3 Reasons ERPs are a waste of money.
Businesses grow until they have too much software to manage. At some point, the different software they use to operate on becomes too much to manage separately. The only option used to be Enterprise Resource Planning.
As a business grows, they adopt various software for customer management (CRM), inventory, manufacturing, payroll, and accounting. At some point it makes sense to bring all of these pieces of software together, and an ERP used to be the best way to do this. But ERP’s were conceived at a time when businesses were investing heavily in servers, computers, and networks. On top of that, ERPs have always been expensive to implement and keep up-to-date. Now with all of the software options available today, and the rise of cloud computing, is an ERP the right solution for every growing business?
ERP’s have their place, but is it for you?
With some success, a business will outgrow the technology stack originally implemented to manage their systems at the start. Many businesses start trying to implement an ERP system when inventory spreadsheets and accounting software become too difficult to manage. Often times, ERP system implementations are abandoned and the company searches for a more cost-effective, integrated, easier to use solution. Why isn’t an ERP system the right fit for a business when their existing software isn’t enough?
1. Traditional ERP systems are too complex for your business
The term ERP was popularized in the 1990s and is directly connected to manufacturing processes. Many large enterprises implemented ERP systems to integrate processes and simplify workflows. Unfortunately, many still find ERPs too complex to use, and return to Excel spreadsheets to make things easier. ERPs have been jokingly referred to as “Excel Runs Production” by users. 88% of users in this article report usability issues and return to Excel spreadsheets to improve ease of use in daily operations. While designed for large Enterprises, most ERP systems are just too complex for small to mid-size businesses.
2. ERPs claim to be flexible, but they’re usually too ridged and expensive.
ERP systems have earned a reputation of being inflexible. They are traditionally designed to support a specific supply chain process. A business implementing an ERP must conform their processes to suit the ERP system of choice, not the other way around. On top of this, ERPs tend to be run as an on-premise solution. The cost to implement an ERP for small businesses can reach $500,000 not including maintenance, upgrades, and licensing. ERPs are just too cost-prohibitive for smaller businesses that need flexibility to grow.
3. ERPs don’t adapt fast enough.
Big businesses with more extensive supply chains than smaller businesses will benefit more from an ERP system. Smaller businesses that need any change or addition to supply chain will suffer, as this requires extensive adaptation. Adaptations cost time and often require the help of third-party consultants. Small to mid-size businesses need to add new sales channels and fulfillment processes quickly and cost effectively. Ultimately, they need a solution that gives them control, automation, and product visibility as they grow.
There are other options nowadays for fast-growing businesses.
If a business is growing quickly, something is being done right. It doesn't make sense to completely uproot an already working system. Now that we live in the future, there are new technologies that we can take advantage of. You might not know it, but almost every commercial software product has an Application Programming Interface (API) that allows other programs to communicate and even modify data. This means that different pieces of existing software can be linked together, allowing you to remove steps from your workflow without actually changing the core workflow. Aboni Tech specializes in analyzing processes and providing custom software that is built to enable your business to grow with as little pain as possible. In some cases, we have even helped failing ERP implementations succeed with our own custom plugins. Contact us today and let us know what issues you'd like to solve today.