Business software tends to grow and evolve with the companies that use it. In the early stage, your small business might use QuickBooks for accounting and invoicing. That’s all you need. As you get bigger and operations become more complicated, you will eventually need an Enterprise Resource Planning (ERP) solution. Here are some things to look for in assessing whether it’s time to look into a new, more sophisticated ERP solution.
Understanding the Tradeoffs in Starter-Level accounting solutions and ERP
You can think of ERP software as being a bit like an airplane. When you are learning to fly, you train in a small, single-engine propeller aircraft. The controls are simple. You don’t learn how to fly in a 777. Enterprise-scale ERP is like the jumbo jet. Enterprise software solutions offer expansive functionality and advanced levels of customization and integration.
Starter level accounting solutions are built for simplicity. They give you enough features to do what you need in a small business, but no more. That’s the way it should be, by the way. A small business can’t handle the enterprise-scale solution and wouldn’t need it, anyway. As your grow, though, you may start to see the tradeoffs the software maker has created to keep your ERP solution simple and manageable. These tradeoffs, which usually involve feature depth, breadth, reporting, security and customization tools, reveal requirements where you will know if you are outgrowing your ERP.
You’re Missing Features You Now Need
When you got started with ERP, you may not have imagined you needed features like multi-branch or Project accounting. But now, you need them. If you’re missing features, you’re probably outgrowing your ERP. Multi-Currency compatibility is another example of a feature that might not fit a small business, but becomes essential as a company expands internationally. You might need to do business in Euros in the Europe while maintaining accounting in the US in dollars.
Supply chain sophistication is another area where simple ERP solutions show their limits. For instance, as you grow, you might need detailed bill of material for sub-assemblies. As volume increases, advanced inventory control might drive the need for advanced material requirements planning, which will help highlight the interdependence of raw material supply and availability by suppliers to that of finished good availability for customer demand. Higher-level ERP offers these kinds features.
You Need More Advanced Business Intelligence and Data Analytics
Small businesses can get by with simple, pre-packaged Business Intelligence (BI) reports. These might include graphical displays of sales trends and profitability. But as you grow, though, you will find yourself needing a lot more data mining and trend analysis capabilities. Having access to timely, dynamic data analysis tools is crucial for making informed decisions about your business. You will want to slice and dice the data and present it in meaningful ways.
You Need More Customization
Early-stage ERP solutions typically come with a lot of preset features out-of-the-box. That’s the right approach for that stage of business life. When you’re getting started, you neither need a lot of customization nor have the time and resources to customize. If you cannot customize your solution adequately when you need it, though, you’re outgrowing the limitations of a starter ERP package.
Integration is Getting More Critical to Success
ERP solutions can do more for your business when they’re integrated with other systems. No one system can do everything, so it’s usually necessary to make connections between ERP and software like payroll, shipping management, tax compliance, banking and so forth. If you can’t integrate your ERP solution or it becomes too difficult or expensive to do so, that’s a sign that you’re outgrowing it. Advanced ERP solutions come with standard functionality, existing interfaces and offer advanced integration toolsets and Application Programming Interface (API’s) that make integration possible and more cost effective.
Are you ready to assess your ERP and see if you’ve outgrown what you have? Our consultants can help you evaluate your ERP needs and determine whether it’s time to move to a new solution.