ERP System for Small Businesses

A manufacturing business aspiring to make its mark in today’s fiercely competitive industry needs to synchronize its operations and keeps tabs on every single movement happening in the organization. Implementing an ERP for small manufacturing company will allow you to combine different aspects, be it planning, production, financials, sourcing, or customer relationships, into one united program. The manufacturing module in ERP software assists with various imperative functions, including:

• Monitor inventory levels and material consumption
• Control and reduce material wastage
• Optimize in-progress quality check stage
• Track delivery status 
• Offer complete visibility into your supply chain and accounts
• Order technologies, components, or raw materials
• Create and run daily reports
• Detect and address bottlenecks in your production & supply chain processes

A manufacturing business does not take care of the production and distribution of goods and services only. Various other moving parts, such as planning, sourcing, warehousing, quality control, and sales, equally contribute to making measurable progress and achieving the desired results. Successful integration of an ERP for small manufacturing company with the manufacturing module enables a business to productively and efficiently carry out otherwise challenging and error-prone activities at every stage. Both small and medium-sized manufacturers can leverage an ERP system and its capabilities to easily:

• order materials and components from vendors or suppliers;
• perform quality assessments;
• organize and improve workflows;
• evaluate and plan demand accurately;
• monitor products, items, or materials available in the stock;
• make faster, informed business decisions with real-time insights
• improve relationships with customers and suppliers
• deliver a personalized, enhanced experience to consumers
• simplify production and order fulfillment processes

The influence a manufacturing ERP system can have on a business is not limited to a specific vertical in the manufacturing industry. More and more industrialists have started recognizing the importance of the best manufacturing software systems for their businesses. Different sectors, including housing manufacturers, construction, automotive, electronics, and technology, can significantly take advantage of an ERP system to improve their business operations virtually. Accurate reporting, inventory tracking, supply chain management, production scheduling, and cost evaluation are a few among many ways an ERP systems for small companies can help a whole multitude of various production, manufacturing, and construction businesses achieve their goals.

The manufacturing industry has been exploiting Enterprise Resource Planning (ERP) software and tools since the year 1990 to track and control their human resources and financials. With an array of integrated functionalities and features, today’s ERPs have quite a lot to offer to manufacturers and production businesses.

All kinds of production companies can count on a reliable ERP system like Autus Cyber Tech to effectively meet the demand of their customers, increase revenue, uphold productivity levels, and streamline their operations. A powerful ERP for small business manufacturing can help businesses keep their inventory, supply chain, expenses, and logistics on the right track, thereby getting an edge on the competition, boosting revenue, and improving customer satisfaction. In addition, they can improve the quality of products and reduce wastage and expenses associated with the materials by tracking how resources are being utilized within their organization.

Businesses incessantly hunt for convenient, operative methods to streamline their processes and improve productivity while lowering costs. A full-fledged ERP software is a critical tool that can help them scale up their business growth and profitability at a global level. Human resources, accounting and financials, manufacturing, asset tracking, supply chain management, and customer relationship management are a couple of the modules that organizations find valuable and effective.

• Human Resources Module: Manage workforce, collect and handle information associated with employees and departments, etc.
• Manufacturing Module: Plan and schedule production plans, procure raw materials, track inventory, etc.
• Supply Chain Management Module: Manage every single aspect of the supply chain – suppliers, vendors, manufactures, distributors, and consumers
• Customer Relationship Management Module: Build strong relationships with customers and prospects, improve customer experience and satisfaction, and respond to queries quickly
• Accounting & Financial Module: Understand and track their financial performance, prepare reports, automate payments, and optimize accounts

An enterprise resource planning tool acquires and controls all the essential information and data linked to a company’s customers, internal and external workflow, suppliers, employees, vendors, and other operations. The top five characteristics of an advanced, consistent enterprise resource planning system are:

• Modular Design: Incorporates a set of business modules – Human resources, supply chain management, accounting and financials, customer relationship management, and manufacturing
• Multi-facilities and Versatile: Supports multi-languages and multi-currencies and is accessible on various platforms
• Comprehensive Management: Manages all critical business processes and operations, including employees, finances, reporting, sales, customers, etc.
• Strategic Planning: Covers long-term tactical planning, mid-term strategic planning, and even short-term operational planning
• Centralized Database: Integrates, simplifies, and manages a business’s front-office and back-office functions in a shared database

ERP system is a special type of software that is designed to help organizations streamline and automate their business processes for maximum productivity. ERP tools enable businesses to manage their daily operations, store business data without ambiguity, and retrieve data in the form of reports to take crucial business decisions effectively. Some common components of ERP software include – order management and processing, inventory management, people management, customer relationship management, finance management, risk management, and supply chain management. Setting up an ERP system for your business is highly advantageous. As it helps automate repetitive tasks, your employees have more time to work on creative tasks and needle-moving business activities. ERP also enables increased team collaboration and better use of available resources that benefit the business as a whole in the long run. Not just this, ERP tools help you create a memorable customer experience that brings in more business from them and their referrals too.

Primarily, there are 3 different ERP implementation approaches based on where you choose the host the business data – on-premise ERP, cloud-based ERP, and hybrid ERP. As suggested by the name, in the on-premise ERP implementation approach, you set up high-end servers and other hardware to store all business data on your local business site or office. This approach requires you to invest not just in the ERP tool but also in servers and trained IT professionals to keep the system up and running at all times. One of the most pocket-friendly and hassle-free ERP implementation approaches is to deploy a cloud-based ERP. In this setup, the ERP vendor hosts the ERP system on cloud servers so that you can access the business data from anywhere in the World. This ERP tool is completely managed by the vendor and doesn’t require you to bear any additional costs for servers or IT professionals. The last approach is called Hybrid ERP which is a combination of on-premise and cloud-based ERP. This is suitable for large organizations that require customized ERP tools and desire full control of data along with the ability to access it via mobile devices.

Broadly speaking, there are 6 steps to ERP implementation. Let’s have a look at them here :

• Plan – This is the most crucial step in the implementation process. In this phase, the business requirements are discussed to make a note of the problems that the ERP system must solve.
• Design – The existing workflows are analysed and upgraded to map the new requirements to existing ERP features. ERP tool customizations and new modules are also designed in this phase.
• Develop – The ERP vendor team works closely with the business to configure the ERP software to the unique business requirements. In this phase, new documents and training material for the employees are also developed.
• Test – Before setting up and making the new ERP system live, it is tested to ensure it does the desired job well. The test is conducted in the form of comprehensive assessments and bugs if any are removed then and there.
• Deploy – Once the testing is complete, it’s time to install the ERP software and transfer all business data. Soon after the setup, employees are trained to start using the new ERP tool and make the most of its features.
• Support – The implementation doesn’t end with deployment. Support from the ERP vendor team is needed to answer questions or fix bugs. They also help upgrade the system with time and changes in your requirements or priorities.

There are 4 types of proven methodologies for ERP Implementation :

• Big Bang – This is a single-step method where all users migrate to the new ERP system at once. This transition starts after the system is tested and all the configuration is completed.
• Phased Rollout – In this method, the deployment is done over an extended period of time which can range from a few weeks to a few months. Since this is a slow transition, it is not as risky but can take really long.
• Parallel Adoption – The organization continues to use its existing systems in parallel during the setup of the new one. This is the least risky because, in case of any trouble, the company can move back to its old system in no time.
• Hybrid – This is a combinations of two or more of the above methodologies. For example – the company might start with big bang approach for core business processes and then use the phased rollout method for other departments or tasks.

ERP implementation life cycle is a 7-step process as explained here :

• Plan who should be on the team to overlook and manage the ERP implementation process.
• Create a change management plan to make your team feel supported during the transition.
• Estimate budgets for the ERP deployment and remember to check for any hidden or indirect costs
• Start with data migration, carefully move all data from the old system to the new ERP tool
• Execute training modules for your team members and support them through live workshops, workbooks, and group sessions
• Go ahead and deploy the new system, make it live and ready to be used by the team
• Evaluate if the ERP project was successful and check all things you can do to make the mosts of it in the years to come

This is a simple ERP implementation life-cycle but it is the proper planning and execution of the steps that make all the difference.

Following are a few ERP statistics from 2022 reports :

• By 2022, the ERP market sizes is expected to grow to USD 96.04 Billion.
• As per the Gartner report, 65% of CIOs predict that AI will be integrated into ERP systems by 2022.
• Cloud-based ERP app global expenditure is expected to reach $226.9 Billion by the end of 2022.
• For the year 2022, ERP software values are anticipated to reach $96.04 Billion.

ERP installation is a big project for your business. It will bring in a lot of changes and continue to affect your company for the years to come. There isn’t really any scope for us to go wrong with this and to have a successful implementation, we’ll need to plan well and use the proven methods only. The biggest challenge with the setup of a new ERP system is to train the employees to start using the brand-new software and get used to the latest workflows. To ensure that this transition from the old to the newer system is smooth, you require a solid change management plan. Here is how you can create one for your business too :

• Mindset – The first step would be to help your stakeholders and employees understand the need for change and be prepared for it. The goal is to bring in awareness and maintain engagement as the project processes.
• Assessment – Much before you start the actual deployment of the new ERP system, it’s best for you to assess how the setup will impact the end-users, how will it change their day-to-day activities, does it change their role, and how does resource allocation change. Answers to these questions will help you plan the move to be efficient and effective.
• Training Strategy – The new ERP system requires continuous end-user training in the form of recorded demos, workshops, practice sessions, and Q and A calls. Additional learning resources will be an add-on and make it easier for the team to get started with the new ERP tool.

Change management is very crucial for the successful deployment of the new ERP system. Taking a holistic approach that connects people, processes, and resources is a great way to go forward with it.

For an SMB implementing a new ERP system, success depends entirely upon the stakeholders coming together, truly believing in the change that is about to come, and working passionately towards it. The best way to approach the idea of setting up a new ERP system is by identifying your goals and objectives. Once you do that, it can be helpful to explore your options from available ERP vendors and choose the one that not only matches your requirements but also fits your budget. Decide to go ahead with a vendor that feels like a right fit to be your partner for this important business decision. It can be helpful to hire a project manager to take care of the deployment from the start till the end. Prepare your employees for the upcoming changes and seek their help to plan for new workflows and efficient data migration. Plan in advance for change management and assign ample resources for live training of the team. This should be your priority to ensure the business doesn’t suffer from the change.

Needless to say, planning is the most important phase of the ERP implementation process. If this step is done well, everything else is most likely to fall in place and give good returns for the business. Let’s quickly look at a few steps that will help you plan better :

• Define the overall scope of the ERP project including customizations required, milestones, mapped processes, and expected outcomes.
• Analyze the business requirements which can be done by installing the software in a sandbox and making the necessary configurations to match the desired outcomes.
• Data mapping and migration from the old to the new system that is also accompanied by regular verification checks.
• Testing the new system to work without errors and completing the tasks as required
• Training end users based on their roles and data permissions.
• Software deployment into the production environment.
• Maintenance, support, and review post-deployment.

Extensive planning, effective implementation, and rigorous testing are necessary to ensure a successful ERP deployment.

ERP implementation is a business-altering decision. If all goes well, your business is likely to benefit in the long run, have better workflows, increased productivity, happy customers, and get a huge ROI from the ERP deployment. But there are a few things that can go wrong and you must be careful to avoid these unwanted situations :

• Not being able to select the right ERP tool for your company
• Lack of proper planning for deployment
• Resistance to change and difficulty in adapting to new systems
• Not accounting for maintenance costs
• Lack of sufficient training for staff
• Absence of support and participation from senior staff
• Poor change management strategies

From the long list, we are sharing the top 5 best practices for a successful ERP implementation :

• Clearly defining your goals and desired outcomes Keeping the stakeholders and top management involved throughout
• Using a proven methodology and choosing a renowned ERP tool
• Establishing KPIs to track and measure progress Having end-users in mind and implementing it for them

A successful ERP implementation doesn’t happen by accident. It must be planned well and executed carefully to ensure the best outcomes.

ERP systems have been proven to reduce operational costs and increase productivity by integrating all core business processes in one place. This is known to increase efficiency and reduce costs but to figure out the exact business gains, we must check the ROI. To calculate Return on Investment i.e. ROI for ERP implementation we’ll have to take two things into account: the cost of setting up ERP and the expected benefits from the ERP installation. While it’s easier to calculate the total expenditure for the ERP project, it is often difficult to quantify the gains as the results are intangible. The total figure for expenditure can be calculated by adding payments such as consulting fees, license fees, implementation costs, and maintenance costs. To calculate the expected benefits, we can add the anticipated returns, both direct and indirect from ERP implementation and arrive at a payback figure for a period of time. When we study the relationship between time-phased cost and benefits, we’ll be able to understand the ROI and evaluate whether or not it was a wise business decision to go for ERP implementations.

ERP implementation is a huge process for any company and not everyone understands how crucial it is to the long-term success of the business. There are a few key elements that differentiate ERP implementation success from failure :

• Poor planning and mismanagement of the deployment process
• Insufficient resources and poor estimation of time and effort
• Lack of accountability for timely implementation
• Data migration challenges leading to inaccuracy
• Absence of planning for change management
• Lack of proper testing before deployment
• Insufficient training and maintenance

The cost of ERP implementation depends upon a lot of factors such as – ERP license cost, the number of users, size of the business, type of industry, data migration charges, customizations required if any, infrastructure cost for on-premise and hybrid EPR tools, testing and training costs, and many other factors. As per the 2022 ERP report, the average budget per user is $9000. Now, based on the number of employees and the sizes of the business, this price can largely vary between $150,000 and $750,000 for an SMB. This is a very broad range and for you to have a betters idea of the cost of ERP implementation, you’ll have to work more precisely on your requirements and get a quote from an ERP vendor.

Just like all other projects, there are a few risks associated with ERP projects as well. These risks can be broadly categorized into the following categories :

• Organizational Factors – Failure to redesign business processes
• Employee Skills – Insufficient training, inability to recruit skilled ERP system developers
• Management Factors – Poor involvement from senior management, ineffective communication
• Software Systems Design Issues – Lack of integration, poor data quality of legacy data, data migration issues
• User Training and Involvement – Lack of proper training for end-users, lack of sensitivity to user resistance
• Tech Planning and Integration – Inability to avoid technical bottlenecks, lack of proper planning for effective.