An enterprise resource planning (ERP) system can provide tremendous benefits for a company. It acts as a central hub that combines record-keeping, processing, scheduling, financial data, communication, and a host of other processes within an easily indexed whole. The sheer versatility of an ERP system means that it can potentially enhance the efficiency of almost any department within a business.
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Best Time to Invest in an ERP System
However, optimal efficiency depends on some initial planning before selecting an ERP system. Your company would certainly not expand to a larger structure before having enough employees to justify it. Likewise, you should know when is the best time to invest in an ERP system before moving forward with purchasing and implementing one. But knowing the best time to invest in an ERP system can be simple when one knows what to look for.
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Examining your IT department
One of the most significant signs that it’s time to adopt an ERP system comes from your information technology (IT) department. An IT department usually begins by manually addressing every computer-related task by themselves. But over time, this can turn into micromanagement of many smaller elements of day-to-day administration. These are exactly the types of tasks that an ERP system can handle from day one.
As such, you should look for signs that your IT department has been stretched somewhat thin. Your IT department may be manually updating data, or managing data across multiple platforms, both of which are laborious processes that an ERP system can takeover.
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Expanding the scope of your business
Adopting an ERP system before expanding the scope of your business can prove beneficial in numerous ways. You will, of course, need to integrate it with your existing systems. This integration will provide a perfect chance to build up the new parts of the business on a solid ERP-based foundation.
Oftentimes the new arm of a business can even act as a testing ground for the ERP rollout. Once you get familiar with using the ERP system in their new area of your business, then you can easily extend back into your existing infrastructure and cover other aspects of the business.
This principle also applies to instance of company acquisition. Both when your company, say, has been acquired, and when your company acquires a division of a company, or an entire company altogether. In these cases, having an ERP system in place provides a chance to increase overall compatibility between two formally distinct business groups. Once implemented, the ERP system can seamlessly manage data between even quite distinct business environments.
Problems with the current business software
A company inevitably comes to a point where standard software limits rather than aids day-to-day activities. For example, spreadsheets and standard office suites are useful within a smaller business environment. And manually managing spreadsheets for a handful of different needs isn’t taxing on anyone’s time. But the overall time investment grows exponentially as the needs of a company grow.
An ERP system provides the benefits of standard office suites. But it takes up the duties involved with managing them on a day-to-day basis. It doesn’t just automate the necessary processes either. It also serves to integrate that data with other managed systems, ensuring that same data is accessible by different departments.
Improved efficiency and reduced spending
An ERP system often provides substantial savings in a wide variety of related systems. Increasing operating costs in related systems is another sign that it’s time to invest in an ERP system, as those systems may be increasingly taxed to do what they are not designed to do. As it may not always be obvious when maintenance costs have escalated beyond a reasonable level, it is important to monitor costs and gauge when they have surpassed what you have defined as healthy limits.
When costs rise, you should carefully consider whether an ERP system might be the solution. Not just for lowering costs within one specific system, but also for lowering overall operating costs for any system that interacts with the ERP system. The methods by which this works differ on a company-by-company basis. But you can usually expect steady improvement in overall efficiency when you implement an ERP system.
Similarly, when computers can’t keep up with expectations, people decide to devise something on their own to increase their efficiency. These are known as workarounds. And this is usually a process of reinventing the wheel, but it isn’t the most efficient way of working. An ERP system, on the other hand, usually scales to meet any given project. As such, it proactively anticipates any given need from internal staff, customers, and clientele alike.
This anticipation also comes about through data management or delivery. People often need information from a system with a very small window of time. Finding that information with a standard database is often time-consuming within a growing company. When this occurs, it’s an indication that it’s time to invest in an ERP system. The ERP software solution will be able to help you more easily anticipate and manage data retrieval within even the most rapidly changing systems.
Considering whether various departments are strained
You should also consider whether various departments in your company are struggling. Many departments face added challenges as your company grows. It’s not a matter of adding people to the department—but instead increasing their overall efficiency.
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Accounting departments are particularly notable examples. Like an ERP system, the accounting department often serves as a company hub. And their workload tends to grow exponentially as the company grows. An overstrained accounting department is a sure sign that you should consider investing in an ERP system.
Something similar can be said of sales in general. Both as an action and a distinct department. Sales depend on the ability to rapidly check existing data and modify it with new sales information. If an existing system isn’t able to handle the task, then sales will suffer. Likewise, an ERP system can usually offer vastly improved speed and efficiency for sales.
The IT department also serves as a sure sign that it’s time to implement an ERP system. An IT department is best used as support for existing larger structures. When they’re forced to micromanage individual spreadsheets and office suites, their time for other tasks is diminished. This is just one example of a larger principle with IT departments though. As a general rule, an IT department is much more efficient in maintaining an ERP system than they are trying to do the job of an ERP system.
Rising concerns over security
Escalating security issues are another sign that it might be time to invest in an ERP software solution. Smaller business solutions depend on a variety of independent programs. Each of these systems comes with its own individual security concerns. Meanwhile, an ERP system is tightly integrated within a single secured environment.
Addressing concerns over reports or communication
Most companies reach a point where reports end up as a complex combination of various documents. This is a side effect of using non-integrated systems. And over time, this results in reports that are outdated and become less and less useful. When this happens, you should consider moving on to an ERP system.
The main reason is that ERP software fully integrates all data points. Any generated report will make full use of that fact to create current, clear, and concise documents.
There are quite a few factors that can suggest it’s time to invest in an ERP system for your business. But one common thread comes down to observation. You should carefully consider the overall efficiency of the system your company currently has in place. It’s also important to consider just how well it can adapt to meet any new growth or demands.
Most of these points relate to strain on individual departments. But people should remember that one struggling department is often a sign of things to come. As such, implementing an ERP system and sooner rather than later will often result in a significantly easier process, enabling the company to grow and succeed in its business.