How ERP Software Can Save Your Business Money and Time?
One of the questions asked by many Customers is “How ERP can save money and time?” This is a genuine question from Customers as they are doing a huge investment of Time and Money and they want to know the ROI on the investment and how this could help them to make a decision.
We normally explain the same with few examples as we take inputs from customers on their real time costs. At the same time, we try to explain the initial costs that would incur due to ERP too.
Benefits of implementing an ERP is high and that helps your business to grow fast, Save money and Time.
A typical expense that are incurred when we implement an ERP are as below.
- New Software licenses
- New Server to host the applications and PCs for users,
- Network upgrade to manage the data load.
- Recruiting new team members, their training and retention plans.
It’s normal that Senior Management can see only costs as part of these activities and this could disturb their current process and make mistakes. Important for them to know is “How an ERP can save money” before they do invest here.
Do you know that ERP can save money too?
Let me explain (You can add a business value to the each areas based on the number of people need to be deployed to manage them)
- Cost of Statutory Compliances
In the last 5 years every central governments woke up to identify the missing taxes and streamline to control them. They want to collect every penny that’s due to them. It’s also important for the Government to spend them for infrastructure, power, roads etc.
If you make a mistake in Filing the returns, it may cost 5 to 10 times of that amount and time to justify the same with tax authorities.
Recently many Governments, came with an option to track the Accounting software Audit trails and these shouldn’t be altered too.
- Stock and Inventory management
Accurate inventory helps to project them into Balance sheet as an asset. This helps to avoid the last minute running to buy new items or RMs and release to productions. A good ERP helps to manage your Product and Inventory costs, Reduces operations expenditure, Convert the capital expenses to Operational expenses etc. Important, ERP helps to view the costs and how they attributed to your profits.
An ERP can forecast the accurate inventory needs, when and what quantity needed. It helps to plan the production, Procurement and makes sure your cashflow is accurate.
This could improve your inventory rotation by 40% and better cashflow controls too.
- Training and retraining of Employees
One of the challenges that are faced by implementing new ERP, is the cost of training and retraining of employees as they come and go. Many management are afraid of the costs of retraining teams and loosing them. It’s a true picture and a genuine concerns by many.
As implementing new ERP, many employees are not comfortable to change their work profile or Practice and many are afraid that they will loose the control on the management (by controlling the report generation from old system or providing statements etc).
How we handle these type of cases and ensure that management gets their data and information seamless? ERP is the right answer.
But having a good ERP is important else your employees would fit themselves to wrong practices and shortcuts of the ERP and miss the international practices too.
- Missing Business Opportunity by not knowing business status.
One of the biggest problems is, missing the delivery deadlines and affecting company Cash-flow. Not knowing the inventory or stock availability at the right moment can have a business loss.
So the management has to invest into the right solution to make sure that right data and decision making process is in place and that helps to grow the business.
- Cost components, Expenses and how to control it?
Many customers don’t know the product cost and what constitutes it? They normally have an idea on the product cost at the beginning of the development or when the quote was sent. They do not have the right cost details on real time basis.
This leads to business loss as the raw materials and other incident cost changes periodically.
What is important is to collect the right data at the sources and analyse them on how to reduce it. Many assume the costs and end-up in missing the detail.
- Easy to prepare and understand the reports.
Many reports misses the basic details that could be important for the decision making process. A right report that helps to make a business decision and saves time is important for the success of the business.
So the questions are.
- How we prepare the data?
- Is it solving my needs?
- Can I depend on the same to make a decision repeatedly?
There are many smaller ways that helps to reduce the Costs and Increase the revenues. What we mentioned are the major and summarised one. A right ERP tool with a proper deployment increases your success rates.
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