Business Drivers for ERP

There are dozens of factors that might drive a business owner to consider maximizing his or her business efficiency with software like the product offerings from Sage ERP. After all, the benefits offered by enterprise resource planning are many: streamlined business processes, increased profits, better communication, efficiency across the company and the elimination of double data entry are just a few of the ones that spring to mind.

So what is it that really drives businesses to adopt ERP? There are many drivers that spur executives to invest in an ERP system. In the end, it all boils down to remaining competitive.

If you manufacture a product that people want and need, odds are you’re facing some competition. You may be the top dog in your industry, or you may be a newcomer facing off against established corporations. Either way, ERP has benefits to offer you.

Think of the business world as a battlefield. If you’re weighted down by the all unnecessary repetitiveness and overlap of most businesses, you won’t be able to fight properly. For instance, what if you had two shields but no sword? Or you were wearing metal armor while your enemies have kevlar vests? What if you were on horseback while everybody else was in tanks, or you were waving a bow and arrow in the face of your enemies’ submachine guns?

Trying to compete in a crowded business market with outdated software and clumsy, repetitive processes is much the same scenario – you won’t stand a chance of winning. ERP is designed to trim all of the excesses and leave you with the leanest business practices.

After all, it’s true in both war and business: To the victor go the spoils.

According to a report published in the Journal of Business and Entrepreneurship entitled “Differences in Drivers of ERP Adoption Between Small and Large Firms,” written by Stephen W. Congden, David E. Desplaces and Eyong B. Kim, there are four main reasons businesses adopt ERP:

• To integrate activities to function more effectively. ERP systems are an excellent way to improve business efficiency by integrating data entry and retrieval across different business departments. Too often, employees in different departments are performing the same tasks because they aren’t able to effectively communicate with one another about what has been done and what remains to do. ERP can eliminate this problem, freeing up employees to perform new tasks, innovate new strategies and generally contribute more usefully to the company.
• To reduce costs. Time is money, and the more time employees spend repeating tasks, searching for documents and overlapping each other’s jobs, the less your business is actually achieving.
• To facilitate firm growth. In smaller businesses, it may be perfectly feasible for a few employees to track data, control business processes and enter information in storage. However, as a company grows, this approach becomes less and less practical. ERP is a great way that a business can grow without overwhelming its employees. Think of it like this – you’re comfortable driving a car with a just a steering wheel and your eyes, but you wouldn’t rely on those two tools alone to fly an airplane. Airplanes need much more sophisticated navigational tools because they are bigger crafts working in a much more complex environment. Businesses are the same way; larger ones require more advanced technology.
• To link with external organizations or people. ERP helps integrate businesses from the inside, and it can do the same on the outside. If you work with many partners, consultants or other businesses, ERP is a great way to make the process hassle-free for everyone.

What drove your business to adopt an ERP system? Tell us about it below.

About the Author

The Sage ERP team report on various topics related to ERP and business management.