What is ERP, why do I need it and when will I know I need it?

Your business is growing and your resident IT expert has told you that the business needs to upgrade your existing software and recommends investing in an ERP system to meet future business demands.

As he’s telling you, all you can hear is “Mwahmwahmwah, wah wah mwah…” like Charlie Brown’s teacher!

If you have no idea what I mean, or you’re too young to get the reference, check this out:

So while he makes unintelligible noises, you nod politely because you are the owner of the business and don’t want to come across as not knowing about this type of thing. Don’t worry you’re not alone, you’d be surprised by the number of business owners who don’t know what ERP stands for, let alone what it can do for their business, why they need it and, most importantly, when they need it.

This article will hopefully give you a brief overview of the what, why and when, for all things ERP.

What does it mean?

ERP stands for Enterprise Resource Planning, which is made up of a combination of software modules that handle the core functions of a business in one central database. The original concept behind the development of ERP was to bring together and manage functions such as accounting, inventory, sales and purchasing in one fully integrated application so that data and information could be passed between departments/functions to ensure that everyone was working to the same standards.

In recent years ERP has increased its core functionality to cover industry specific requirements such as manufacturing, construction, retail, wholesale-distribution and professional services but the idea behind the software is still the same; to help your people work faster and better, reducing risk and supporting and driving business growth.

What can it do for me?

There are plenty of benefits to having an ERP solution. These can include;

  • Reducing inefficiencies in business processes
  • Allowing effective planning and allocation of resources and management
  • Reducing the cost of overheads
  • Giving a 360° view of clients’ activity
  • Bringing together islands of information into one system
  • Increasing productivity by reducing duplication of work and ‘dead time’
  • Standardising core processes
  • Providing full visibility of how the business is performing against the overall strategic plan

But why do I need it? And why is my IT guy telling me to buy it?

There are many reasons why businesses are choosing to migrate to a new ERP solution and each business is unique but here are a few of the most common motivators behind changing:

  • Major changes to your business and its processes will affect the stability and suitability of your existing ERP system.
  • Access to information about your business is limited or can take time to collate due to it being stored on many different systems.
  • Accounting and other processes take longer than necessary and result in a less productive workforce.
  • Customer satisfaction and sales are suffering due to the lack of knowledge and information available to your staff to make quicker decisions.
  • The cost of maintenance is spiralling and your existing system is outdated
  • You are using a bespoke system and the supplier has gone away
  • A lack of flexibility in the system to support growth
  • You want to trade abroad and have no capabilities for multi-lingual or multi-currency
  • The share of information across the business is by word of mouth
  • Your aging system is no longer supported by the vendor/author or by new operating systems

There are many other reasons for business owners to look at replacing their existing software but this article would rival ‘War & Peace’ if I listed them all!

When do I need to invest in ERP?

There is nothing ‘written in stone’ as an answer to this question. You can keep on fighting fires for as long as you want but at some point you will need to decide what’s more cost efficient; maintaining or altering a system that’s causing issues or replacing it with a shiny new system that will do the job a lot more effectively.

Only you will know when it’s the right time to replace your business management software for a new ERP system but if you’ve been affected by a few of the above reasons, then you should start looking now. 

One last thought

When you are ready to review, make sure that you compare all of the ERP options that are out there. Check out what Microsoft Dynamics 365 Business Central can offer your business by clicking here for some more in-depth benefits of using it.

If you want our help to find the perfect partner for you, then contact us and we’ll be happy to answer any questions you might have, then put you in touch with the partner that suits your needs best. 

Article written by Mark Blackmore, QBS Group.

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