Why SMBs Must Consider Upgrading their ERPs to Transform the Business

When your business is small or growing slowly, you can get away with a mix of disparate SaaS tools, spreadsheets, and collaboration over email to manage the business while leaders and employees focus on serving customers.

One of those tools is likely an ERP, financial, or accounting system. The finance person or team is probably using it to manage basic accounting, financial, and business reporting functions. In small and medium businesses, finance is likely operating siloed from the rest of the company.

As the business grows in complexity with new products and service offerings, growing sales channels,  and increasing importance in monitoring supply chains, the financial function can quickly become overwhelmed. In some cases, they can update financial systems to track this level of detail, and other times, they are forced to select different tools or use spreadsheets to manage the functions and data.

Small and medium-sized businesses experiencing these complexities should consider an upgrade to the ERP. Upgrading the ERP is perceived as a complex project as it will impact most business functions and workflows. But there are significant benefits, especially when you consider modern, cloud-based ERPs that provide the majority of business functions,  integration, and reporting and without the customizations that plagued older ERP systems.

Here are some reasons why an SMB should consider upgrading to a modernized ERP.

Run the business with accurate, real-time analytics

The signs of an outgrown ERP system or one that needs an upgrade are highly visible.

  • Monthly closes take too long and require a growing number of people to review and close the books. 
  • Financial reporting requires many manual steps, is slow to produce, and has easy-to-find inaccuracies. 
  • Business leaders have growing needs to pull data from the ERP to perform their own analysis and reporting.
  • Adding new cost codes, pricing variants, and account profiles to the existing ERP require work performed by IT or specialized contractors.
  • Forward-looking financial analysis is computed manually by pulling data from the ERP and other operational databases.

To be competitive and grow, companies must be more data-driven, operate with accurate data, and leverage predictive analytics to aid in decision making. Employees charged with making complex decisions in areas such as supply chain logistics or dynamic pricing should have machine learning algorithms guiding them. There are too many business risk and unrealized opportunities, and competitors that already have real-time operational data have the advantage.

The SMB Advantages of Upgrading to a Cloud ERP

SMBs have the option of selecting an on-premise ERP, a SaaS ERP solution, or running the ERP in the cloud. There are benefits and tradeoffs with these options, but SMBs with growing and evolving businesses should find several advantages with cloud ERPs.

There are many infrastructure-related benefits of operating a cloud ERP versus an on-premise one. First, running in the cloud helps lower IT’s involvement in setting up and managing the infrastructure. Instead, they can provide better services to leaders and employees around the ERP’s functionality, configuration, administration, and integration. Second, for growing businesses, operating the ERP in the cloud better enables scaling up the infrastructure and adding new ERP services when they are required. Lastly, running in the cloud opens up new and more straightforward ways to backup data and enable disaster recovery environments.

Second, operating the ERP in the cloud often enables more data and workflow integration options compared to SaaS ERP. With SaaS, integration is usually done by software developers using the APIs exposed by the SaaS solution, or by third-party platforms that build integration services on top of these APIs.  Cloud ERPs often have these options, but usually provide other business tools and services that have out-of-the-box integrations. Also, cloud ERPs are often supported by integration platforms that enable connecting data and workflows with different tools and analytics platforms. 

Cloud ERPs Enable SMBs to Plan for the Future

So a cloud ERP is not your grandfather’s ERP that required significant infrastructure investments, customizations, and manual workarounds. That’s just the beginning of the potential benefits in a world where industries and competitors are moving fast. 

For example, cloud ERPs enable the integration of operational and experience data enabling a data-rich customer profile and helping sales and marketing optimize their customer engagements. Cloud ERPs also allow scaling operations that require processing data from IoT sensors or delivering innovation capabilities with artificial intelligence.

That future is here today for progressive organizations that are ready to upgrade core business systems and invest in their futures.

This post is brought to you by SAP.

The views and opinions expressed herein are those of the author and do not necessarily represent the views and opinions of SAP.

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About Isaac Sacolick

Isaac Sacolick is President of StarCIO, a technology leadership company that guides organizations on building digital transformation core competencies. He is the author of Digital Trailblazer and the Amazon bestseller Driving Digital and speaks about agile planning, devops, data science, product management, and other digital transformation best practices. Sacolick is a recognized top social CIO, a digital transformation influencer, and has over 900 articles published at InfoWorld, CIO.com, his blog Social, Agile, and Transformation, and other sites. You can find him sharing new insights @NYIke on Twitter, his Driving Digital Standup YouTube channel, or during the Coffee with Digital Trailblazers.