Not all the big fish in a pond use an ERP platform, but it can be an essential tool for SMEs wanting to scale.
The big attraction of ERPs is having a single database for all information; the drawback is that they are expensive and involve a learning curve for staff.
SMEs may find that accounting software and third-party applications can do the job they need, but not always.
A rising volume of inter-entity transactions is one sign that your organisation could benefit from an ERP.When should you step up to an ERP? – Acuity Magazine
Practical signals that you need an ERP
Mindset aside, there are several practical indicators that an SME has outgrown its accounting software.
The first is a rising volume of inter-entity transactions. ERPs use a single database to handle multiple entities, whereas small business software is designed to manage the finances of a single entity.
A major advantage of an ERP’s single database is that it creates a common list of products, suppliers and customers shared by all entities. This can immediately solve the issue of managing stock on hand held by different entities or locations.
A single platform also makes it easier to see a customer’s full history in one place. An ERP will show how many products or services they have bought, their payment history, how often they open your marketing emails and any outstanding support tickets.
Taking a component approach to software
Sometimes it doesn’t suit a business to move to a single ERP. In trying to do everything, ERPs rarely do any one thing extremely well. As a result, the component approach to system building, often sold as “best of breed”, still exists in enterprise.
Sage, for example, sells Sage Intacct which handles complex, multi-entity accounting and relies on integrations with the Salesforce CRM and other specialised tools for other functions.
Financial management tools can capture data in multiple dimensions and then report on any combination of those dimensions. The tool can map account codes to a custom report for each funder and maintain it for the lifetime of the program.
This means you don’t have to export the information to Excel and manipulate it into the correct format each time you want to view a report. These dimensions include locations, departments, projects, grants and strategic objectives.
Financial management software also has the ability to blend financial data with non-financial data. This is extremely important for management, who typically want the ability to track outcomes.
Extract of When should you step up to an ERP? – Acuity Magazine – May 2021