Small businesses adopting ERP software at increasing rates | The Business Management Blog

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Small businesses adopting ERP software at increasing rates

1/24/2013 at 4:48 am by

Enterprise resource planning (ERP) systems used to be a tool reserved mostly for larger companies, but that is quickly changing. A recent survey by Aberdeen Group found that small businesses are adopting ERP software at more frequent rates.

“Organizations with under $50 million in annual revenue are looking towards ERP because they need to be more agile when making decisions and interacting with customers and business partners,” said Nick Castellina, research analyst of enterprise applications at Aberdeen Group, according to Apps Tech News. “At the same time, they must keep costs low. They need to continue expanding without losing track of what made the organization successful in the first place.”

Mobile and cloud-based solutions, among other new technologies, have made ERP systems more accessible to small businesses. 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 respondents cited managing growth as a major factor with regard to implementing ERP. Improving customer response time (29 percent) and decision-making (30 percent) were also popular motivations.

Cutting costs with ERP
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.

In a recent blog for Business 2 Community, Tom Caper, sales manager at Rand Group, discussed several financial benefits of implementing cloud-based ERP. To start, 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.

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

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