How to choose an ERP for SMEs in South Africa
South African small and mid-sized businesses (SMEs) who hope to be competitive in the long run, particularly those with complex operations, will benefit by implementing an ERP software system. This business solution facilitates greater efficiency for core processes, like finance, manufacturing, human resources, supply chain and procurement.
What is ERP software?
Enterprise resource planning (ERP) software automates admin and repetitive back office tasks, such as estimating, inventory management, accounting, and production. These systems also manage and analyse data, allowing businesses to streamline their workflows and establish effective procedures.
ERP solutions typically have multiple modules that cater to each of the business’s functions. These modules share information with each other within one system, eliminating information silos within an organisation.
The Benefits of ERP for Your SME
Here are a few ways that using the right ERP software can benefit your business.
- Improved efficiency and productivity. ERP’s ability to streamline processes means workflows within your business are more efficient. Automation of admin frees up your employees to focus on more productive work.
- More accurate forecasts. ERP’s inbuilt reporting capabilities utilise advanced analytics to ensure data is up-to-date and duplication free.
- Lower operational costs. Insight into key business metrics ensure you avoid disruptions, interruptions, and errors which lead to lower overall operational costs.
- Better collaboration. Information silos are removed due to ERPs single data source, ensuring teams and departments collaborate more easily.
- Increased data security. Admins have full control over access, and access to confidential business information is controlled at a user and role level.
How to Know if Your SME is Ready for an ERP Solution
Here are indications that you are ready for an ERP solution.
1. Your single-purpose software strategies are no longer adequate
If you have a suspicion that your patchwork IT strategy adds more frustration than benefit, or that you have outgrown your single-purpose applications, then you are ready to investigate ERP solutions.
Many SMEs stitch on function-specific applications in an attempt to meet all employee and role requirements. However, these software packages very rarely communicate with each other. This typically results in the need for duplicitous data handling, exposing the business to human error and risk.
With the increased pace of work and the amount of data passing through a business, these patchwork, limited applications are not able to keep up with what a growing business needs, and causes more frustration and delays than benefits.
2. You’re managing beyond the line-of-sight
SMEs typically start out as owner-operated establishments with a very hands-on approach. Managers and owners know about everything that is happening in the business, teams are small and typically in one location, and information is shared and easily available. It is also likely that the leader is the custodian of the majority of the business’s operational information, and employees turn to the leader as the centralised data source.
However, as the company starts to grow, control and insight of the business becomes more challenging. If the leader is not available, staff and customers become frustrated as they have limited access to information, or information is outdated. So, where the owner previously was the fuel that started the business, they could very well become the ceiling that hinders the business’s growth, unless they find a new way of managing information.
If there is a rise in human errors, information bottlenecks, lack of clarity, and you start to worry that things are getting out of control, then you need to look into Enterprise Resource Planning (ERP) solutions.
3. You’re outsourcing your accounting
If you don’t know what is going on in your business’s accounting, or your outsource accounting functionality to take care of payments, receipts, tax, financial reports, and salary functionality, then you are ready to consider an ERP solution.
Challenges that SMEs Face when Considering an ERP Project
When it comes to ERP selection and implementation, SMEs often face unique challenges which their larger counterparts do not have to deal with.
- Limited IT resources. Recruiting and keeping qualified IT personnel is a challenge, so the ERP solution needs to be easy to use and train, and well-supported by the implementation partner.
- Limited budget. Big-name, dollar-based ERP solutions are out of reach, but the robust functionality is still desired.
- Rapidly changing business environment. SMEs are agile and flexible, changing direction quickly. The ERP solution needs to be able to bend and flex with these changes.
- Complex business processes handled by a smaller workforce. SMEs are smaller but not less complex than larger enterprises. Plus, they do all of this with a smaller workforce, which means their software needs to do much of the heavy lifting and be highly efficient.
How to Select the Right ERP for Your SME
Here are some tips on how to choose the right ERP solution for your South African SME.
1. Identify What you Need Your ERP to Do
There are many ERP options available in the market, so it is important to first specify what your requirements are in order to identify the best fit. A manufacturer, for example, would need their ERP to easily manage inventory and allow for frequent quality and regulation checks, whereas a retailer might need robust warehouse functionality and point of sale integration, automated sales budget forecasting and customer lifecycle reporting.
Keeping in mind what problems you want to solve, and what wins you wish to achieve, will help you identify the functionalities you need in an ERP.
2. Does Rand-Value Match Functionality?
As dollar-based big-brand ERPs are beyond most South African SMEs’ budgets, it follows that you need to find an ERP that makes Rand-value sense, while still offering the complexity and robust functionality your business requires. Most ERP projects are costly. Thankfully, due to the many benefits that ERP brings, you will see a ROI, but how quickly depends on how accurately you match requisite functionality with budget.
Key functionalities to look for in ERP software
The best ERP software will, at minimum, have the following features.
- Support for cloud computing. Modern ERP solutions make it possible for SMEs to leverage the benefits of cloud computing, such as speed, mobility, security, and agility.
- Advanced reporting and dashboards. Modern ERP consolidates every aspect of the business into one system, ensuring business-wide data analytics. Instant dashboards and reporting empower business decision-makers with real-time data for accurate decision-making.
- Customisable and modular. Every business is unique. Expecting an out-of-the-box solution to meet your exact needs is not feasible. Select an ERP system that can be configured, as well as customised, to support your unique business processes and needs.
- Integration capabilities. You can further enhance your ERP system’s business capabilities by integrating it with the existing applications your business uses. Consider how capable the ERP software is, as well as your ERP implementation partner, to integrate with other systems such as Point of Sale, Warehouse Management, Business Intelligence, and Electronic Document Management systems.
- Core business functions. Choose an ERP solution that offers comprehensive support for your core business functions, such as financial management, reporting, supply chain management, manufacturing, sales and marketing, service management, customer relationship management, project management and HR management.
3. The Right People Behind the ERP
After selecting the right software, choosing the right implementation partner is your next most important decision, as it could be the difference between a successful deployment or an abysmal failure. Typically the ERP vendor recommends an implementation partner.
Here’s what to look out for in an ideal implementation partner:
- Proven track record of successful implementations
- Experience implementing ERP for companies like yours
- Tried and tested implementation methodology
- Able to deliver on their promises
- Experts in the ERP software you have chosen
- Strong business acumen for business process guidance
- Dedicated development team
- Dedicated support team
- Outstanding service
In this case, going cheaper could be the more expensive option in the long run if implementation partners opt to cut corners to keep costs down, so be sure to carefully weigh up what you are paying for.
Choose a partner who is reliable, has a large client base, has unparalleled service, and who is invested in your long-term success. You can tell a lot by their demo, and if they use real-case scenarios when proposing solutions to your challenges.
Get Custom ERP Implementations in South Africa with T3T
At T3T we work closely with SMEs across a range of South African verticals to implement tailored, flexible Sage ERP solutions that meet your unique needs.
T3T is an award-winning Platinum Sage Partner, and our dedicated team of developers, consultants and support staff have over 25 years of experience in successfully deploying business solutions. We also offer Sage ERP training and on-going support.
If you’re looking for the best ERP software for your small to medium business, contact us online or give us a call on +27 (0)21 556 2622 to discuss your business’s needs and challenges. We are experts in South African ERP deployment, and we are here to help.