A businessman walks in and says, ‘Doctor, doctor I need glasses!” “You certainly do, sir. This is an accountant’s office.”
Knowing when to use an ERP system is similar to knowing when you need glasses. But before I take that analogy too far let me explain.
Most businesses start with an off-the-shelf accounting program such as Xero and MYOB in which the processes, systems and reporting are predesigned and inflexible. As the business grows and the demands increase it is not unusual to use add-on software applications, Excel spreadsheets or custom applications.
The slide into dependency on these solutions can be as slow and subtle as the deterioration in our sight as we age. Even though our eyes deteriorate we can still see and function but in reality our clarity of sight, or peak performance, becomes compromised. The right glass prescription can correct the impact of this deterioration.
The right ERP system ‘prescription’ can also bring clarity for a business owner and return the business to peak performance.
An enterprise resource planning (ERP) program is a system of integrated applications that manages a business and automates business functions including product planning, development, manufacturing, sales, marketing, inventory, shipping and payments.
An ERP system such as JCurve or NetSuite is a holistic software solution providing an integrated view of core business processes, in real-time, in ‘the cloud’, using common databases maintained by a database management system.
When is it time to use an ERP?
There are no hard and fast rules that say when to adopt an ERP system (e.g. level of sales, amount of profit). The answer to this question is as varied as the type of businesses out there and is a function of many factors including:
- Type of business and the complexities involved. Do you have an inventory or online sales?
- Numbers of users. How many team members or customers?
- Number of locations. How many geographic locations or sales teams are on the road?
- Level of reporting. Do you need product margins or non-financial data?
- Software dependency. Do you use ‘add on’ software applications, excel spreadsheets or in-house developed applications such as CRM or HR solutions?
- Potential savings. Can you reduce time re-entering and reconciling information across systems or increase sales?
- Long-term growth. Do you have long term growth aspirations and planning accordingly?
Each factor increases the likelihood that an ERP system would be beneficial.
If your accounting software solution has lost its clarity of sight and is not operating at peak performance, consider an ERP system ‘prescription’. It can help reduce business risk and improve planning efficiency, speed to market, service response, internal compliance, order fulfilment, margins and reporting.
Craig Stanmore is a chartered accountant and CEO of the Jaques Stanmore Financial Group.
