Choosing the right ERP system for your business: part 1

Many firms use systems that aren’t right for their business needs. Using poorly matched systems has detrimental effects on the productivity, profitability and performance of a firm. To run your business effectively, it is essential to use a purpose-built enterprise resource planning (ERP) system that will optimize the specific needs of your firm. By focusing on what your business benefits from and assessing what is most profitable for your business in the future, it will help to enhance the growth capabilities of your business. In addition, it will help to achieve a diverse and thriving portfolio.

ERP systems streamline the flow of business processes by integrating information between different departments into one complete system. Collated information includes:

• Finance/accounting

• Customer relationship management

• Management accounting

• Acquisition

• Human resources

• Budgeting

• Sales order entry

• Materials

• Manufacturing

By integrating the information from the functions above into one system, it enables the firm to establish rules to implement major processes and gain a greater insight into the business. Information that is flowed accurately and efficiently between different departments increases the control that every element has on the business. Key characteristics of an ERP include:

• All information is collated into one complete system

• Real time information

• Flexible and interchangeable design

• An open system architecture — allowing changes to be made to one function that doesn’t interfere with the other functions of the process.

Choosing a Project-based ERP

Project-based businesses — firms that receive the majority of their revenue from client-based project work — have very specific needs. It is important to be able to assess the nature and performance of every project worked on by viewing the business in three dimensions. Generic ERP systems don’t enable fluidity and don’t provide the necessary level of complexity when analyzing a project. In order to operate, these systems require a lot of customization. When project-based businesses attempt to customise generic ERP systems, the outcome is often disappointing, with processes lacking precision and focus. Lack of control when manually dealing with predictive costing methods, and reconciliations when connecting accounts makes it difficult to accurately view the profitability and performance of every project. If a projectbased ERP is used correctly, it results in decisions and work being completed faster. To improve your business’ success rate, be sure to address these three essential elements:

• Account —the general ledger account

• Organization — this describes who is doing the work, eg: a particular department

• Project — the product/service being completed for a customer/client. The project is the key success element and enables your business to stay in business.

By linking the following elements, businesses are able to produce accurate and efficient results that will maintain the growth of their business:

• Financial reports

• Invoices

• Payroll

• Project status reports

When all information is integrated under one system, firms have maximum control of their business. Being able to easily identify problems and make critical informed decisions helps to maintain a competitive edge in their industry. Real-time integrations between financial, distribution and manufacturing solutions ensure accurate and up-to-date data whilst it also eliminates duplication and manual entry. This ultimately saves time and cuts costs. By streamlining your business, it means there is more time for firms to focus on maintaining their position in the industry whilst being able to respond quickly and efficiently to their clients.

Send us an email to info@m4d.com.au if you are interested in learning about some real examples of bottom line impact.