

For example, the ERP systems can make available all the data and information of your sales and purchases departments to the finance and accounting sections. With the right data available at the right time, finance teams can make decisions faster and develop prudent strategies, including predicting cash flow accurately, managing liquidity efficiently, and mitigating risk proactively.

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However, when done correctly, deploying ERP software can be a rewarding decision. The global business community has realized this, and ERP adoption is increasing by leaps and bounds. According to aÌý, the ERP market revenue is expected to reach $66.38 billion by 2026, with a CAGR growth rate of 8.2%. While ERP software implementation is mainly seen in big businesses, theÌýÌýsegment is also showing growth.

An ERP system adds to your competitive advantage by synchronizing all of your information and streamlining workflows. In fact, aÌýÌýfound that 97% of the businesses that successfully implemented an ERP improved business operations. 86% of the companies that completed ERP implementation showed better reporting and visibility. An ERP software can improve coordination between departments and ensure lower time to market and delivery time. A cloud-based ERP system can also provide automation capabilities by using third-party software.

Clearly, ERP implementation has proven benefits such as-

• Enhanced business reporting
• Better customer service
• Improved inventory costs
• Better cash flow
• Cost savings
• Better data security
• Business process improvements
• Supply chain management

A good example of successful ERP implementation and the consequent organizational growth was seen in the case of Tata Steel (TISCO). TISCO implemented the 51·çÁ÷ERP system in 1999, and aÌýÌýwas done to understand the benefits of this move. The study found that the coordination among different departments increased at the Tata Steel Ltd. Jamshedpur plant. Production-linked data was collected automatically, which resulted in faster and error-free processes. As a result of these business processes becoming more efficient, customer service and productivity too improved. Even the workforce cost reduced substantially, falling from US$200 per ton in 1998 to about US$140 per ton in 2000. The carrying cost of inventory was also decreased significantly. Consequently, most of the investment made for deploying the ERP system was recovered within a few months.

However, simply going live with the new solution is not the same as aÌýsuccessful ERP implementation. To ensure your business stays competitive and leverages the full potential of the software, here are theÌýstepsÌýyou should follow to ensure a successful implementation:

• Identification – Prior to deploying any ERP solution, it’s critical to define your goals and requirements. Given the numerous advantages of an ERP system, you may have a general notion of what it can do for your company, but do you know exactly what objectives it can assist you in achieving? For example, are you facing trouble with legacy systems? Or is low customer retention and low customer satisfaction undercutting your efforts? Depending on your end goals, you can define KPIs and measurable goals that you want to achieve with the help of the ERP.When TISCO decided to migrate to SAP, it was facing several issues with its legacy systems, causing dissatisfaction among customers since their problems were not being addressed and resolved. This led to lower sales and low customer retention. Also, the legacy systems were prone to errors, which affected customer satisfaction again, directly impacting sales and the top line and bottom line. These issues were highlighted by the management and were resolved by the new ERP.
• Selection– Selecting a vendor and putting together a project team is arguably the most crucial phase in ERP implementation. When it comes to choosing vendors, instead of opting for general software experts, you should look for ERP experts with in-depth experience implementing ERP solutions. Your preferred partner must have a thorough understanding of your organization, including the verticals in which you operate and your customers. Here is what needs to be kept in mind in this phase.

1. ÌýWhile selecting the project team- Before you choose your project team, it is essential to understand that ERP implementation is not only an IT project but a business project which requires coordination between all departments. The process should be defined by employees with clear visibility into different aspects of the business. But the key factor here should be competency, not their position in the hierarchy. Your core team members require experience, skill sets, adaptability to change and excellent communication skills. Since ERP systems are implemented company-wide, including the CEO, CTO, and CIO is advisable. If some team members are continuously playing catch up, it can delay the whole process. Allow your finest employees to work on the project and accept that their capacity to conduct their regular tasks will be severely limited or non-existent for the time. They will need to focus on key tasks such as defining requirements, attending vendor demonstrations, shortlisting and selecting the vendors etc. Thus, the internal ERP team should be ready to dedicate at least 25% of their weekly work time to this.
2. While selecting the ERP vendor- The first step in ERP vendor selection is determining the requirements. An ERP software is to be used by all the departments and therefore, these requirements should come in from all departments, the IT team and the top management. Next, critical success factors should be determined and these need to be used to evaluate and compare different vendors. Next, ERP vendors should be asked to submit their bids. The vendors should be evaluated on various parameters such as functional capability, system integration ability, processes coverage, technological capability, implementation and maintenance costs, and vendor support. A shortlist should be prepared and then a detailed discussion should be done with these shortlisted vendors.

• Design– In the design phase, the project team and the vendor will decide the processes, along with user roles and standard operating procedures. The emphasis is on developing a system configuration that maximizes the client’s system benefits and ROI. The implementation team will work with the customer to translate their system requirements into possible configuration options. Next, they will collaborate closely with the project team to define the configurations and implementation techniques that will lead to the project’s development phase. In short, this phase will see the development of a blueprint, which will act as a bridge between the business, the project team, and the ERP specialists to keep everyone on the same page. The blueprint will serve as the base for all future development, and it should include each minute detail, such as project tasks and processes, with a sign-off from respective process heads.
• Development and testing– Once the tasks are finalized, the IT team and the ERP vendor implementation team will get the software ready and also create training modules for future users. The testing phase overlaps with the development phase and includes testing with dummy data. The importance of using the correct data is often overlooked in the overall process but the experience of a major energy utility,Ìý, explains why this is critical. A manager picked a live information database to utilize during pre-launch testing. This resulted in sensitive company information being revealed, resulting in a slew of expensive recovery efforts as well as a loss of public trust in the company’s reputation. Clearly, it can be costly and time-consuming to make changes when your installation is nearly complete. Test software and processes as much as possible to ensure that the implementation is achieving what it should be. Measure results throughout the deployment period to assess how well the ERP is accomplishing your goals. Coming back to the example of TISCO, this phase threw up several errors and unexpected results. Even after extensive brainstorming and research in the beginning, the blueprint had to be changed from time to time and new requirements were added.
• Training– It takes a lot of time and effort to train users, especially when employees are expected to continue doing their regular jobs during the process. The length of time it takes will be determined not only by the size and complexity of the ERP solution, but also by the employees’ attitude toward changing their working habits. Focus on comprehensive training for the trainers. Allow users to provide feedback and the implementation team to take action on it. The chance of lost productivity after deployment will be reduced if users, trainers, the implementation team, and the vendor communicate consistently and meaningfully.
• Deployment– Once the software is ready, the next step is the final deployment, where it will work on live data and replace legacy systems. There are three ways to do this final deployment:

1. Big bang adoption– The switch between ERP adoption and phase-out of legacy systems occurs on one date. It is an instant changeover where the entire organization moves to the new system instantly.
2. Phased adoption– In phased adoption, some processes move to the new system first. The remaining operations move to the new system in a phased manner.
3. Parallel adoption– In parallel adoption, the new and legacy systems are used simultaneously for some time. If the ERP works correctly, the legacy systems are phased out entirely and the new ERP becomes the default software.

On the go-live date, your organization should be adaptable and ready to face any unanticipated obstacles. Users should be able to check, document, and amend business processes in the live ERP system with the help of IT. Have extra IT staff on hand, as well as individuals that are willing to work overtime. Prepare a communication strategy in the event of a system outage.

• Ongoing Support– Once the system is in use, it will likely face challenges like new process addition, process changes, feature enhancement, etc. This necessitates continual software maintenance as well as user support. Investing time and resources to detect problems and correct errors will be critical throughout the ERP solution’s life cycle. The challenges can be easily mitigated if the ERP vendor provides ongoing support, which should help ensure continuity and future readiness. ForÌýÌýsoftware, ongoing support is of utmost importance due to the lack of IT resources.

The blueprint and the training modules also need to be regularly updated with every successive change. This too requires ongoing support from the vendor.

You can notice substantial gains in your business if you use the appropriate methods and strategies for ERP implementation. But one of the critical factors in ensuring success is choosing a vendor who can combine industry knowledge, previous experience and an in-depth understanding of your unique needs and requirements. With varied and extensive expertise in ERM implementation across industries,ÌýÌýhelps you achieve the critical competitive edge to move ahead in the race.

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