Modern Businesses have, up to very recently been faced to adapt and make quick decisions and with break neck speed to keep up with pressures dictated by trends in market, which on its own presented a myriad of challenges.
With the sever shock brought on by the
pandemic compounding the rate of change has become even faster. This in
addition to also adding a strong component of uncertainty and lack of longer term
visibility to the equation.
These factors pose business decision
makers with challenges that can have an impact both on the short term business
goals but also on those of the longer term.
Thus it has become a matter of
business life or death for managers and executives to be able master
uncertainty and quickly make informed strategic course corrections, based on
quality data, at very short notice.
This is where an Enterprise resource
planning (ERP) comes in providing insight on key KPIs for of a business, for
managers to act on in a timely and effective manner.
So what is
an ERP exactly?
Simply put an ERP is a business
management software tool that provides real time information/data on the main
business processes, of an organization. Also this software is used as a central
repository of the data collected. The ERP stores, manages, and aids
interpretation of key business KPI such as Profit, Cash flow, financial
transactions and so on, in an organized and easily manageable fashion. Thus it
also acts as a communication tool for the business team to disseminate mission
critical information throughout the organization.
Thus an ERP
acts as;
- A Central single source of information or a
single source of truth Centralized one source of truth. For instance one
customer list.
- A conduit for the dissemination of relevant
information and business processes throughout the organization.
- A window providing an up to the minute
snapshot of e relevant perspective of a particular business aspect such as
financial position for instance.
All this will keeping a unified user
interface while also adding an improved security, layer for sensitive
information, to be kept.
Naturally the above cannot be
efficiently handled with manual methods. Also Manual data management lessens
productivity speed, but if you invest in the ERP software, it keeps track of
all the incoming and outgoing transactions.
What
business areas can an ERP Improve Finance?
An ERP provides real time recording of
transactions that are carried out through the business, be it issued and
received payments, goods accepted at warehouse, shipments released from
warehouse, project works in progress and so on.
This in turn is reflected directly in
the company accounts with transactions being recorded in the GL. The central
finance/GL repository and Automation that the ERP brings greatly simplifies
operations related to accounts receivable, accounts payable, improves cash flow
problems, and cash management. It becomes pretty easier to manage the entire
organization by generating information and compiling it. Critical Account
department tasks are simplified and made far more less time consuming to perform
such tasks could include the for;
- You can use an ERP system to estimate the
capital requirements and for management of cash.
- You can accurately come up with a budgets and
forecasts.
- Allocation of costs for various activities
such as labour, raw material, and transportation.
- Management of payments, including those made
to the vendors and paying wages to staff.
- Optimization and cost reduction of inventory.
Improved
Inventory Control
A major challenge for growing
companies is tracking and monitoring their expanding inventory levels. ERP
utilizes barcoding, RFID tags and serial numbers to keep tabs on your inventory
at every stage during the supply chain. These tools help you keep track of
inventory levels at different warehouses. Furthermore, the real time picture
and planning tools can also play a major role, in keeping the capital cost of
inventory to a minimum as well as providing the possibility. Additionally it
also provides with a means to reduce loss resulting from waste originating for
instance from expired goods, lost items and so on.
Analytics
and BI
The Central live data and real time
recording of transactions in conjunction with Reporting, analytics and BI tools
can provide the decision maker with easy to consume often visual analytics dashboards
that enable critical business decisions to be made on real up to the minute
data. Most ERP solutions provide a customizable dashboard so executives can see
reports when they first log into the system. These reports may include
everything from income and expense statements to custom KPIs that offer insight
into certain functions. Lastly, reports typically come with access levels,
ensuring only relevant staff see valuable company data.
Improved
Productivity
With traditional methods, tedious
tasks are completely unavoidable. Tasks like generating reports, monitoring
inventory levels, timesheet tracking and processing orders have historically
taken employees hours to accomplish. In addition to taking up time, these
processes lower employee morale and open yourself up to human error. After the
umpteenth hour of entering the same line of data into different forms, even the
best staff members are bound to make a mistake.
Quick
reaction time
When you start gaining popularity in
the market, and your goodwill gets enhances, even the small mistake can
negatively impact your reputation. So it is essential to enhance the quality of
service as well. To offers the best customer services, your executive needs to
perform well, for which they require full-fledged details across all the
departments.
Therefore most of the industry is
talking help of the software which makes their work easier. The majority of the
ERP software comes with an in-built feature that lowers down duplicate work and
manual data entry.
Regulatory
Compliance and Security
Another reason for investing in the
ERP software is that it will help you in all the operational activities. Most
ERP software keeps the Compliance and regulatory changes track and update their
features to fulfil the business's needs.
Adoption
challenges and considerations
Probably one of the major challenges
is the justification of the investment for the ERP project. One must remember
that this involves both Direct and indirect costs. Direct costs could include
the capital purchase of licenses, the implementation costs etc. while indirect
costs could include the the investment of allocating team members to effort
related to the ERP project such as Time for Analysis and Business process
restructuring and allocation of time for training as well as reduced
productivity while team is getting up to speed in new environment.
In order to maximize the ROI of such
an expense the following criteria should be clearly understood and considered
carefully.
Long-term
Continuity of the Platform
A strong track record of success
speaks for itself. Apart from the reasonable expectation of robust
industry-proven software and great customer service, you can safely assume that
a well-established ERP provider is here for the long haul, and has a vested
interest in your current and future success.
Industry
Adoption
By selecting an ERP Platform that is
has a wide user based through industry both locally as well as internationally
you are guaranteed to build your ERP solution on a solid base.
This in conjunction with an
experienced ERP supplier who has ample industry experience that can provide
insights via a team of experts who speak your language and understand your
business needs also greatly facilitating the smooth progression of the project.
This saves a great deal of time and effort, and reduces risks and results in a
quicker, easier implementation.
Successful
ERP Implementation
Technology is only as good as its
implementation. Your ERP supplier should have the knowledge and experience to
adhere to project management best practices from the outset, with all controls
and governance activities strictly managed to ensure that all objectives and
expectations are met. Ask to see testimonials from other customers within your
industry to ensure that your potential ERP supplier delivers on its promises.
Post-implementation
Support, Education and Training
In order to maximize the benefits of
your ERP investment, it is imperative to provide your team with adequate
support and training. The typical workforce spans three generations, with
varying degrees of technological comfort and rates of learning. One cannot
expect true competency to be achieved through onsite training alone.
Ongoing vendor support, as well as
easy-to-access online training materials and tutorials, are essential to
ensuring that your users are able to learn and adopt the new system at their
own pace.
Conclusion
The shift to this state-of-the-art
software can provide substantial organization and business benefits while also
no longer being the cumbersome, disruptive, tortuous process it was once
purported to be. What formerly may have been a long, arduous trip for those
businesses that didn’t quite fit the template has now become an enlightening
journey of discovery accessible to companies of all shapes, sizes, and sectoral
flavours.
All things considered however,
partnering with trusted and experienced ERP partner is key to making your ERP
adoption project a success.
For more information on the topic
please contact Datatech as we have highly
qualified and experienced team of consultants handling ERP in
Malta and Libya. Datatech is an official partner for SAP Business
Systems.
