4 Signs Your Business Needs an ERP System

At the beginning of their operations, most SMEs make do with Excel sheets and manual data entry. This works just fine until they really start to grow. When companies experience growth, the problems that they must solve become more complicated.

Does your business need an ERP system?

A growing customer base needs more inventory. And more inventory needs multiple suppliers to maintain consistency. Increasing business activity needs to be complemented with enough manpower so that all tasks are dealt with. The more employees you have, the more difficult it becomes to keep track of each one’s productivity and progress. Lastly, if you have numerous employees, you’ll need a payroll system to properly compute the salary of your employees.

In this situation, it becomes impossible for you to micromanage everything in your business. And it is evident that you need technological help to make things work – an ERP system, to be specific.

Although these are serious problems that need answers, this also means that your business has achieved a major milestone – growth.

There are no hard and fast rules to tell if your company needs an ERP system. However, there are situations or signs that you should look for to ascertain if you need one.

Here are 4 signs that your business needs an ERP system:

1. Employees take too much time with tasks that can be automated.

Your business needs an ERP system if your employees spend too much time reconciling financial information. This problem is especially true for businesses using basic spreadsheets to do accounting. Also, a productivity-killer and a huge time-waster is having to call and wait to confirm a stock’s availability.

Your employees will get more frustrated, and you’ll end up wasting money on tedious tasks that could have been easier. This will continue to be the norm if your company still uses old methods in dealing with increasing paper works.

When company data is recorded and filed in physical copies, misplacing them is a huge possibility. And when it’s time to use that data, time will be wasted searching for it through a pile of folders.

The common ground here is that these tasks can all be automated; and in doing so, it will help you save significant number of working hours.

An ERP system enables you to find all information in a single database. Employees no longer have to unnecessarily consume precious time cross-posting data, re-typing values, and confirming information. Thereby allowing the department concerned to deliver critical reports and information as needed.

Hence, if your company is losing productivity because of your current methods, your business needs an ERP system.

2. Use of multiple unintegrated systems.

Business startups can get away with just using pen and paper, and basic spreadsheets in their processes. They can even manage to somehow make do with unintegrated systems for each task.

But if you’ve managed to grow your business into a bigger one consisting of multiple locations and employing more manpower to accomplish tasks, the system you used to manage data when you first started may no longer keep up with the more advanced demands of your business.

Therefore, growth is among the reasons why your company needs an ERP system.

When a growing company runs on incoherent front-end and back-end systems, problems such as work redundancy, poor communication, and lack of access to real-time accurate data will likely happen.

For example, an inaccurate sales data can impact inventory management, purchasing, production, and ultimately, the overall performance of the company. Similarly, an accounting department that does not get accurate figures will likely affect marketing budgets and payrolls.

Using separate unintegrated systems add complexity to the day-to-day operation of a growing company. Rather than putting an additional software to every process, implementing an ERP system will help you eliminate complexity.

3. Too much data across the board or data recording is inaccurate.

Data management is another reason to implement an ERP system. Management of data will be increasingly difficult for a growing business because more data is created from time to time. Therefore, more data needs to be processed. Additionally, the speed of operation will increase, which means that employees will need immediate access to information whenever needed.

It usually ends in tragedy when a company uses separate systems for different divisions to process massive amount of data. The problems created by unintegrated systems, amplified by the company’s inability to manage data, will likely result to employee confusion, conflicting data, loss of vital information, and company performance could suffer.

Lastly, inefficient data processing will lead to delayed access to important information. This results to delayed decision making. With the use of ERP, concerned departments will have access to the information they need to accomplish their jobs effectively. In addition, business owners will get a bird’s eye view of the current state of business when needed so that important decisions are made when required.

4. Inefficiency is affecting sales and customer experience.

The primary goal of every business is to fulfill orders and keep customers happy. But this becomes very difficult to do when you try to grow your company because you need to deal with several problems simultaneously.

Among the major problems that come with the growth of a company is the elevated difficulty in managing the increase in its inventory, sales, and customers. Thus, inventory management will be more complicated.

When stock is delivered at the right place and at the right time, more product will be sold. This will increase sales and give the business a higher chance to succeed. But, if your sales team and warehouse managers take up significant amount of time to communicate with one another to confirm the availability of inventory, your company may lose potential sales and customers because of poor response.

Customers, most of the time, need abrupt answers. And an incoherent system cannot provide answers instantly, much less give an accurate one.

Failure to solve these problems could put your company’s reputation and reliability in peril.

Hence, inability to keep up with customer inquiry is a concrete sign that your business needs an ERP system.

An ERP system can help solve inventory woes by compiling all stock-related data in a single database while giving access to all persons and departments that need access to it. Therefore, if your salespeople receive product inquiries, they can give immediate answers without having to ask the customer to wait.

Final Words

Although an ERP system gives solutions to almost all business process-related challenges, it may or may not be the answer to every issue encountered by a business.

Yes, a business, big or small, needs a system; but an ERP system cannot fix poorly trained workforce, troubled managers, or unmotivated salespeople.

On the other hand, complexity of operation, inventory management, and services can be clear signs your business needs an ERP system.

Lastly, An ERP system is a huge undertaking for a company in terms of time, finances, and effort. That is why it is important that you have factual, real world basis to justify that your business really needs to implement an ERP system.

To identify if an ERP system is the best solution to your current business problems, you need an expert to assess the situation. CyberLife is a leader in digital transformation and we can help identify solutions to improve the efficiency of your business.

Contact us to know more.

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