Business Solutions

Accounting and Operations = ERP Software 

The Ins and Outs of Enterprise Resource Planning (ERP) Software

When accounting and operations software are combined they exist as enterprise resource planning (ERP) software. The accounting side is typically standardized and GAAP compliant however; the operations aspect of ERP software is specific to your company. There are many ERP software vendors today including Intuit, SAP, Microsoft and Sage. ERP software is often classified in terms of a company’s revenue and type of industry.

For example, a business that only offers services and that earns less that $1 Million in revenue may be a candidate for Intuit’s software. In another case, a manufacturer of discrete items earning $5 to $10 Million in revenue could comfortably use Microsoft Dynamics GP. And in one more example, a company with revenues that exceed $500 Million through manufacturing, services and re-selling requires a very scalable and robust ERP solution.
 

If you are interested in an ERP system, review the Annual ERP Software Survey supplied by 180º Systems before making a decision.

Shedding Tiers

ERP providers mostly classify businesses using a tiered system. Using a tiered system to decide what type and how much software to invest in is a great starting point for most companies. A comprehensive approach to picking an ERP system is located at this link. In addition, the following link is an expanded version of an ERP Customer Survey article that originally appeared in the April 2006 issue of CA Magazine by Michael Burns.

At DNS we are committed to installing, supporting, and maintaining ERP software for tier 1 thru tier 5 companies. Because ERP software typically consist of accounting, distribution, manufacturing or other modules, it allows companies to go beyond best practices and effectively manage information from anywhere at any time.
 

Tips for an ERP Return on Investment (ROI) 

Return on investment is extremely important. Corporate leaders can rely on ERP software to demonstrate a predictable return on investment (ROI). A typical ROI for tier 1 thru tier 5 is two or three years until payback. However, it today’s hosting environments [link to commercial hosting], a company may realize a return in months.

Some of the primary factors affecting ERP ROI are implementation strategy and how quickly users accept new software. An ERP Implementation strategy requires a significant amount of planning, business experience, and training. How quickly and to what extent, users accept the new software is often determined by how involved they become in the ERP software selection process.

Keep in mind that most ERP software projects carry a 1:1 ratio [software purchase : software implementation]. This ratio represents the cost associated with purchasing ERP software to the cost associated with implementing the software. For example if your company selects $25,000 ERP software then it’s wise to budget another $25,000 for data migration, training, consulting and other soft costs for a total project cost of $50,000.
 

Economic Assistance 

Many Counties and States across the United States offer regional economic assistance for technology upgrades. As an IT Provider in Northwest Pennsylvania, Distributed Network Software assists customers to obtain economic assistance through no payback IT KickStart grants. IT KickStart grants soften non-software and non-hardware related costs through an economic development payback grant of up to 30%. This assistance directly reduces the right side of the [1:1] ratio by 30%.

Another reason for the predictable ROI on ERP software is the fact that today’s ERP software modules are made for each other; companies have one unified system then add (or subtract) modules that reflect their business processes. Unified ERP software adjusts to your business needs without changing an entire system thus shortening the ROI timeline.

The savings and efficiencies of an ERP system in the long run are significant. Employees spend more time focusing on their job instead of trying to enter data two and three times into different systems. In addition, most ERP systems are connected directly to company websites which is oftentimes the initial entry point (and exit point) for customers.
 

Choosing an Enterprise Resource Planning System

Business practices are constantly changing but in order to make your decision you should ask yourself the following questions:

• Is your business growing?
• Where are you today in revenue?
• Where do you expect revenue to be in the next year? Five years from now?
• Will my technology hold up to the revenue growth that I expect in the next few years?
• If you have a current ERP system, does it fit your business?

Keep in mind that the software is a tool that allows your company to grow and it will not necessarily make you grow. Unless you have a marketing plan in place detailing how you will grow your business product or service, then offering your customers the technology will not do your company any good, so technology should not be your end result to a business solution. In addition, the software isn’t what matters the most, what matters is the functionality and that the software matches the business and operations.

Manufacturers Association Business Magazine article for additional light reading on ERP implementation.
 

To help you choose an ERP system that best fits your organization, review the Annual ERP Software Survey supplied by 180º Systems before making a decision.