The Benefits of ERP Software You Need to Know
By Kris Blackmon
It’s a good time to be in the midmarket. Historically, technology has taken its sweet time trickling down from the enterprise level, through the midmarket, and into the small and midsize business (SMB) space. But in the digital era, when every company is a technology company, tech vendors and their sales channels are turning their attention from the saturated enterprise market to the gigantic opportunity presented by the midmarket.
The definition of midmarket companies varies widely, but we can safely say that businesses that have between 50 and 1,000 employees fall in that category, as do organizations that claim revenue between $100 million and $3 billion. This is a very large market that is a greenfield opportunity for a lot of technology vendors and third-party managed service providers (MSPs).
The Time Is Ripe for Midmarket Tech Sales
Think about it. There aren’t a lot of companies that start out in the midmarket. These organizations have grown from SMBs, adding employees, clients, products, services, data, and systems to manage them all as they evolve. Many are outgrowing the ad hoc systems that supported their SMB, including platforms such as QuickBooks for accounting or Namely for human resources functions. As the businesses evolve, they need more sophisticated, integrated systems to make operations work more efficiently and support their future growth strategies.
One of the first platforms midmarket companies implement is enterprise resource planning (ERP) software. Don’t let the name fool you: While ERPs were originally designed for the enterprise market, the demand for enterprise-grade business management software solutions for the midmarket and the SMB space has become deafening. Thanks to the cloud, these solutions are now within reach of companies with smaller IT budgets.
In very simplified terms, ERPs make all of your systems work together, in real time, with one set of login credentials and a minimal number of touchpoints. Instead of siloed operations for each department, the ERP binds them together so all data can be accessed in one place. ERPs today aren’t a one-size-fits-all solution — customers can add or change software modules that are typically individually purchased depending on their organization’s needs. There are modules that work for just about any job function in any size company in any vertical: supply chain, accounting, human resources, ecommerce, marketing, sales, customer service, and so forth. Today’s ERPs can even integrate with your customer resource management (CRM) platform or content management system (CMS), truly bringing all functions under the umbrella of a single platform.
For SMBs, the headaches associated with moving operations over to an ERP usually far outweigh the benefits. No matter what anyone tells you, there’s no easy way to implement an ERP. It’s a complex, difficult process that eats up time and spend like it’s going out of style. It isn’t unusual for an ERP implementation to take hundreds of hours, which can tie up departmental functions for months or require bringing on new employees or consultants. And the headaches don’t stop once the ERP is installed. Then you have to train both your employees and your customers on how to use the new system, which usually results in serious growing pains, including in some cases a loss of revenue.
So why should midmarket companies bother?
Why ERP Software Is Important for Growth
In order to grow, there’s really no way around having to invest in an ERP system. You can’t increase the number of customers and data you manage within the same disparate systems. Excel sheets can only take you so far.
In addition to growing your base business, it can be exceedingly difficult to execute a necessary pivot in a business model when your systems don’t talk to each other. Can you imagine trying to get sales, marketing, accounting, and operations to move from one-time product-sale revenue to ongoing solutions-recurring revenue when they’re all working in separate silos? There’s no way something big wouldn’t get missed.
In the end, the major benefit from an ERP installation is efficiency. In today’s business landscape, a company’s profit can be impacted just as much by wasted internal resources as by sales. You can be raking it in hand over fist, but if you’re bleeding time and energy within your business operations, your path to profit becomes much longer.
ERP software eliminates duplicate processes and manual touchpoints. It syncs data across all lines of business, making it quicker to access accurate information. Collaboration and communication improve because information is centralized and uniform among departments. And because all company data is integrated into one system, it’s exponentially easier to scale. You can add new users and functionality to support your business needs and integrate other systems, such as your CRM platform, to achieve that elusive “single pane of glass.”
Even taking the considerable cost of an implementation into account, the cost savings of ERP are significant. Businesses save resources in terms of fewer employee work hours, more accurate data entry, lower administrative costs, and simplified processes. These benefits are all pretty obvious, but there are three other areas where ERP generates profit in slightly more nuanced ways.
1. Reporting and Forecasting
Because all of your data is accurate, up to date, comprehensive, and easily accessible, an ERP improves reporting processes. The systems also typically include customized reporting capabilities that can be tailored to each user, showing only the most relevant data.
Sans ERP, managers often have to turn to IT or operations to request the complex reports they need to produce accurate forecasting, then mine that data manually or within Excel. ERP software eliminates the need for that middleman and allows for flexible, accurate, customized reports in a much shorter timeline.
Accurate forecasting is critical for a growing business. You need to be able to plan around sales goals, inventory trends, and employee overhead in order to know how much you have to devote to growth strategies. That’s hard to do with manual processes, and very easy within an ERP.
2. Compliance
3. Improved Relationships
Clearly, there’s a quantifiable number that can be associated with cost savings in terms of employee hours or elimination of errors from manual processes. But the side benefit of freeing up customer service representatives (CSRs) from tedious and error-prone tasks is that they then have more time to build real relationships with your customers.
This is no throwaway perk. The more solid your customer relationships, the stickier you become. When CSRs can see all of your customer’s data, such as past orders, payments, help tickets, and other touchpoints with your business, in one place, they can converse more freely and help the customer more quickly. It’s far less expensive to keep an existing customer than to try to sell a new one, and an ERP can significantly improve customer relations.
A SMB can get away with ad hoc disparate systems, but evolving organizations need a comprehensive business management software that supports their growth strategies and better equips employees to devote time to profit-generating activities. Moving to the next stage is hard no matter what the occasion: having a child, buying a house, starting a business, or growing from a SMB into a solid midmarket player.
There’s a lot of complex prep work that goes into making sure you’re ready to tackle any challenge. For growing companies, implementing an ERP is a necessary framework to build if they want to move to the next level.
