How ERP is Driving Small Businesses into a Digital Era

ERP Software / December 2023

Just by the name “enterprise resource planning”, small businesses might think that ERP is not for them. Yet, any size of business looking to develop and grow in a structured and integrated manner will find that adopting ERP Software creates value and helps it grow in the market.

Also, as ERP providers gain wider recognition through marketing deals with the likes of the Mercedes F1 team, there is greater awareness of ERPs among all workers, small business leaders and startup founders.

Alongside the growing number of small businesses that are digital-first, ERPs are increasingly valuable as a growth driver. By absorbing and analysing all of your data, ERP systems create a core of centralised, joined-up and efficient decision-making. Primary benefits include:

  • Better sharing of information between teams
  • Make data accessible and transparent
  • Improved workflow through automation
  • Use that information to increase productivity
  • Develop business intelligence to drive strategy
  • Access smart features like analytics and AI insights
  • Improved data backups, security and disaster recovery
  • Simplified and possibly reduced IT costs

Starting your ERP journey as a small business can also prevent many of the integration pains and technical issues that larger firms face. The more “business” there is, the harder it is to squeeze a dozen applications and huge amounts of data into an ERP-sized pot.

In short, ERP vendors are happy to attract smaller businesses with attractive SaaS packages, using the cloud to reduce setup costs and time. And the sooner a business starts using an ERP, the faster the efficiencies and economies grow.

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What Are Your Key ERP Requirements?

6 Signs SMBs Will Know When to Consider an ERP System

The need for an ERP can occur at any time during a company’s evolution. That lightbulb moment can come when a small business or SME is:

  1. Struggling to manage growth
  2. Drowning in paperwork
  3. Teams are showing signs of organisational or process confusion
  4. The spreadsheet that runs everything becomes too complex or won’t do what you need it to
  5. A new hire has experience in ERP systems
  6. Partners and clients are showing signs of frustration with your organisation

At any of these points an ERP can be considered and the process of finding the right one begins. With examples showing a 10-hour per week saving through automation of repetitive tasks, SMB workers will experience the benefit and can focus on higher value-added tasks.

When Small Businesses should consider an ERP system

What Is the Best ERP System for A Small Business?

SMBs tend to have a narrower set of requirements compared to a sprawling enterprise across many continents. Buyers can choose from the many ERP systems on the market.

If one is tailored to your market or vertical, it is likely to have immediate appeal and will integrate with your current system, notably for legal, healthcare and finance markets.

Even so, when investigating the best ERP for the SMB landscape, you may find a combination of features or pricing that appeal. Or a demo that appeals to the needs and capabilities of your team.

A strong choice of ERP gives SMBs a competitive advantage over non-equipped rivals and will help them compete with larger firms and accelerate growth.

ERP Features & Functions

Priority of ERP Feature for SMBs

Accounting & FinanceYes
HR & PayrollYes
AutomationYes – As the Business Grows
CRMYes – Likely for customer-facing
Supply ChainYes – As the Business Grows

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What Are Your Key ERP Requirements?

Integration and Implementation Options for Small Businesses

Before choosing, it is vital the business has a total understanding of the current applications and data in use. Choosing an ERP that can absorb their information, and deliver the right services for finance, sales, production and other teams is key.

See our comprehensive guide to ERP integration for more information.

The second issue is how your business works and what the immediate and strategic goals are. Consider how the ERP will bring them together, to meet goals such as:

  • Minimising operational costs
  • Reducing decision-making time
  • Increasing process throughput or productivity
  • Create more value from data (and visibility into it)

Then plan how to implement and integrate the ERP. Again, SMBs are at an advantage as they can do this in one change across the business by following a a successful ERP implementation guide. Training for managers and users will be quicker, and issues will be easier to identify and resolve.

Through a smart integration process, workers can save time on repeatable and boring tasks through automation. And with a solid implementation, all workers gain greater insight across the business, while leaders have better data to plan strategies.

ERP Deployment Choices for Small Businesses

Essentially, there are three main ERP Software deployment types for SMBs:

  1. ERP cloud
  2. ERP on-premise
  3. Hybrid

The ubiquity of software as a service and the cloud make deployment choices simple for most SMBs. A cloud solution removes the need for IT knowledge and expensive hardware. Most vendors are also used to working with SMBs and meeting their training and any minor customisation needs.

If you have on-site IT teams, they prefer an on-premise ERP for added security and avoiding reliance on internet connectivity for everyday operations. However, a hybrid approach mixing cloud and on-premise might balance any need for control with the ability to scale quickly.

The arrival of the ERP can also align parts of the business that operate in silos, for example, sales and customer service may use a CRM, while warehouses and dispatch may be reliant on legacy systems.

Why Some SMBs Aren’t Ready for ERP Implementation

If an SMB has grown in a chaotic fashion, it is likely to need plenty of remedial work before it is ready to adopt an ERP.

Or, if a business is already running a market-specific application, such as real estate or restaurant software, there is no particular advantage for adopting an ERP unless the business plans to scale at regional or higher levels.

And, just because your more clued-in workers are talking about using AI (an increasingly common feature in ERPs and a big part of the digital future) to supercharge the business, it won’t magically make your processes better.

With all that said, ERP has come a long way from its 1990s enterprise-first origins and can now play a part in boosting the fortunes of a company of any size.