The idea of selecting, integrating and running an enterprise resource planning (ERP) system for your business can feel overwhelming. After all, an ERP solution can span every department and area, including sales, inventory, accounting, customer service and even human resources.
However, if you want to improve your business’ efficiency, scale successfully and/or identify key areas of opportunity, an ERP solution is fully worth exploring. To help you develop an accurate perspective and make an informed decision on which ERP provider to go with, here are 10 common myths about ERPs and ERP implementation:
1. Misleading ERP pitches.
When it comes to an ERP solution, if it’s worth doing … it’s worth doing well. ERPs can provide improved business operational abilities by fully integrating with your existing systems and business needs. Because every company may use a different combination of software and processes, as well as unique ways of serving its customers, there is no such thing as out-of-the-box functionality, pre-configured solution or any other sales pitch that makes an ERP solution appear ready to go from the get-go.
2. ERPs only work in the cloud.
According to Panorama’s recent ERP report, the majority of ERP implementations still leverage an on-premise model. While this could change in the future as cloud technology becomes even more widespread, for now, don’t stress if your current systems and processes aren’t cloud-based, because your ERP doesn’t have to be cloud-based, either.
3. You have to follow the ERP’s workflow.
ERP systems are dynamic, robust and flexible, and there is no defined workflow for using them. However, given the increased capabilities provided by an ERP solution, you’ll probably want to improve or create an entirely new workflow for your business, related to receiving, processing and executing on customer sales. Updating your business workflow will give you the opportunity to ensure operations are as efficient as possible. Similarly, an ERP cannot tell you what to do or recommend a workflow; only an expert in your business’ needs and operations can do that – and that means you!
4. ERPs are pricey and must be paid for upfront.
Not all ERPs cost the same, and businesses can pursue different pricing or payment models. For smaller businesses, adopting cloud-based solutions or providers who offer usage-based pricing is a budget-friendly ERP option to consider. In addition, if your business doesn’t require as many ERP capabilities, there are numerous other lightweight ERP options to explore.
5. ERPs are universally and immediately adopted by employees.
No matter which ERP solution you chose, you will need to put in considerable effort to secure buy-in from all involved departments, and even more effort into proper training. Enable your employees to see the opportunities and benefits of the ERP by helping them understand that you aren’t switching new systems without a valid reason. Employees will likely already be comfortable with their old practices and software, and will almost assuredly resist having to learn an all-new system and software. Even after initial training, it will be important to do periodic check-ins with your employees. Hold Q&A sessions and solicit feedback from employees so that you can correct misconceptions or incorrect processes.
6. Begin with a starter solution and then upgrade to an ERP.
Talk about inefficiencies! This strategy involves the cost of setup and the effort of training, only to find yourself going through the same process again in a year or two. It would be more efficient to take on parts of ERP implementation and work your way toward full integration.
7. Customized ERP features are unnecessary.
ERPs can offer customized features or processes to better serve your business’ exact needs. As discussed earlier, most ERP solutions serve as a foundation on which customization and additional modules can be added. According to Panorama’s ERP Report, 91 percent of organizations end up doing some sort of customization during implementation. Customization of your ERP should be expected from the onset of the ERP evaluation and budgeting process. However, a fully customized ERP can be unnecessarily expensive and complicated. The knowledge of the ERP will be concentrated with one or a few select individuals. When updates, expansions or troubleshooting is needed down the road, only those select individuals will be able to manage the task compared to a fully staffed company. In addition, ERP companies invest significant dollars in research and development of ERP capabilities to advance their offerings.
8. ERPs are for big businesses.
Companies of every size can benefit from having departments and operational processes integrated and subsequently analyzed. Today, small businesses can still generate large volumes of sales and a widespread customer base, thanks to online selling. The right tools can help small businesses plan their expansion as efficiently as possible.
9. ERPs only benefit the shipping, inventory and manufacturing departments.
This is one of the most common misconceptions about ERPs. In reality, ERPs can improve as many business departments as you integrate with them. As you advocate for the new ERP solution to your company, stress that no matter which departments you integrate initially or at all, improving the business’ operations affects all employees because that ERP technology helps businesses grow bigger and more successful. Beyond number crunching and order processing, ERPs can also improve communication and project planning, a capability that can help all departments. Finally, ERPs make more information available to all members of your business through reports and analysis. With more information and knowledge, every employee will be able to do their job better.
10. ERPs take a long time to implement.
Depending on your needs, available resources and prioritization of implementation, ERP progress can be slow or expedited. After discussing your company’s goals, ERP feature needs and budget, ask for a timeline estimate. Given the robust nature of what an ERP solution can do and the various business operations it must integrate with, businesses should expect an integration and configuration period of at least a few months. Remember, the sooner you are able to set up your ERP, the sooner your business will begin operating more efficiently and with greater precision. The duration of implementation is ultimately up to you.
ERP Is Worth It
ERP software can seem complex and hard to get used to, but the benefits can far outweigh any disadvantages when implemented and used properly. Take your time to study what’s available, and consider all the options before making a commitment.