by Scott Jack
Content Contributor, E-N Computers
7+ years experience in healthcare IT and tech support.
Enterprise resource planning (ERP) software is a powerful tool for automating business processes, improve efficiency, and enable deeper insight into company data. Whereas accounting software focuses on tracking the financial health of your company, ERP systems are far more comprehensive. They facilitate inventory management, supply chain management, human resources, and other core business functions. Instead of having information silos across a company, the ERP brings all your internal data into one place, enabling real-time dashboards and automating the flow of information between departments. Businesses in many industries are making use of ERP software as they realize the potential for streamlining processes and having more accurate, up-to-date data when making decisions. Among all the industries that use ERP systems, they are most common in manufacturing.
In fact, ERP software has deep roots in the manufacturing industry, which started looking to computerize inventory management in the 1960s. Gradually, features were added until all major business functions were supported. To modernize and avoid the Y2K bug, large corporations in other industries started implementing this kind of software in the 1990s. But because of high upfront costs, small and medium businesses were left out. As the customer base became more diverse, vendors began customizing ERP solutions to the needs of industries like healthcare, education, and hospitality. With the software-as-a-service (SaaS) subscription model, ERP software is now more adaptable and accessible to smaller organizations.
Despite its greater accessibility, ERP software is still intended for established businesses. In this article, we’ll discuss when ERP may be a good fit, what to look for when considering software options, and a few recognized names in ERP software. First, is ERP software right for you?
QUICK ANSWER:
What is the best ERP system for my small business?
This depends on the industry you’re in and what you want to achieve by implementing the software. We see businesses with either Syspro or Epicor, which are great for manufacturing, distribution, and retail. If you’re in another industry, consider looking at ERPs that offer a specialized solution for your industry.
Do I Need ERP Software?
As mentioned above, ERP software is for mature businesses with complex requirements for accounting, processes, and reporting. Software makers and resellers are careful to point out that successfully implementing ERP requires a careful analysis of your business processes, including pain points, streamlining opportunities, and what results you hope to achieve with the software. Here are a few things that might indicate it’s time to consider an ERP solution.
You are pushing your current software to its limits. When you chose your accounting or HR software, it had all the features you needed and room to grow. Now, you’re constantly bumping into its limitations and looking for workarounds. You might need more advanced inventory control, more flexible reporting, multi-currency support for global sales, support for multiple business units or sites, or want the benefits of an integrated e-commerce platform.
Your different systems don’t work well together. You have several systems with related data, but they don’t talk to each other. You’re relying on spreadsheets to manage operations or to export and import data between systems. Because data doesn’t flow seamlessly between your systems, staff does not always receive critical information on time. And because your internal data is spread across so many systems, you have to hunt for it and reconcile it—which complicates your ability to make data-driven decisions.
Your customers aren’t happy. Your customer satisfaction can be negatively affected by inventory issues, inaccurate invoicing, and a customer service team that doesn’t have a complete view of a customer’s past interactions with your business. If your customers have noticed the limits of your systems and processes, it’s time to take corrective action.
Does it sound like your organization may benefit from an ERP system? There are a few criteria to keep in mind as you evaluate your options. Let’s go over them.
Criteria to Consider When Choosing
When looking at ERP solutions, we encourage you to look at cost, integrations, usability, and whether it’s web-based or self-hosted.
Cost
The price of ERP software depends on several factors, including the number of users; add-on modules; customization; whether it is on-premise or web-based; maintenance and support fees; and implementation and training. Because the software encompasses all core business functions, the implementation process is known for being long and expensive.
Purchase and implementation usually happen through a value-added reseller (VAR), rather than directly with the software maker. Resellers, sometimes called partners or solution providers, will ask questions to get familiar with your business needs, processes, and what goals you want to achieve by implementing an ERP. They will help you select the best combination of features to address your needs, set up your processes in the software, and train your users.
While prices range widely based on the factors mentioned above, licensing an ERP for a small business (roughly 10 employees or fewer using the software) will start around $25,000/year. Initial implementation is generally 1x to 1.5x the licensing fees. You will want to work closely with your vendor to keep costs under control.
Integration
While all of your core business functions can be brought under the umbrella of your ERP software, you may have software outside of the ERP that you want to integrate with—such as an e-commerce platform, CRM software, or your HR/payroll solution. For example, if your ERP does not have an e-commerce module or you’re not ready to implement it, you might prefer to integrate with Shopify. As a Microsoft 365 customer, you may want tight integration with Office apps, SharePoint, and OneDrive. Or if you do a large amount of business with a customer or supplier, you may want to make sure that your systems support electronic data interchange (EDI), so that you can seamlessly send documents back and forth.
Usability
Some ERPs focus mainly on manufacturing, distribution, and retail, while others have specialized configurations for many other industries like healthcare, education, and non-profits. Choosing an ERP that offers somewhat out-of-the-box solutions can help cut down on the customization you need to do. It can also encourage the use of industry best practices in your business, which may improve efficiency.
The complexity of ERP systems often leads to a less user-friendly interface. So it’s important to make sure the interface is as friendly as possible or that the learning curve is worth the feature set. Additionally, try to find out what learning resources and trainings are available from the software maker, the reseller, and elsewhere. You want to make sure your team—and your ERP implementation—is set up for success.
Deployment Method
Web-based ERP software provides greater flexibility for your workforce. If staff are often in the field, working remotely, or spread across multiple locations, cloud software will probably be a better fit. Cloud-based ERP systems also offer lower upfront costs and reduced maintenance overhead.
On-premise, or self-hosted, ERP solutions are more customizable and offer the company more control over security. However, additional network infrastructure may be necessary to enable remote access, and you may not have the option of integrating with mobile apps. Upfront costs are much higher because of the hardware infrastructure required; however, vendors may offer a perpetual license to help offset the investment. A self-hosted ERP must have a capable IT team to manage the servers and backups, since any data loss or downtime would be extremely expensive.
The Most Popular Small Business ERP Software
Syspro
Syspro, founded in 1978, is a mature ERP system designed for SMBs in manufacturing, distribution, and retail. It is available through resellers in either a cloud-based or on-premise deployment, starting at $199/user/month. The company offers a native point-of-sale system that integrates with the ERP. However, they do not have HR or payroll modules; these features can be added by integrating with a third party. The company provides an abundance of training materials and a way to assign and track employee training on a subscription fee basis.
Epicor
Like Syspro, Epicor is available as a self-hosted or cloud-based solution. It offers solutions for businesses in the automotive, manufacturing, distribution, retail, and building supply sectors. Epicor is very complex and flexible, but this sometimes means that it is not as approachable as Syspro. It comes with a wealth of training materials that covers just about every task a person will do; however, you must back out of whatever you’re doing, go to the main screen, and go to the Education section of the software to access them. Epicor plans start at $175/user/month.
Oracle NetSuite
NetSuite is a web-based ERP solution and is consistently ranked as one of the best choices for small businesses. It uses a modular design so you can choose exactly the features you need; these modules come a la carte or as industry bundles so that you have the tools and processes you need built in from the start. Because of its wide usage, there are integrations available for almost any tool you might use, and there are vendors that offer pre-built integrations for an annual subscription fee. Plans start at $999/month plus $99/user/month for the core feature set.
There are other options to choose from, such as Acumatica, SAP Business One, and Microsoft Dynamics 365. Because of the costs associated with implementation, training, and licensing, we encourage you to take your time evaluating your options. Make sure to do so in light of your pain points, processes that have been identified as needing improvement, and what goals you want to achieve by implementing an ERP. A team made up of stakeholders and an executive can be especially useful during this process; resellers even encourage such a team to ensure successful implementation.
Technology has the potential to supercharge your business processes; but it can also hold you back. If you feel like your organization needs some technology improvements, we invite you to use our 5 minute IT Maturity Evaluation. It will help you identify areas for improvement and provide action items to get started. Start on the path to a mature IT implementation today!
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