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What are the benefits of erp?
What are the benefits of erp instead of just continuing with a stand-alone accounting system? We have a mid-sized heavy equipment leasing company. What other features do ERP systems have that would motivate us to implement a system?
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4 Answers
The decision to move from a stand alone accounting system to an ERP system should be based on a needs assessment rather than features provided by an ERP solution. If your business is running efficiently and effectively on the stand alone system there may not be a good business reason to change systems.
The majority of ERP implementations either fail or exceed time and budget considerations. Proper due diligence will assist you in mitigating risk. Having said the above, please see the following link for a very high level view of ERP. Although I don't agree with everything stated in the article it will give you an idea of ERP solutions.
http://www.benefitsoferp.com/
Rick Freeman
Although there are several pros and cons usually stated, I tend to quanitify the main advantages under 2 points
System integration: This is an advantage because in your current stand alone environment, how long does it take for the accounting system to be updated with the status of an order invoice or your available inventory which effects your Cost of Goods (COGS)?. This is especially important when you get to the month end close and need to reconcile your accounts recievables. An integrated system allows real time data to flow back into your financial system and should (in theory) reduce the amount of time taken for period end close. In additon, the ability of your managers to base business critical decisions using real time data is a huge competitive advantage. An integrated system approach also means that all the different deparments are looking at the same data at the same time and helps break down the "silo" effect in organizations, leading to much better collaboration across the different functions.
- Masterdata: Although this traditionally boring subject (unless you are passionate about IT) tends to get ignored, the savings across an organisation by moving to an integrated IT system are actually pretty easy to quantify financially. The two main advantages are:
1. Lack of confusion: Different stand alone systems talking to each other usually have different data entered in each system that actually denotes the same thing. Ever seen the same equipment called a different name in conversations between manufacturing, transport, sales and finance? Master data is the main reason and in some extreme scenarios, can lead to lost customer service in sales because sales and manufacturing got their wires crossed on what product they were manufacturing and selling. This can be especially true in modern complex global supply chains
2. Cost to IT of maintaining hardware to support the growing amount of memory required for systems that are 50% full of old or obsolete data that nobody can clear up because differences in the master data means that nobody is clear on who is still using them. The cost in time, resources and equipment to help maintain the growing amount of uneccessary increasing data maintainance in the current systems is something most organisations should factor in when considering an ERP implementations.
Matt,
It is likely you don't need an ERP. The cost, risk and disruption probably isn't worth the effort or investment.
Is like you do the question; how much cost the information? Planning well with the right choise the results came naturally.
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