ERP system benefits
When we start an initial discussion with prospective clients you can sometimes feel a hesitancy about moving systems.
The basic question we should be asking is "do the ERP system benefits outweigh the costs?"
A basic cost-benefit analysis should always accompany a significant business decision and selecting an ERP system is no different.
Let me review the benefits from two angles;
- moving from one ERP system to another.
- moving to your first ERP system.
ERP system benefits when changing systems
Firstly, let me say that many people complain about their ERP system without addressing the basic problems.
If an ERP system is setup incorrectly, or used poorly, then it might well not be the ERP systems 'fault'.
Should you feel that you might be in this camp, then check out the article "Five common errors to avoid with your ERP system implementation".
But, what are the potential ERP system benefits if you do change systems?
They could include:
- Faster processing times for your repetitive, higher volume, transactions.
- Simpler reporting.
- Better data for improved decision making.
- Reduced costs.
- Better support.
- Simpler processes.
- Better software reliability.
- Reduction in workarounds (e.g. additional spreadsheets) through specific functionality.
If you aren't getting the productivity you had hoped for from your current ERP system, and the implementation / management is effective, then moving systems could well bring significant benefits.
Benefits when moving to your first ERP system
If your business is currently working with spreadsheets, whiteboards and paper-based systems then this question becomes even more important.
Key benefits of moving to your first ERP system include:
- Reduction in duplicated data entries.
- Information at your fingertips, via dashboards and effective reporting.
- Not relying on one person in your business keeping all the spreadsheets working.
- Simplified processes leading to less admin.
- Protection against data loss (if your paperwork goes missing or whiteboard gets rubbed against).
- Improved management of production (via shop floor data collection and exception reporting).
- Integrated activities such as production scheduling and purchasing, driven by sales orders and stock work orders.
- New functions that can save hours of management time (including production tracking).
- Accessing the information remotely (especially if you opt for a cloud ERP system).
Dropping the reliance on people having to update manual systems (that fall over as soon as people are sick or take holidays) is one of the big, overarching, ERP system benefits.
If the thought of moving from a paper based system to an ERP system feels daunting, then check out our article "Taking baby steps when moving to an ERP system". It doesn't have to be that way!
What's your conclusion?
There are some big ERP system benefits that can be achieved. Sure, you need to select a system that meets your needs and you need to know how to manage the ERP processes correctly, but the benefits certainly outweigh the costs when done right.
On a personal note, I (Giles) would not have been able to streamline production in a number of manufacturing facilities that I had run in the past without the time saving benefits of ERP. I would recommend to any business that isn't getting what they need from their current system (whether that is an existing ERP system, or a paper based system) that they figure out what the costs of not moving are, and then quantify the benefits once some systems have been reviewed.
Converting the costs and benefits into a currency value often makes this analysis easier. Any time saved from changing systems can then be equated into cash, to compare against any changes to the system costs.
ERP system benefits are certainly worth the effort!