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ERP for Small Business – Do You Really Need It?

Posted by IES on May 15, 2018 9:13:00 AM

pexels-photo-914931Is your business too small for an ERP? You already know that enterprise resource planning (ERP) software is particularly important to mid- to enterprise level organizations. In most of these ventures, an ERP can serve as the heart and nerve center of these organizations. Companies use ERP for everything from backend billing to front-end sales.

ERP platforms are characterized by their interoperability between multiple company functions. They’re also designed to share one common database. The benefits are simple to understand; customer service, sales, and HR can input to one customer record that holds buying and payment history and more.

ERPs were designed to ensure that the right hand always knows what the left hand is doing. Companies that fail to use ERP often have four or more disparate software platforms with multiple logins, workflows, and processes. But what if a single login accessed HR and billing, inventory management and customer care? As one department enters data, nothing is lost; it’s populated into one software hub. 

Consider the alternatives to an ERP; purchasing multiple platforms that will not always integrate with each other, causing departments to reenter data.

Here are some more problems that an ERP can solve: 

  • Imagine customer service makes an entry that the customer has canceled an on-site visit. Sales never got the memo because that data is held in a different system from sales.
  • Or, inventory management is housed in another system, so the sales rep closes a deal on a product that is back ordered for six weeks. But the two platforms weren’t integrated and the batch doesn’t run until 7 pm. The end result? A frustrated sales rep and an angry customer.
  • What if marketing could start to tailor their materials to take into account customer buying patterns?
  • What if a sophisticated but simple-to-read trends report spotted problems in your supply chain before you did?

An ERP can help you handle many of the challenges facing your business. As your company grows, an ERP can expand.

ERP for Small Business – How Can it Help?

Software-as-a-service (SaaS) models such as Microsoft Dynamics 365 have become the great equalizer in business today. That’s because any size business can now afford the same tools that big organizations have traditionally purchased.

A decade ago, the only option when buying software was to purchase on-site servers to house the data. There were always hardware and software costs as well as hiring an IT executive to manage the data. Because ERP platforms had some many functions under one software umbrella, it was often necessary to add a server by function; one server for inventory management and one for accounting, for example. As the equipment aged, unexpected costs would crop up, which was another reason why only enterprise organizations used these tools. Only large organizations could actually afford to maintain them.

Today, the cloud has allowed subscription software on demand with all the benefits of access from any device as well as automatic security upgrades. Instead of waiting for an IT team to manage an update, software is constantly updated in the cloud. Instead of spending thousands on hardware and software on-premise, one low license fee is a static cost that does not fluctuate. So, clearly, cloud software makes the most sense for a small business. But how can an ERP help?

One benefit to consider is that small business employees wear many hats – sometimes simultaneously. There is often little time to waste. Instead of dealing with multiple spreadsheets, databases, and platforms, an ERP can improve the efficiency of an organization by streamlining business processes. Too, ERP platforms are designed to automate basic functions in a business. While time is an issue in the small business, software like Microsoft Dynamics takes the work out of your hands by doing it automatically – something every small business can appreciate. 

Some other benefits of ERP for small business include:

  • Data is shared between people or departments so transparency increases. There are no data imports or exports between platforms; everything is in one place.
  • Decision-making should be improved, especially within the immediacy of the cloud. You’ll see inventory levels as they fluctuate. Cash flow has no lag – you’ll deal with real numbers in real-time. 

ERP for small business could be a game-changer, especially when margins are tight and any competitive advantage could make or break your business.

How Do I Know if an ERP for Small Business is Even Necessary?

Small businesses often start out with the business basics -- Microsoft Office and QuickBooks for accounting. The problem arises when the business starts to expand. As transactions improve, new clients come in and the flow of data gets heavier, business processes bog down. As you have less time, the myriad of tasks within a workflow may drag slower as the workload increases. It’s at this point that the small business has to do something to improve – or fall behind.

When manual processes such as inputting purchase orders or updating inventory start to fail, it’s clearly time to look at ERP for small business. ERPs automate these manual functions, flowing data seamlessly from purchase to payment.

Here are a few indicators that your small business could need an ERP:

  • You’re not sure if inventory is completely accurate.
  • The sales forecast is more of a guess.
  • You’re relying on data from Excel spreadsheets.
  • You’re logging customer complaints in a paper file.

Every business gets to this point. But here’s a thought to consider -- Instead of waiting for the business to grow and going through two (or more) sets of software implementations, why not start with the best ERP for small businesses – Microsoft Dynamics 365.

Choosing an ERP for Small Business – What to Look for?

Once the decision has been made to consider an ERP, you should:

  • Look for a cost-effective ERP that combines multiple front and backend functions for your business.
  • Look for a platform that integrates well with any existing platforms that you plan on keeping.
  • Watch for subscription solutions that are reasonably priced.
  • Also look at the user interface. Does the ERP look and feel intuitive?
  • Can the software grow with your business? Are upgrades available? Can you start with a couple of modules and add functionality later on?
  • What about customization? Does the ERP allow you to grow more sophisticated as the business improves?
  • What kind of security does the software offer?
  • What kind of customer service and employee training does the ERP for small business provide? 

For more details on the different ERP solutions available, check out our breakdown of the four biggest ERP solutions for small businesses.

Now let’s look at Microsoft Dynamics 365 within the context of the above requirements.

Microsoft Dynamics ERP for Small Business

The cost of Microsoft Dynamics runs around $40 per user per month, depending upon which package you need. PC Magazine reviewed the software, saying:

Microsoft Dynamics 365 for Finance and Operations, Business Edition is a
cloud-based accounting system that’s easy to navigate and tightly integrated
with Office 365 and other Microsoft cloud applications…What Dynamics 365 brings
to the table is a focus on small and midsize enterprises and a cloud-only deployment model.”

If you currently use Office 365, then Microsoft Dynamics 365 will feel very familiar. Not only do these products integrate fully, but they also look and feel similar, which aids implementation and training.

Dynamics also has reporting features that are second-to-none; PC Magazine said, “A nice side effect of the tight integration with the rest of the Microsoft Office and Office 365 suite is that creating custom reports is fairly easy using tools you likely already know.”

Each Dynamics 365 installation comes with the support of a Microsoft Partner like IES. This is an important distinction; ERPs can be complex, so having an upfront trainer and collaborator can help you customize Dynamics 365 right out of the gate. 

One thing to mention about the cloud in general and Dynamics 365 in particular, is that the software comes with mobile apps for Android and iOS. Having the ability to access company data from any digital device cannot be discounted; it’s clearly another reason to consider the cloud ERP platform instead of an on-premise installation.

Bottom Line – Is an ERP Worth it for Small Businesses?

Don’t let the name fool you – today’s ERP software is for more than the enterprise-sized business. With cloud software, ERP is more affordable and accessible than it has ever been in the past. In fact, tools like Dynamics 365 have been tailored and targeted specifically for the small to mid-size business. The cloud lets small businesses have a competitive advantage at a time when every dollar and efficiency is particularly meaningful – especially in competitive markets.

To find out if your business is ready for ERP, contact us.

What to Look For in the Best ERP Solutions Ebook

Topics: Microsoft Dynamics ERP