Is your small business utilizing the full potential of your ERP functionalities? Needless to say, there are numerous ERP system benefits for any small business – such as cost efficiency, scalability, and improved productivity.
However, despite heavy investments, most of the small businesses fail to completely leverage the range of ERP functionalities, thus falling short of their business objectives. Why does this happen?
Here is a list of 7 reasons why small businesses fail to achieve their ERP system benefits:
1. Choosing the Wrong ERP Service Provider
With a host of ERP tools to choose from, small businesses often end up purchasing the “cheapest” tool to save money. There are plenty of ERP “experts” and “consultants” who suggest any ERP tool – without understanding the company’s business requirements.
To avoid this problem, choose an ERP service provider with proven expertise in an ERP solution like SAP Business One. Check if they have the necessary industry experience and are able to understand your specific business requirements. Based on this understanding, they can recommend the best ERP modules for your small business.
2. Not Knowing How to Use the ERP System
Too often, small businesses are unable to maximize ERP usage simply because the ERP tool is too technical or not easy to use. It’s also common for companies to lose specific ERP-related knowledge whenever an ERP consultant or specialist leaves the company. Other users may not have in-depth knowledge of how the ERP tool works and its various functionalities.
During the ERP implementation phase, ensure that all your users are trained on the ERP software features. With regular training sessions, you don’t have to depend on a few ERP specialists or experts. With efficient knowledge transfer, small businesses can retain their ERP skills – whenever an experienced resource is leaving the company.
3. Poor ERP Implementation
Even when small businesses choose the right ERP solution, poor implementation can stop them from fully availing the ERP system benefits in their daily operations. This problem occurs in the post-sales phase when small businesses incur higher implementation costs than the ERP’s purchase costs.
To avoid this problem, choose the right implementation partner who is proficient in deploying the right ERP for a small company. Make sure to continue consulting your ERP partner after the initial ERP installation and deployment. Additionally, you need to appoint an experienced ERP professional who can:
- Monitor your ERP implementation budget and keep it under control.
- Evaluate how to migrate your business data to the new ERP system.
- Allocate the right human resources to the ERP implementation project.
4. Limited Understanding of the Capability of ERP Systems
ERP stands for enterprise resource planning. This means that every ERP system is an enterprise-level tool that extends across business functions – like sales, procurement, finance & accounting, customer relationships and much more. Unfortunately, companies have a limited understanding of ERP capabilities, thus resulting in under-utilization of the tool.
As a fix, small companies must implement ERP systems across all their departments and functions to fully benefit from their capabilities. An integrated ERP solution can synchronize business operations, thus enabling it as a “single source of truth.”
5. Insufficient Employee Training
Besides proper implementation, small companies also need to train their staff on how to properly use the new ERP system. Sadly, most companies try to save money by not assigning time and budget for employee training. Insufficient end-user training is among the leading reasons behind ERP failure – and also causes loss of productivity.
Without proper training, most users remain disengaged and reluctant to use ERP features. 20% of small business employees do not use all ERP functionalities simply because they don’t know how to use them in their daily work.
Implement a cycle of continuous training so that end-users remain engaged and proficient with the latest ERP functionalities.
6. Incorrect ERP Modules
Companies are not able to harness the full range of ERP functionalities – because they are not using the right business modules in ERP. This often happens when companies leave out critical ERP modules or functionalities from the implementation phase – either due to a limited budget or a lack of understanding of their business requirements.
Make sure your ERP implementation partner understands your business requirements – and the ERP modules that can deliver maximum business value. This requires them to understand your existing business processes and areas of improvement.
7. Lack of Integration with Third-party Systems
As an enterprise system, ERP can easily integrate with third-party systems and facilitate the seamless flow of information. For instance, by integrating an ERP with CRM, ERP users can directly access their customer data, thus saving both time and effort.
Besides underutilization, lack of ERP integration can lead to challenges like:
- Data incompatibility
- High maintenance costs
- Data duplication
To mitigate this problem, choose an ERP solution that easily integrates with third-party systems. An experienced ERP integration partner can also assist you during the ERP implementation phase.
Conclusion
Despite decent investments, small businesses are not able to utilize the full potential of their ERP system. Designed for the benefit of small businesses, SAP Business One or SAP B1 as an ERP is among the user-friendly and feature-rich solutions in the market.
Among India’s leading ERP service providers, Praxis Info Solutions has enabled small businesses to maximize their investment return in SAP B1 solution. Our ERP consultants are proficient at understanding your business requirements and recommending the right ERP modules. Contact us today.