After discussing how customer relationship management software can aid small businesses, let us now go to another application that can also aid small businesses, which is enterprise resource planning (ERP) software. The American Production and Inventory Control Society (APICS) defines enterprise resource planning (ERP) as ‘an accounting-oriented information system for identifying and planning enterprise-wide resources to produce, ship, and provide for orders by customers.’ It is a computer-based application that manages internal and external resources. Its purpose is to model and simplify the process of transferring data in a centralized database. It basically makes the flow of information shorter and more convenient. Keep reading to know more of the importance of using ERP software for small businesses.
Importance and Application of Enterprise Resource Planning
ERP software aims to eliminate paper-based transactions in the company. Through the use of an automated process, data are stored more securely and in a more organized manner than storing them manually. Aside from this, the flow of data is also faster because there is no more need for a lot of paperwork to be moved around. This results in a more efficient and effective management of the business. More time is spent on handling the business itself and planning for future projects rather than on simply gathering and analyzing data that are needed to review and start a proposal.
The ERP software is similar to the CMR software in that it helps automate information and data regarding a certain business. However, the application of using ERP software is focused on finance and logistics. Its purpose is to integrate the entire process of managing information across the different units in the business like sales, human resource, accounting, inventory management, and product development. Aside from that, it also assists employees in generating reports in a single database and merging them with spreadsheets. These integrated systems allow for an efficient flow of processed data and information across the different offices of a business, thus paving the way for a more efficient cycle that can further maximize greater profit.
When looking at the application and importance of using an ERP software, it can be observed that its application suits medium-sized and enterprise businesses. However, with the enhancing globalization of the market, small businesses also need to step up their game because of the increased opportunity for marketing to customers worldwide. That is why small businesses are also encouraged to invest in ERP software. Knowing the difference between the management of a small business and an enterprise not only clarifies the importance of using ERP for small businesses but also proves why it is worth the money to invest in ERP software.
Difference of Management in Small Businesses and Enterprises
In enterprises, large and dedicated teams are needed to compile and analyze data into reports. The same thing is also needed in managing the system for maintenance and upgrades. Enterprises cater to a wide scope of customers; that is why efficient organization of all data and information is vital to the company.
Meanwhile, small businesses are different. Because they cater to a fewer number of customers, less data and information are needed to be handled. Different strategies in terms of marketing the products are also needed.
Because the flow of communication and production is wider in an enterprise, it therefore needs a more complex ERP system that can handle and integrate all information on sales, to manufacturing, development, and so on. Since the budget is also larger for an enterprise, it also has the luxury and requirement of ERP software that readily has more complex features.
On the other hand, small businesses still do not have access to large resources that are needed to run a complex ERP software. Aside from that, small businesses usually do not need to avail ERP software that contain all the functions that are used by enterprises like project planning, inventory management, and accounting, sales. Small businesses only need ERP software that caters to specific needs; that is usually the sector that greatly needs assistance like customer relationship management. Therefore, you can opt to buy ERP software with customer relationship management but that does not have other features like financial accounts handling.
Enterprise resource planning software that is sold in the market varies in size, functionality, dynamics, and special features. You can check out https://www.crowdreviews.com/best-erp-software for a list of different ERP software that caters to different companies and needs.
After being able to define and cite some applications of using ERP software as well as their importance, it is now time to proceed and discuss reasons on why ERP software is important to small businesses as well.
- It Fosters an Environment for Transparency
When data are already automated into the system of the ERP software, they will be accessible to all departments of the company. This cancels out the need to export or copy data whenever it is needed. Thus, it leads to less errors and efficiency in time usage. This may not be seen as beneficial to a small business because of the limited number of customers; however, this is also a benefit to small businesses. The time that will be used to transfer and re-enter data from one to another is minimized and can thus be utilized on other tasks that need to be done.
- It Paves the Opportunity for a More Organized Decision-Making
When data are already organized, their statistics can be analyzed in a shorter span of time. This leads to more informed and concrete decision-making. The company can easily detect possible hindrances or problems that may arise with each decision. Other than that, productivity levels that are needed for maximum profit can be analyzed faster. This would lead to a faster and safer pace in production. It also allows the head of each business to plan alternate strategies that cater to each scenario ahead of time.
- Productivity Becomes More Efficient Which Leads to Larger Profit
Because the ERP software can assist in designing a more concrete business plan, the company staff can therefore take on larger volumes of business transactions. This leads to the opportunity of expanding your business to a wider range of customers and transactions.
- Provides Integration of Different Tasks for More Accurate Data
Since ERP software is designed for integration with the different features it offers, it can automatically give you updates on other modules by simply entering one section of the data. For example, when you enter data on inventory, it can automatically update the data on accounts payable as well. This saves you the task of balancing financial statements repeatedly to assure that it is correct. ERP software is also built with excellent security provisions that help you protect sensitive data.
- Assists in Planning so as to Utilize all Resources
Built in ERP software are features like planning engines and simulation function, which guide you in utilizing resources for maximum profit and minimum cost for all resources. A certain feature of most ERP software is an inbuilt standard report generator and report writer that automatically produces ad hoc reports whenever they may be needed.
- Establishes the Execution of Standardized Procedures
Each ERP software is patterned to comply with international best practices. This therefore should be implemented by each business when using ERP software to be able to use its maximum function. Through the practice of standardized procedures, opportunities for fraud, obsolescence, and theft are put into a minimum, and unusual transactions are easily detected.
Enterprise resource planning software is a breakthrough technology that greatly benefits any company, no matter how big or small the business may be. It improves all aspects of your business strategy, starting from planning, production, distribution, marketing, and inventory to financial accounts handling. When thinking that your business might be too small for you to invest in ERP software, think again. It is always better to start while the business is still small. We are now living in a globalized business community where companies, production and distribution centers, and resources are positioned in different countries around the globe. This requires the need for multi-accounting modes, multi-language, and currencies of different kinds that should all be integrated.
What is needed is technology that is flexible that can serve as a common language for all. This can be made possible through ERP software. Of course, the ERP software alone provides not all of these, but it plays a vital part. It can serve as the backbone of your small business, which not only can make it last for the long term but also give way to its expansion in the near future. Different kinds of ERP software offer free trial so that you can try whether it suits your business or not. When you have already decided to invest in ERP software for your business, check out https://www.crowdreviews.com/best-erp-software. CrowdReviews.com provides a list of different ERP software for small business. All you need to do is decide on what is suited for your business.
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