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How to Know When you need an ERP System

by Olufisayo
Enterprise resource planning (ERP) software

Enterprise resource planning (ERP) systems are essential tools for businesses, both large and small. ERP systems were at one time accessible only to large companies, and they used them for streamlining and integrating multiple business functions. Nowadays, ERP software is commonplace, even though the sophistication and quality of the systems vary greatly.

Small companies in niche markets and with sometimes very limited resources are taking advantage of ERP systems to make the most of their human resources as well as their time and money. Before a manager can know whether an ERP solution is necessary, it is essential to understand exactly what these systems can do.

Enterprise resource planning (ERP) software

What is ERP?

ERP software allows business organizations to streamline and consolidate their communications and data, in such a way that the business entity can perform as an integrated organism. In some ways, ERP software is similar to a human brain – acting as a collector of information that helps all parts of a company communicate for maximum efficiency.

How ERP Improves Business Efficiencies

An ERP system helps all functional sections of a company communicate clearly and promptly with one another. Data collection is standardized, terminology differences are eradicated, communication is enhanced, and the big picture becomes easier for management to view and control.

Why You Need an ERP System

There are multiple reasons for needing an ERP system. Sometimes the software in place isn’t working anymore, either because it is outdated or it lacks vendor support. In other cases, a business may be evolving in unplanned or unexpected ways. Also, companies can suffer all sorts of problems that entail lack of efficiency, weak data security, poor productivity, and weak communication between departments – all of which an ERP solution can address.

Your software is outdated or simply not working

Managers and business owners who have legacy systems in place probably already realize that their dated information systems are not up to today’s more complex tasks in areas like data reporting, integrated information sharing, and the like.

While you may not need to have cutting-edge technology, you do need to be able to keep up with the demands, and trends, of the day.

Companies that already have an ERP system in place can also experience poor support from a vendor. In other cases, an otherwise competent ERP system might not satisfy a company’s needs because it is poorly matched with the company’s changing business requirements.

Your business needs to secure its data

It’s time to adopt an ERP system if sensitive information is being too easily accessed. An ERP system protects your data with firewalls and access restrictions. Managers also have control over user access: ensuring departments have access to information relevant to their jobs.

Your productivity is flagging

When your company is experiencing a lag in production, and especially when the reason for such a downturn is not apparent, the culprit may be a poor, or nonexistent, ERP system. Without ERP software, there’s a good chance your employees are wasting time trying to find information or duplicating tasks.

Poor productivity can also be the results of weak communication among management, vendors, and manufacturing. Whatever the reason for failing productivity, an ERP system can address the situation by bringing information into view. A single, integrated management system, like ERP software, is the best diagnostic tool available to managers.

Your business is expanding

It’s a fact of economic life that as companies grow, they need more complex software to run their business. More information, increased complexity of financial data, increased employee headcount, larger geographic reach, and additional products, among other typical signs of corporate growth, are harbingers of the need for more – and more complex – business processes and more capable ERP system.

Your business information is difficult to access

Here’s a scenario: an accountant needs information to settle a bill, but it is on a different system that the department doesn’t have access to. This disrupts business productivity and makes processes slow. One of the signature advantages of an ERP system is an efficient flow of information and data throughout a corporate entity.

Your legacy system is too expensive to maintain

An old software system often costs more to sustain that it returns in value. Older systems that are no longer vendor-supported and/or that have become impossible to customize or upgrade can quickly turn into money pits and should be replaced as soon as viably possible.

If your company’s legacy software system is costing too much to maintain, then implementing an ERP system could boost profits and solve multiple problems in short order.

An ERP System is a good Business Solution

If you can relate to the situations mentioned above, then it’s almost certainly time to acquire an ERP system or upgrade the one you already have. The search for a new ERP is a crucially important step in the life of any business. You’ll need to invest in some serious research and careful comparisons among the ERP systems on the market.

Even if you don’t currently need a new ERP system, be sure to know the signs and symptoms, discussed above, for deciding when a legacy software system is out of date and in need of replacement or when it’s time to acquire an ERP system for the first time and take your business to the next level.

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