Understanding the benefits of ERP
In the corporate world, it’s easy to succumb to using buzzwords when dealing with complex topics.
It’s understandable in the sense that these terms can help get complex ideas across without confusing people. At its worst, however, it can turn conversations, meetings and ideas into word soup.
Granted, ERP doesn’t exactly fall into this category, but it does suffer some of the problems mentioned above, according to Mark McArdle, group sales director of Intact Software.
“The term ERP has evolved into an industry term that isn’t overly understood by many businesses,” he said. “We do a lot of work on what words we should be paying for on pay-per-click searches and the term ERP is not something that’s searched for very much. Business software is the more apt term for it.”
When you think of what it stands for – enterprise resource planning – people don’t use it for planning; they use it for reporting and for accounting or stock control, but not resource planning.
Part of the problem is that if businesses don’t understand what ERP is, many of the benefits it can bring can be missed. For those companies growing in size, it’s a significant step up from using the standard Excel spreadsheets or accounting software.
Also, since it’s an enterprise-wide system, all of the information is centralised instead of being placed in silos that don’t necessarily interact with each other.
“One of the benefits of a company having an ERP or business software system is that they’re ready to embrace different opportunities for improvement to their business,” said McArdle. “Having an ERP system which is an enterprise-wide system, you see a lot of the Excel sheets disappearing and the information coming from the ERP systems.
“That would be the main benefit. They’re not dealing with spreadsheets; by their nature, if there’s one change in the formula, you’ve lost or might be getting wrong information, whereas ERP systems tend to be more reliable in terms of the databases.”
Another advantage they can bring is accessibility. If you have salespeople on the road and they take orders, an ERP system can allow them to carry out and process sales directly, allowing it to feed back into the system.
“The real advantage of having an ERP system is that you’re ready to embrace every technology opportunity going,” said McArdle.
“We talk about it [in terms of] having a digital fabric in your business so [it’s] your structure for growth and improvement, be it you just getting busier or expanding via acquisitions. You need to have the digital fabric in place and we look at that as being the ERP system.”
Alongside not knowing what ERP really means, a potential blind spot for businesses wanting to grow and advance is not knowing what they don’t know. The ability to interrogate and interpret data is crucial if you want to get any real use out of an ERP system. Otherwise, you can end up doing certain processes inefficiently.
It’s why McArdle and his team adopt an educational approach with clients and prospects, not just so they understand what’s required, but to determine if they’re a good fit.
“We’re all about finding out if we’re a good fit for them, if they’re a good fit for us, have they got the skillsets in place to run an ERP system,” he said. “We would often say to companies that when it comes to getting your ERP up and running - we see that as the start line, not the finish line.
“The killer question is: do you place a value on technology? There are people who see technology as a cost to the business, and there are other companies who see it as a real investment and a vehicle that can make improvements all over.
“An ERP partner is someone you get married to; it’s not something you can take and leave back next year, it’s something that is a ten, 15 or 20-year relationship, so everyone has to make sure it’s a good fit.”
For the most part, there’s a balance between Intact working with those who are embracing ERP for the first time and those migrating from an older system. Rarely are these companies start-ups. As McArdle points out, very few invest straight away because they haven’t established where their needs are yet.
“You have people who are moving from accounting software, whether they’re doing bookkeeping and a little bit of stock,” he said. “We would see ERP as going out and touching the edges of the business. It goes to the sales reps, it goes to the CFO, it goes to the CPO - everyone is getting information as and when they need it, whereas the old system generally ran in the accounts offices.”
If you’re still not convinced, McArdle uses the example of investing in a new lorry as an analogy for ERP. You could buy an old diesel lorry to bring goods from Cork to Dublin and back, but it will be inefficient and unreliable even as it completes the task it’s supposed to do.
The same idea applies here. You can rely on spreadsheets or accounting software, but the jump to ERP will allow for greater efficiency and reliability.
“People who see benefits in technology will get a similar view on their ERP system,” he said. “We had one guy recently who did invest in a new fleet instead of an ERP system and it was only when we used that analogy that he went ‘I never looked at it that way!’.
“It’s very much the educational approach. We build toolkits to assess companies’ readiness for ERP and it’s a questionnaire and we go through it and we explain to them why and what gaps they have."