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ERP Enterprise Software: is it just for big companies?
Our company seems to be close to needing more sophisticated planning systems; we are not a large company and I don't know if we want to take on a big expense like an ERP system. Is there any way I can do a quick test to see if we should start considering a more robust solution?
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3 Answers
Hi Guy:
The test is really simple.
1) If you find yourself jumping through hoops to locate a piece of info, be it from operations or accounting, be it a week old or a century old, then you know.
2) If your company is maintaining parallel systems (multiple spreadsheets, databases). Example: your engineers have their own island of information system, your marketing/sales people maintain their own information system, etc... This is a sure sign that what you have in place is not doing it.
1) and 2) always go together.
I am providing a link below not as a solution to your issue but as a "look before you leap".
Good luck
http://www.devantiscapital.com/INTRO.html
An ERP system is a two edged sword. The integration of all business functions has some real advantages but with them come complexity and constraints. Supply and/or demand planning can be even more of a challenge that the other components of ERP. Finding a balance between automation and agility is difficult. No matter what any vendor tells you, planning will not be totally automated and you will still need good business processes and some good intellectual horsepower sitting in front of the computer screen. Additionally, GI-GO (garbage in - garbage out) is the rule here! Meaning, if the supporting data is not set up correctly and if transactions are not entered correctly or are not timely, planning will produce answers that will be illogical. The typical response to this is: "this planning system doesn't work!" Best of luck!
Depending on your company's situation a case can be made for needing an ERP system or not needing one. The size of your company is relevant, but not a determining factor by itself. The key questions to ask are:
1) What business problems are causing me the most pain, in terms of resources to accomplish, accuracy and time to complete task
2) Are you growing? If yes, then the problems are likely to get worse so you probably be better of getting a system sooner rather than later as you want to be in a position to ride the wave vs being drowned by it
3) What is the ROI or payback time of obtaining an ERP system. For instance, if the ERP system costs $50K (could obviously be less or more) will you be able to:
a) Reduce your inventories (saves cash, reduces obsolescence and loss exposure)
b) Save money by lowering your audit fees, because information is more readily available
c) Reduce headcount, because of the productivity improvements
d) Have employees work on more value added projects due to productivity improvements
e) Missing a sales opportunity, because your inventory is not accurate or planned correctly.
Expandable has customers with $0 revenue and customers with revenue with hundreds of millions of dollars, because the complexity of the business, growth expectations, productivity gains, costs savings, etc are all part of the decision making process
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