Finance is tight, especially for SMEs, so making the right investment decision is critical. Learn how ERP systems can create a crucial advantage for you.

It’s not hard to see why many management teams have decided to ride out the storm, especially in the fiercely competitive world of manufacturing.

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Bank lending has stagnated, access to all finance is tough, so battening down the corporate hatches can seem sensible, and capex projects are usually first to go.

However, although massive cuts may work for global plcs, who have the finances to quickly rebuild, the logic of ditching capex is flawed for SMEs, especially those with ambitions to do more than just survive.

The midst of a downturn is exactly when SMEs need to invest in processes and systems which leave them best-placed to grow when the upturn arrives.

Technology as a catalyst for recovery

The benefits of adding ERP systems include increased operational efficiencies and improved workforce productivity, as well as the ease of complying with an ever-increasing regulatory burden, summed up neatly here.

If you’re looking for non-traditional finance sources, proven ERP systems will be welcomed by lenders offering invoice discounting and factoring services.

Who will – understandably – be equally unimpressed to see your business using an old and inefficient system, most likely based on an outdated software package or a bespoke system made in-house.

Take your time – and do take advice

Admittedly, the perceived scale of the challenge of introducing ERP can envelop management teams in clouds of corporate uncertainty.

So before you invest in ERP systems, you must seek the reassurance of external advice; especially from fellow corporates who have taken the same journey with your shortlisted suppliers.

What the best-in-class think of ERP systems

For best-in-class corporates, especially in the mid-market, embracing ERP is increasingly the way to go, as Aberdeen Group research indicates.

Its 2012 Benchmark Survey assessing the top strategic priorities for such organisations, showed they were:

Streamlining (57%)
Standardising (41%)
Optimising the use of current capacity (37%)
…precisely what ERP systems are designed to do.

However, having decided to adopt an ERP strategy, do take note that even some of the world’s biggest brands have come spectacularly unstuck, by not properly planning, implementing and updating their ERP systems; including Hershey, Hewlett-Packard and Nike.

Their ERP challenges are essential reading for anyone beginning the journey towards ERP systems, underlining the truism that no organisation is too big for an epic fail.

What to do before you sign up

So what should the right ERP systems supplier offer you?

Time. This is not an investment to be rushed.
Access. To previous clients, so you understand and learn from their experiences.
A track record. A history of long-term relationships with corporates of your size and in your sector who are using the same solution you are buying.
A true partnership. You’re not just choosing a system, but a viable long-term partner you need to trust will support your future needs.

Discover more detailed insight to help your business in the eGuide, ‘Food Industry ERP: Cost Vs. Return on Investment’

This post first appeared on the Sanderson blog.