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Why Small Businesses Need Enterprise Resource Planning

Is there anything you can’t do with a spreadsheet? There is a reason that spreadsheet skills are considered an essential business tool. Many small businesses rely on them to manage activities related to accounting and finance, human resources and payroll, supply chains and stock levels, manufacturing, logistics and more.

While spreadsheets are powerful tools, business professionals will undoubtedly discover some downsides. The risk of significant errors is one of many. However, as a business grows, so does the appeal of enterprise resource planning technology.

What Is Enterprise Resource Planning?

Enterprise resource planning (ERP) refers to a type of software that is designed to automate and streamline business processes. Data across departments are integrated in real time, improving the communication of critical business information.

At a time when on-premises ERPs were the only option, they were typically unavailable to small businesses with smaller budgets. Then came software as a service (SaaS) and subscription-based cloud ERPs, leveling the playing field for small businesses.

How Can Enterprise Resource Planning Help Small Businesses?

An integrated system that links core business functions is essential for any organization. That may be truer than ever in today’s markets. For small businesses with limited resources, including fewer employees, ERPs can be especially useful. Following is a look at six ways ERP adoption can add value:

1. Enhancing Efficiency

How much time do employees spend every day on manual repetitive tasks? Processing orders and generating reports are two examples. ERP automates routine tasks, improves efficiencies and frees up time for more fulfilling activities. Another benefit? Happier employees.

2. Eliminating Data Silos

Writing for Chron, Ian Linton notes the issue of information silos in many small companies, which prevents data from seamlessly being shared across departments. The result can be incomplete data sets and missed opportunities.

As Linton explains, “with an ERP system, all relevant data is available to those departments, eliminating the need to re-enter data, reducing the risk of error, improving productivity and speeding up the time to fulfill orders.”

3. Optimizing Supply Chain Management

The COVID-19 pandemic put supply chain disruptions on the minds of many. The benefits of ERP in supply chain management begin with visibility, which Techopedia defines as “the trackability or traceability of product orders and physical product shipments from the production source to their destination.”

4. Improving Financial KPIs (Key Performance Indicators)

According to Gartner‘s research, “organizations believe poor data quality to be responsible for an average of $15 million per year in losses.” Today’s business environments are data-driven. Implementing ERPs can ensure leaders have the business insight they need to justify decisions affecting financial performance, such as inventory turnover.

5. Increasing Cost Savings

From automating repetitive tasks and minimizing errors to improving inventory management, ERP systems can save small businesses money in many ways. Automating tasks, for example, may reduce staffing needs as the company grows. Effective inventory management can reduce costs associated with inventory holding.

6. Risk Management

Relying on spreadsheets as a primary tool for managing business processes can create risk during personnel turnover. For example, what happens when a procurement manager tracking order points through data in a spreadsheet moves on, taking their spreadsheet tools and templates with them? Their successor is left to reinvent the wheel. ERP systems eliminate this risk.

According to Allied Market Research, the global ERP market was worth $39 billion in 2019 and could jump to as much as $86 billion by 2027. Earning a Master of Business Administration (MBA) with a concentration in ERP can prepare professionals for a career in this high-growth field.

For example, Lamar University’s MBA in ERP online program builds on core business skills with coursework that develops expertise in integrating key business processes into a leading ERP system (SAP). This online program delves more deeply into ERP with specialized courses that emphasize:

  • ERP E-commerce
  • Business Intelligence (BI)
  • Data Mining and Predictive Analytics
  • Enterprise Systems/CRM (Customer Relations Management)

Degree candidates also gain extensive training in SAP products such as NetWeaver, Visual Composer, Data Warehouse, Business Warehouse and supply chain management platforms.

As more small businesses move to ERP, they will be bringing ERP professionals on board. Earning an MBA in ERP can accelerate advancement in this profession. An average salary of $144,544 for ERP project managers is just one indication of an excellent return on investment.

Learn more about Lamar University’s online MBA in Enterprise Resource Planning program.

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