How Relevant is ERP to Small Businesses?


Small businesses are just as interested in improving the efficiency of their processes as any other organisation, irrespective of size. But many aren't aware of the benefits that an ERP system can bring.

The first question we need to ask is, what is ERP?

Let’s get the dictionary definition out of the way first. If you were to look it up, Enterprise Resource Planning (ERP) is described as “the management of all of the information and resources involved in a company’s operations by means of an integrated computer system”.

Why do businesses use ERP?

Many successful businesses use ERP for managing functions such as production, order processing and stock control. It is relevant not only to manufacturing and distribution but also to many other industries such as pharmaceuticals, chemicals, oil/gas, retail, construction, agriculture etc. ERP typically collects, stores, manages and interprets data from all business activities. ERP is also an essential source of Business Intelligence (BI) for analysis and reporting.

Is ERP relevant to small businesses?

The short answer is, yes. ERP is as relevant to businesses both small and large, particularly as competition is forcing all companies to continually improve efficiency and effectiveness.

While no business is too small for ERP, smaller businesses have historically neither had the funds or the technical capability to implement this kind of business management software.

As ambitious small companies grow they are usually supported by a combination of fragmented systems for their finances, customers and inventory. Spreadsheets or bespoke software will attempt to fill any gaps in their system requirements.

As businesses grow they naturally generate more transactions and data to be processed. A huge effort is required to make sense of information from any number of disparate systems.

Why should a small business invest in ERP?

ERP investment

Businesses tend to struggle with an ever-growing administration burden. If the historic systems operate without integration, the business is often faced with re-entering data into multiple systems and databases. This can easily lead to error and inefficiency.

For example, an ERP solution for the Professional Services can solve the challenges of multiple disparate systems by handling all of the activities in one integrated system. Manual processes can be automated and the duplicate entry of data is no longer required. The system operates in accordance with a workflow that reduces the time spent processing and interpreting information.

Looking to the future, small businesses will need to invest more in ERP so that they can compete and outperform the competition.  

What are the benefits of using ERP?

A small business can experience many benefits from using an integrated ERP solution, including:

  • Eliminating systems that operate in isolation and don’t integrate with each other, dealing with all of the company’s system requirements in a unified way.
  • Optimising operations with intelligent fully-integrated processes that help grow the business.
  • Removing the re-entry of data from one system to another, either manually or through export. This will improve accuracy and reduce operating costs.
  • Delivering more sophisticated and proactive information quickly throughout the organisation to improve decision making.
  • Making it easier to create future forecasts of sales and costs.
  • Extending functionality to include order processing, customer relationship management, service management, reporting, materials resource planning, e-commerce, etc.
  • Easily extracting or importing data.
  • Flexibility that supports future growth.

Small businesses need to start planning for their ERP solution at the earliest opportunity. It’s essential to fully understand your business requirements and document these as a reference point for system design and configuration purposes.

Benefits of ERP

It’s also important that the small business builds confidence over time that there will be value in making an investment in an ERP solution. Smaller businesses are likely to be constrained financially and therefore more focused on a lower cost solution. However, they will still need to have all the functionality to get the full benefit from ERP.

What is Microsoft Dynamics 365?

Microsoft Dynamics 365

More recently we have seen the emergence of Microsoft Dynamics 365 an ERP solution which unifies ERP and CRM capabilities so that they work seamlessly across sales, customer service, field service, operations, financials, marketing and project service automation. Microsoft Dynamics 365 is designed to:

  • better engage customers
  • empower employees
  • optimise operations
  • reinvent products and business models

Microsoft Dynamics 365 is a cloud ERP solution which is available as an enterprise or business version based on the number of users. Pricing depends on whether the requirement is for a package of applications (apps) or individual apps. The charges also factor in whether users of the system require “full” functionality or if they are a “light” user who just requires reports and is able to view data and records.

The cloud solution is very attractive to the small business as it tends to avoid the large initial investment and licensing costs of an on-premise system. Microsoft Dynamics 365 is more affordable to the smaller business but also continues to meet the business needs as it grows when more users and apps can be added to the solution. Further specialist business apps are available from the Microsoft Appsource Marketplace.

Microsoft Dynamics 365 Apps

Microsoft Dynamics 365 also benefits from apps that seamlessly integrate and offer consistent user experience. It includes features made available from the Microsoft BI tools which include Cortana Intelligence, Power BI and Azure Machine Learning.  Deep integration between Dynamics 365 and Office 365 connects business processes which enable integration and easy use of familiar tools such as Outlook, Word and Excel. This creates a consistent and familiar experience.

Since it’s automated, upgrading a cloud-hosted solution such as Microsoft Dynamics 365 can be achieved quickly. This can reduce the costs of implementing enhancements when making on-premise updates. Security of data is also paramount and support is available from Microsoft and their resellers.

Ultimately the goal is ensuring that the investment in an ERP solution delivers the right level of return. Microsoft Dynamics 365 has been positioned to help make that happen for businesses of all sizes. Most importantly, it caters for businesses at the early stages of their development. It gives them the help and support they need to grow and increase profitability. It also gives them the option to add more applications into their system as the business grows.  

What should I do next?

Whatever size your business, whichever sector you work in, there’s an ERP solution available with the functionality to improve efficiency and unify your systems. All you have to do is find it.

Luckily, at ERP Central we can help you find a Microsoft reseller with experience and knowledge in your industry. Get in touch today and we’ll help you find your perfect ERP partner.


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