Four Requirements For Small Business ERP Software
Small businesses have special requirements for adequate ERP software. You can find out what these are here.
ERP systems are on the rise. More and more companies are using software solutions to manage business resource planning processes and make them more efficient.
However, in particular, smaller companies are comparatively often reluctant to take a step towards digital ERP. Why this is the case and what special requirements this group has for a suitable ERP system will be discussed in more detail below.
Reasons Why Small Businesses Don’t Use ERP Software
The requirement profiles for a suitable ERP software are as individual as the companies looking for a system. Nevertheless, smaller companies across industries usually give the exact reasons why they have decided against the introduction of an ERP system for the time being:
We want to address these reasons in turn and see whether these are well-founded arguments.
The Complexity Of The System
Small companies often fear being overwhelmed by the complexity of the new ERP system. In principle, such a scenario is quite conceivable. Modern ERP systems are powerful analysis tools and often have extensive functions to map even the most individual business processes.
However, this is not a must. Many systems are not particularly complex in their standard version and only have essential functions that can be extended if necessary. Small businesses should therefore focus on less complex solutions when looking for a suitable system. These are often more cost-effective than extensive alternatives.
An ERP System Is Not Required
Ultimately, each company must decide individually whether introducing an ERP system would be the right step. Nevertheless, many companies that currently do without a plan could benefit from using an ERP solution.
A suitable ERP system can save valuable resources by optimizing business processes. Especially with small companies, resources are usually limited. For this reason, small companies can benefit from the use of an ERP system. More Advantages of an ERP system are
- Transparency and consistency
- A common database
- Improved collaboration
- Easier reporting
- Better project management
The Cost Of An ERP System
The cost factor plays a role for companies of all types and sizes. But even smaller investments can already tear into a big hole in the budget, especially for small companies. For this reason, the cost factor often stands between small businesses and the introduction of an ERP system.
An ERP project is always an investment. However, the system itself does not have to be expensive. In addition to expensive, high-performance systems with extensive functionality, the market also offers affordable versions. Some ERP systems are even available for free.
Size Of The Company
Companies with few employees often state that they are too small to introduce an ERP system. Companies with a small number of employees often have a simple structure characterized by short decision-making paths and little bureaucratic effort. In this way, various processes can also be handled without the use of an ERP system.
However, it is possible that these processes could be made more efficient. Often, over time, inefficiencies creep into processes that cost the company valuable resources.
In addition, small companies are also confronted with a high volume of requirements. ERP systems, for example, can help small businesses comply with data protection requirements under the GDPR.
ERP Systems Are Also Suitable For Small Businesses
Therefore, the arguments against the introduction of an ERP system in small companies are usually justified to a certain extent. Nevertheless, in most cases, systems can be found from which even small companies can benefit considerably.
But what criteria does an ERP system have to meet to represent significant added value for small businesses?
Which ERP Software Functions Are Essential For Smaller Companies?
As has already been discussed, small companies have a different requirement profile for a suitable system. Factors such as an extensive range of functions move into the background, while the budget is usually much more restrictive than in large companies.
In addition to costs, however, other factors also have a high priority.
Easy Implementation And Customization
Smaller projects also represent a considerably greater effort for small companies than would be the case for large corporations. Thus, the actual implementation of the new ERP system can present small companies with a significant challenge. Often there is not only a lack of sufficient IT know-how but also simply infrastructural conditions.
On-Premise Solutions: Control And Responsibility
If companies opt for an on-premise solution, the entire responsibility for the implementation of the system as well as the subsequent maintenance of the hardware and software lies with the company. For many small companies, this is associated with an honest effort that cannot be implemented.
In this case, companies should first consider whether an on-premise solution is the right choice or whether, for example, a cloud-based ERP system would be more suitable. With an on-premise implementation, companies can usually rely on the support of experienced providers.
A High Level Of User-Friendliness
As already mentioned earlier, small companies usually do not have the appropriate capacities to deal with complex solutions for a long time. Here it is essential that the system is intuitive to understand and has a straightforward interface.
Usability In All Areas
User-friendliness is a topic that is gaining relevance across industries. With growing customer expectations and digital progress, even large corporations demand high-performance systems that are intuitive to use. Usability is currently one of the most important trends and developments in the field of business software.
Only The Bare Necessities
In order not to make avoidable compromises in user-friendliness, companies should focus on systems with only relevant functions. In practice, this cannot consistently be fully implemented. Nevertheless, the more functions a system has, the more complex it can potentially be in operation.
Modular Design Is Often Helpful
To choose a suitable system with – if possible – only the required range of functions, ERP software systems with a modular structure are ideal. Companies only select the modules they need to map their processes.
For example, they can put together a tailor-made combination of purchasing, sales, accounting, CRM and DMS and initially dispense with BI and analysis functions. These can then be booked later as required.
Scalability
The same applies to the scalability of the system. Small companies that first have to establish themselves on the market should pay attention to the solution’s scalability when choosing a suitable ERP system.
If additional users are added, the system should ideally be able to grow with the company. Otherwise, the system is overloaded by a certain number of simultaneous accesses. If it cannot be scaled in this case, a new system must be implemented.
Since this would involve renewed effort and additional costs, companies should pay attention to scalability when choosing a suitable system.
Conclusion:
It becomes clear that small companies have fundamentally different requirements for an adequate ERP system than large corporations. Even if there may be company-specific deviations, the basic needs of small companies for an ERP system can be summarized as follows:
- Lowest possible costs
- Easy implementation and adaptation
- High user-friendliness
- Modular design and scalability.
There are suitable ERP systems for companies of all sizes and industry affiliations on the market so that even small companies can benefit from the use of an ERP system.
Thus, even small companies can gain a competitive advantage in the long term by using an adequate ERP system by optimizing processes and saving resources.
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