Yesterday, Sholto Macpherson posted on IN THE BLACK an excellent article about entry level discussions and explorations for businesses exploring moving to ERP systems.
As we all know, with success comes the challenges of growth – and it’s rare that a start-up planned for and implemented systems oriented for larger enterprises. However, a successful business finds themselves needing to consider ramping up to new (for them) technologies to support and streamline their operating processes and management.
This is a great article if you and your management are talking about what is needed to help wrangle all the various departments and management systems that have grown, well, unruly, as you have successfully grown.
Enterprise resource planning: taking the leap
Enterprise resource planning (ERP) companies are winning over business owners by showing how one single database can be used to manage and help automate multiple parts of the business.
What happens when you get too big for your accounting software? Once a company evolves from a small business into the maturity of a mid-market enterprise, the trusty old accounting program can start to feel a little small.
The trigger may be running a business in multiple locations or countries, the depth of reporting required, or the need for a platform to sustain long-term growth, says Craig Stanmore, chief executive of Enspira Financial, an advisory accounting firm that specialises in supporting small to mid-size clients.
At some point the business owner will need to sit down with the chief financial officer and have that talk: “It’s time to think about ERP”.
This acronym, which stands for enterprise resource planning, can strike fear in the heart of a CFO because, by its very nature, it is a big undertaking. ERP is a term that describes a software suite of modules that run several functions within a company. The modules can include multi-entity accounting, order tracking, advanced inventory and warehouse management, project management, e-commerce and more.
Definitions of ERP by vendors such as (Syspro and) NetSuite suggest the term emerged in the 1960s from the world of manufacturing. Making things can be incredibly complex – building a bicycle, for example, involves myriad materials, kits and parts. Manufacturers need a way to track the inputs required to make a product, the number and type of products they create, the quantity and type of products a customer orders, and whether those customers have paid their invoices.
You can track all of these things with spreadsheets or different applications but it quickly becomes confusing; errors creep in, which can cost a business time and money. The errors can become so large – a critical cashflow shortage, for instance – that it can wind up the company.
Hence the birth of the ERP, a single database that tracks all these things in one place.