To ERP or not to ERP?

ERP (Enterprise Resource Planning) is a software application that allows organisations to integrate internal and external management information accross an entire organisation, embracing and automating processes throughout the lifescycle of each individual transaction.

Being in the consulting industry myself, I see a couple of customers that would be asking this question.

1. Existing organisations, that have a basic accounting system with multiple spreadsheets and possibly MS Access databases or even multiple programs that handle various different functions in the organisation.

These organisations spend a lot of time duplicating effort. An example of this is companies that manage their Inventory seperately from their financials either because their accounting software doesn't manage inventory or it doesn't manage inventory well. They keep spreadsheets to keep track of the stock they have on hand (at their last stock count) and then increase or decrease the quanities when someone tells them they have either bought or sold stock (assuming they are even told). It is a really good look when a salesperson is dealing with a customer and has to "quickly check on the shared spreadsheet to see if we have that item in stock"

It shouldn't be that hard. Most of the time the reason these companies have such outdated software is because initially they decided to have software written specifically for their requirements and now they rely on either one person to do all their support, or one company that still supports their software. This is not a good situation for any organisations to be in.

2. New start up organisations that do not have very complex processes and think they "really only need book keeping software".

You may think you only need book keeping software now, but what you should be thinking about is what you plan to have or be doing in the next 10 years. It is much more cost effective to implement an ERP solution that you will grow into now, than implementing book keeping software now and then later migrating into ERP.

3. Companies that have outgrown their current ERP.

I know, that sounds like an oxymoron, you aren't supposed to "outgrow your ERP" but it happens. These days, ERP has become a bit of a buzzword. The question you should be asking is did I buy accounting software and with a whole lot of add ons to run my Job Costing, Warehouse/Inventory, CRM etc to give me "ERP" or did I buy a single solution that managed all of these requirements. In my opinion, this would differentiate ERP from Accounting software.

To ERP or not to ERP should be a simple question for anyone to answer. The cost can be high, but if the implementation is managed and supported effectively by the organisation, it can certainly save you time and money. The next question is how do I chose one from the many that are out there?