Without sounding too much like your college roommate who followed Phish on tour, there is something I tell businesses that are looking to implement a new enterprise resource planning (ERP) system: ERP is just like, an idea, man.
What I mean by this is that ERP is no longer a clearly defined set of software applications provided by one software vendor in a single integrated suite. It’s not even really a “thing.”
ERP is a strategy. And like any other business strategy, it must be tailored to fit the business—not the other way around.
With the explosion of cloud-based business software, it has never been easier for businesses—especially small businesses—to develop a software strategy that works best for them.
“It is no wonder that many small businesses move towards modern cloud-based [solutions],” says Dimitris Verdelis, a software engineer for Megaventory, a cloud-based inventory and order management solution.
“A small business might find solutions that appeal exactly to their needs by picking the best of breed in every category and building a flexible, modular system. On the contrary, the big players in the market try to have a more general approach which usually makes some operations really troublesome,” he explains.
Two Approaches To ERP
Buying a new ERP system is like getting a jigsaw puzzle with a few pieces missing: While the system is nearly complete to begin with, it is up to the organization to figure out how the functional gaps will be filled in.
And when it’s all said and done, the final product might be different than the organization’s original vision.
Alternatively, an organization can create its own puzzle using only the pieces it needs by connecting, removing and adding new pieces when necessary.
In practical terms, this means selecting the best individual applications for each operational area, putting functionality, integrative capabilities and ease of implementation above other concerns. It is more about the strategy than the software itself.
Much has been said about this “postmodern” approach to ERP. But what would a practical example of that look like?
How A Business Can Reach Postmodern Perfection
Say we have a midsize business that manufactures nifty high-end widgets that it sells in its own specialized retail stores. Let’s call it BizCorp. One manufacturing plant, a handful of retail locations scattered across one state, a few hundred employees—you get the drift.
As BizCorp has grown, its software hasn’t been able to keep up and its internal processes are inefficient. So BizCorp is looking to overhaul everything.
Instead of implementing a traditional ERP suite, BizCorp takes the postmodern approach.
Its first priority is an accounting system that seamlessly integrates data collected from both retail and online sales in one place.
The organization is happy with the manufacturing software it has in place, but wants software that can integrate with the accounting and manufacturing systems to assist with demand forecasting, supply chain planning, inventory and warehouse management.
Over at the corporate office, the sales team is using homebrewed spreadsheets to keep track of customers, and it’s a disorganized mess.
They also have nothing in place to manage, track and analyze their email and social media campaigns.
And human resources still requires applicants to send in paper applications. In 2016!
On top of all of that, the company needs something more sophisticated than Microsoft Office to manage its internal documents and help with project management.
Rather than trying to use a single ERP system to cover all of these bases, it opts to implement the following solutions instead, integrating the different software platforms when needed:
|Human Resources||Ultipro, ApplicantStack|
|Supply Chain||Lead Commerce|
|Customer Relationship Management||Salesforce|
|Other||Google Drive, Basecamp|
What if two software platforms don’t integrate with each other?
Unfortunately, many platforms won’t integrate with each other out of the box. Not to worry: Many software vendors make their APIs available for developers, meaning that a custom integration can be built out. Of course, that means a significant additional cost, so keep this in mind.
Won’t it be more expensive to pay for individual applications over a single ERP system?
Not necessarily. Many of these cloud-based solutions are surprisingly affordable, and traditional ERP systems are notoriously expensive. Even if the postmodern approach ends up costing more, it will likely produce more value for the company than a clunky, traditional ERP system that isn’t as fully featured.
Have more questions?
Check out our buyer’s guide for enterprise resource planning software. Also feel free to email me at email@example.com.