Benefits of ERP software: Risks, rewards, and realities of alternative software systems
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Originally Posted On: https://quickbooks.intuit.com/r/growing-complex-businesses/benefits-of-erp-software/
Balancing risk and reward is core to any business. As a company grows, maintaining a comfortable balance between the two becomes progressively more challenging. Why? Because growth can demand substantial change—such as refining technology infrastructure or new technology implementation. And when there is big change, the potential for greater risk (and rewards) will follow.
When a company expands, the number of data points increases, demand for real-time reporting increases, and new workflows emerge. These changes require full transparency across departments and roles, custom reporting, and deeper insights into business functions—often leading businesses down the path to consider new systems for management, like enterprise resource planning (ERP) implementation.
ERP software has been around for years—long viewed as a silver bullet for managing multiple business functions and data points. And while ERP vendors design their ERP systems to bolster efficiencies via a centralized database, they also come with their fair share of risk and headaches, including a hefty price tag and a highly complex and time-consuming implementation process.
So, before you take your business down the ERP route, it’s best to understand the risks, rewards, and reality of alternative software solutions. Read on to learn how QuickBooks Online Advanced can serve as the hub for business operations and why it’s the best cloud ERP-styled choice for your growing business.
ERP implementation: Not always what it seems
While enterprise resource management systems are designed to bring all business functions under one integrated suite of solutions, the complexity of integration and the project management lifecycle can cripple a business. It’s also important to understand that ERPs were designed with large-scale enterprises in mind—offering more solutions than growing mid-sized or small businesses may need or want to handle.
Integration alone can be a massive undertaking. Take a moment to consider just a few major requirements:
- Full buy-in from upper management.
- Training and re-skilling of your entire workforce, which often requires hiring an ERP specialist to lead.
- Development of a change management roadmap, which typically takes 18 to 24 months.
- Strong project and business management throughout the company and several dedicated champions to ensure that implementation progresses and is completed.
When you factor in the human resource hours required to accomplish ERP implementation, both cost and risk grow bigger. The truth is that major changes need to be made companywide to properly implement an ERP that fits the specific needs of your business.
The rewards of implementing the right ERP system can certainly be worth the initial time and cost investment. The ability to stitch together workflows across departments via an ERP can increase operational efficiencies, improve team productivity and scalability, and provide the transparency into data that business leaders need to make informed decisions.
Further, with custom views and reporting capabilities, inventory management and real-time data access from across the company, ERPs can help fortify the bottom line and set a company up for long-term, sustainable growth.
The reality is that, historically, ERP solutions have been a highly effective way to automate and integrate functions in growing businesses. However, most ERP solutions come with a steep cost and significant time investment. But recent technology innovations offer better alternatives that are more intuitive, timesaving, and cost effective. These solutions have the key functionality of an ERP for a fraction of the pricing.
QuickBooks Online Advanced offers ERP functionality and can serve as the “nerve center” of your enterprise. Starting with your accounting department, you can leverage the system’s advanced features to build out more efficient and more streamlined business processes as your company grows—an accounting-first operational approach.
Essentially, Advanced represents the launchpad for better, more efficient planning and management. From custom reporting to powerful workflow automation capabilities, there’s much more to QuickBooks Online Advanced than many business owners realize.
Just consider the system’s Custom Report Builder feature, which allows users to select the data they want to see and create the reports that are most impactful to their business. Reports can be filtered, grouped, and summarized to highlight the KPIs and data that are essential and unique to each customer’s operation. With custom reports in hand, business owners can easily identify and showcase critical information that provides deeper insights and supports informed, data-driven decisions.
Consider a few added benefits of custom report functionality:
- Add custom fields as columns in reports to easily track key details about each transaction or line item. You can also quickly reorder columns as needed.
- Sort data to organize and scan reports with greater efficiency. Sort in ascending or descending order to further manage data views. Your sort takes effect instantly.
- Group data to see the activity and totals for the same type of item in one place. This feature allows you to drill down into the exact data set you want and in the order you want without any manual process.
- Filter data points to isolate the data required. This allows you to create reporting that is multidimensional and exceptionally organized. The system offers unlimited classes for granular filters and unlimited charts of accounts for broader filters.
It’s all the muscle of ERP systems without the expensive or time-draining implementation.
ERP outcomes: Are you adding complexity or efficiency?
When setting up an ERP, the core objectives are to minimize chaos and increase efficiencies. Solid plan. However, what’s often not considered is the disruption that comes with major technology change. Not only must you integrate the ERP into every nook and cranny of your business, but you also have to invest in ongoing training and optimization. This can require you to:
- Identify and hire an ERP expert to lead implementation and training.
- Identify and hire an ERP developer to ensure ongoing system optimization.
- Hire qualified ERP-related talent (full-time or contractor-based).
- Invest added dollars and time in ERP system updates to sync with process changes over time.
The end result is often adding complexity to operations rather than increasing efficiency.
To manage business growth effectively, it’s critical to capture all data points and workflows within a single, integrated solution. Successful ERP implementations support the needs of various departments—connecting workflows and providing unobstructed transparency companywide. In an ideal world, ERP adoption would accelerate operations, reduce waste, and improve margins via advanced data syncing and process automation.
With all this in mind, the rewards can be significant. ERP solutions were designed to help with integrating multiple business functions within a single, centralized database—including sales and marketing, human resources, customer relationship management (CRM), production, forecasting, and accounting. As such, integrating departments can lead to great efficiency gains, ease of change management, and increased profits.
Weighing the risks against the potential rewards is key as you move down the ERP path. The size of your business, the pace of growth, or whether you’re in an emerging industry can be factors in your decision to move forward with an ERP or to seek an alternate solution.
Efficiency is the name of the game, and automation and business intelligence are the key to achieving unprecedented efficiency gains. QuickBooks Online Advanced can help you further increase efficiencies across business functions (in businesses of all sizes) when you leverage the system’s smart automation features.
Accounting automation can have the greatest impact on a business when you streamline repetitive tasks in areas such as vendor billing, reporting, and customer management. For example, use the Workflow feature to automate payment reminders and overdue notices. Also use this feature to automate processes for your team, including invoice approval, unsent invoice reminders, alerts to pay vendors, and bank deposit reminders.
Before you decide that an ERP is necessary to manage and streamline decision-making for your expanding enterprise, just know that it’s possible to get the best of both worlds. With Advanced, you have cloud access to smart, powerful ERP-like features—such as batch transactions, CRM, automated workflows, and data security—without having to overhaul your entire business and for considerable cost savings.
The truth about the benefits of ERP systems: One-size-fits-all is not for everyone
The ability to aggregate all data points and processes within a single system is alluring. In fact, for large-scale companies, an ERP solution is ideal to manage global operations end to end. For many others, however, the disadvantages of ERP can be too much. A one-size-fits-all solution is not for everyone.
Consider first the complexity of adoption across departments. Inevitably, some departments will have a harder time adapting than others. And for good reason. Different departments will have different processes and balance of resources that may not fit as neatly into an ERP. It can also be difficult to get equal buy-in across department leadership and equally as difficult across multiple workforces.
Also contemplate the time commitment and longevity of ERP implementation. Fast and nimble are terms not generally associated with ERP adoption. This can create major pain points and barriers for fast-growing companies, emerging industries, and expanding businesses.
Finally, don’t underestimate the friction an ERP implementation can create for IT departments. An implementation of this scale requires IT professionals to thoroughly understand the full system suite and how it will impact each department.
As mentioned previously, it’s important to capture all data points and workflows within a single, integrated solution. The result of a successful ERP implementation is operating within a system that broadly meets the needs of all departments—connecting workflows and providing unobstructed transparency companywide. In an ideal world, ERP adoption would accelerate operations, reduce waste, and improve margins via advanced data syncing and process automation.
Clearly, the rewards can be vast. ERP solutions connect multiple business functions within a centralized database. This can include everything from sales and marketing to human resources, client services, inventory, and accounting. Integrating departments can lead to great efficiency gains, ease of change management, and increased profits.
While the rewards can be big, ultimately, it’s important to weigh the possible risks as well. ERPs present a one-size-fits-all approach, which isn’t always the case for many businesses.
The good news is that you can have the best of both worlds. You can leverage the ERP-like functions of QuickBooks Online Advanced to better manage and automate your existing infrastructure without having to overhaul your entire business.
Just like ERP modules, you can add exclusive app integrations into your existing technology infrastructure to build a “new” and modern ERP that is the right fit for your business. Customization is the key to building an ERP platform that meets your unique requirements.
What you get is a system that is flexible and supports specific user needs across teams and roles. For example, the sales team can perform their work in Salesforce without having to access QuickBooks (a system sales reps might not be familiar with). Ultimately, it insulates employees from business applications and information they don’t need access to.
Application integrations enables you to hyperfocus on business needs related to:
- Departments: Add specific functionality to support your team’s needs.
- Industries: Use features tailored to your industry for flexible customization.
- Accounting: Further strengthen the backbone of your business by adding powerful functionality to financial operations.
As you consider the risks versus rewards of an ERP system, it’s good to know that you have sound, proven alternatives like QuickBooks Online Advanced and other cloud-based apps to support highly efficient, automated operations. The benefits of ERP are right at your fingertips.
An ERP solution may (or may not) be right for you
There is a lot to consider as you look into ERPs to solve your business growing pains. While ERPs were designed to make work life easier by connecting departmental processes and data points, the time and cost investment required can end up creating more complexities, draining your human resources and breaking the bank.
As you move forward, be sure to consider all the risks, rewards, and realities of alternative solutions. You really can run your business like you have an ERP—just without the inflated expense and disruption.
Learn how QuickBooks Online Advanced can give your business the power of an ERP with the intuitive interface of QuickBooks—without the high price tag or complex implementation required with other ERP providers. Learn more.