6 Reasons Your Business Might Need an ERP

by / ⠀Startup Advice / August 12, 2021
6 Reasons Your Business Might Need an ERP

Even competent business owners and executives often feel as if they’re operating in an environment of barely controlled chaos. One thing you quickly learn in business, after all, is that the unexpected tends to happen when you least expect it.

What if you could bring a bit more order to the chaos, though? What if the unexpected didn’t feel like an existential threat to your organization every single time it happened?

With an enterprise resource planning (ERP) software system, you can. ERP software ties together the many systems your business relies on to get work done, enabling real-time communication and visibility across your entire enterprise footprint. ERP makes forecasting, planning, and collaboration far easier and less error-prone than before. For midsize and large businesses, and rapidly growing smaller enterprises expecting to operate at scale before long, it’s all but table stakes.

ERP software is a significant investment in the future of your business, but it’s not cheap, and it requires substantial resources to deploy and manage effectively. So, before you commit, you need to make sure you really do need it right now.

Here’s why you might need an ERP.

1. You Have a Lot of Separate Business Systems That Don’t Communicate With One Another

We’ve already touched on a key benefit of ERP integration: making it so that your company’s disparate business systems actually communicate with one another when they need to. An ERP is the best way to gain real-time visibility into your entire operation, or at least the entirety of your integrated operation.

Take stock of your business system environment as it currently exists. Does it have a lot of separate processes that aren’t on the same page? Are your process owners having difficulty getting the information they need, when they need it? Are you not working off a single version of truth?

If you can answer “yes” to any of these questions, your business could be a good candidate for ERP integration.

2. You Feel As If You’re Losing Control Over Your Supply Chain

Supply chain management is a common use case for ERP. In many instances, it’s a lack of control over or visibility into the supply chain that leads organizations to invest in ERP; secondary use cases then follow.

Why is ERP so helpful for supply chain management? Because supply chains are really complicated, often relying on multiple business systems and processes (inventory management, accounts payable, customer relationship management, vendor management) to stay afloat. By providing real-time visibility into each of these systems and processes, ERP brings order to unruly supply chains.

3. You’re Struggling to Manage Your Company’s Inventory Effectively

Let’s drill down a bit on one aspect of supply chain management: inventory. 

Enterprises with multiple points of sale, warehousing locations, and fulfillment locations often struggle to arrive at a single point-in-time version of truth around inventory. An ERP helps establish and clarify that version of truth, keeping everyone responsible for inventory management on the same page.

4. You’re Tired of Your Team Duplicating Its Efforts

Some duplication of effort is probably inevitable in a large organization. But process owners and executives should have little patience for obvious inefficiencies. Why should one employee in one location have to run the same process as another employee at another location to create the same work product?

They shouldn’t. And with an ERP system knitting everything together, they don’t have to. ERP gives teams visibility into their counterparts’ activities across the entire organization, allowing for more efficient division of labor and reducing instances of duplicative work.

5. Your IT Staff Is Overworked 

Larger organizations without ERP software often rely on in-house IT teams to devise informal workarounds that replicate some of the integrative and collaborative functions of ERPs. 

These informal workarounds might do just fine when your team knows how to operate them, but training new team members on them is both time-consuming and prone to an error where processes aren’t spelled out in the official procedure. Creating and managing them also takes considerable time — time your IT team could be spending on higher-value work. 

And that’s before we get to the even more informal matter of employees making individual-level requests of IT teams or personnel. Multiplied across an entire larger organization, these requests can quickly swamp even the best-equipped IT teams. 

The takeaway here is clear: If your IT team can’t handle its current workload because your systems don’t talk to each other like they should, it’s time to think seriously about an ERP.

6. You’re Overwhelmed by Compliance and Risk Management Demands

You want to remain compliant with the various rules and regulations you’re subject to. You want to effectively manage risk across your enterprise too.

The problem is, you’re not sure how to do either. Not with the vast and growing trove of data your organization creates and stores, and not with the playing field changing faster than you can update your forecasting models. 

These deficiencies often have roots in poor internal communication. You’re not quite sure if you’re keeping up on the compliance front. This may be because you’re not quite sure what everyone on your team is doing. You don’t know if you’re operating within the bounds of your risk tolerance because you’re not exactly sure what risks your teams are taking.

By now, the solution should be clear. An ideal solution is an ERP platform that provides real-time visibility and communication across your entire digital and physical footprint.

Does Your Business Need an ERP? 

Do you see yourself in the scenarios described above? If you do, you’re not alone. Countless businesses, including in all likelihood some you’d consider competitors, struggle with these challenges and limitations.

A comprehensive and properly deployed ERP system can help address each of these issues. It can also address others not described here. It’s fair to say that if you’re experiencing any on a sustained basis, your company is a good candidate for ERP.

Deploying an ERP system is not an easy feat. It requires a significant investment of financial resources, necessitating short-term trade-offs. It demands considerable human resources investment as well. And it’s vital that, once your ERP is up and running, you devote adequate resources to managing and scaling it as needed.

With all that said, it’s clear that the benefits of ERP are worth these costs. What’s needed now, from your company and others that need ERPs, is the resolve to get it done.

About The Author

Kimberly Zhang

Editor in Chief of Under30CEO. I have a passion for helping educate the next generation of leaders.