For years, ERP software has been considered a tool reserved mainly for “big businesses”; however, in the past several years it has shed its “big business” stigma and entered into small and medium-sized business markets. Aberdeen Group recently released a survey on ERP adoption rates and found that small businesses are adopting ERP software at more frequent rates than in the past.
Why the sudden change?
For starters, mobile and cloud-based solutions, among other new technologies, have made ERP systems more accessible to small businesses. Businesses with under $50 million in annual revenue are looking towards ERP software because they need to be more agile when making decisions and interacting with customers and business partners. At the same time, they must keep costs low. They need to continue expanding without losing track of what made the business successful in the first place. New technology (such as mobile and cloud ERP solutions) make this possible.
According to the study, the biggest issues with pre-ERP systems include the inability to track business processes (cited by 49 percent of respondents), the lack of collaboration tools (40 percent) and the lack of access to these applications outside the office (34 percent).
Meanwhile, the report highlighted three ways ERP software can benefit small businesses:
- Standardization, which helps organizations develop the best business and financial practices.
- Visibility makes important data available to members across the company.
- Efficiency in many different areas, from managing finances to improving the supply chain for manufacturers.
Nearly 40 percent of survey respondents cited managing growth as a major factor with regard to implementing ERP systems. Improving customer response time (29 percent) and decision-making (30 percent) were also popular motivations for small to medium-sized companies.
Cutting costs with ERP
While the above motivators have certainly played a role in small business ERP adoption, the Aberdeen Group survey found cutting costs to be the top-cited reason for small businesses to adopt ERP software. However, because these systems tend to have high initial costs – in particular, ERP implementation requires substantial resources – smaller companies may want to start by adopting cloud-based solutions.
There are several financial benefits of implementing cloud-based ERP systems. For starters, cloud computing technology generally has lower upfront costs and, unlike on-premise packages, users only pay for the products they use. In addition, fewer IT professionals are required to run cloud-based servers when compared to legacy systems.
Meanwhile, over the long haul, power costs will also likely be lower, and cloud computing’s scalability typically makes upgrades cheaper as well. As a result, companies will have an easier time achieving a return on investment for cloud-based ERP systems.
Have a Plan in Place before Moving to the Cloud
The transition to the cloud, however, should not be done without a bit of forethought. After all – it entails the wholesale movement of records and their attendant programs from one computer system to another. As a result, companies should be sure to use such an opportunity to make changes that will set them up for success going forward. Here are some of the important steps to take after the decision to migrate your ERP software to the cloud has actually been made:
- Security policies
No business worth its salt can survive without some security measures in place. They can be as complicated as using encryption and obfuscation programs to mask their data, or they might be as simple as password-protecting their computer systems. Either way – it is quite a bit easier to securely monitor and track systems and applications that are firmly rooted in the real world. That’s because only people who are onsite will ever actually be able to see sensitive information.However, the cloud is a different story. All of the information stored in the cloud is theoretically being transferred hundreds or thousands of miles over fiber optic cables. Consequently, security measures need to be tightened, or at least reviewed, before a migration to cloud ERP is made.
- Management reorganization
It might seem unwanted, but management positions should be reevaluated in light of cloud ERP adoption. Managers are meant to oversee projects and ensure that work is being carried out effectively. With cloud-based ERP systems in place, records are generated more quickly and fewer meetings are necessary. Businesses won’t need quite so many eyes and opinions, so management could benefit from shifting people to other departments where oversight is at a premium.
- Adding additional software
Of course, any ERP or business intelligence (BI) move will set up the perfect moment for a review of application assessment. That is, it is a great time to add other kinds of software since one is being installed anyways. Consider inquiring with vendors during the planning stages of an implementation about other programs that might suit a company’s needs.
As you can see, moving your ERP software to the Cloud requires a lot of research and planning. Continual monitoring of your company’s ERP system once it is moved to the Cloud is crucial to its success. Do your research before making the move.
If your small or medium-sized business is looking for an ERP solution, contact us today. We not only sell and support Sage 100 ERP (formerly Sage ERP MAS 90 and Sage ERP MAS 200) and Sage 300 ERP, but we will also work with your business to pinpoint your needs and improve your overall business efficiency.
Give us a call today at (866) 990-3994 to get started!