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We all know that in order to mitigate economic risk and scale your business, it’s important to innovate and stay ahead with technology. However, it can be difficult for an SME to navigate which is the right direction forward with so many options in the market competing for your attention, meaning that staying with your existing spreadsheets and legacy in 2023 is the easiest and simplest option.
In this article we interviewed our integration and automation expert, Manzer who shares why staying with spreadsheets and legacy in 2023 can lead to unneccessary cost and ineffeciencies if you are an SME. He also shares some tips on how to select the right solution for your business whilst limiting disruption to your business.
Q: Why should you consider moving away from spreadsheets and legacy in 2023?
Spreadsheets
I love spreadsheets, we use spreadsheets even now. But most businesses are a combination of processes, which means those processes are linked. Typically there are a few steps for smaller manufacturers, whereas bigger manufacturers are more complex. Your data is moving from one process to another, but to cope with something like that, you may need to have two or three spreadsheets.
Here are 3 main problems:
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- Somebody has to design a spreadsheets with specific formulas, so whoever has done the design, it’s very specific to the way they’ve worked on it. If the person is not there or doesn’t turn up to work, It’s very difficult to pass that knowledge on to somebody else, therefore it’s very person specific.
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- Secondly, if an error is introduced in a complex set of spreadsheets, it’s difficult to find and it’s very time-consuming.
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- Thirdly, it’s not scalable. If your business grows, you can’t have ten total spreadsheets running a business, it just becomes too cumbersome and too error-prone to scale, so no chance of scaling there.
The rule of thumb is that:
If you have more than five spreadsheets in a business, it can’t be scaled and you need a different way of working.
Legacy
Legacy traditionally replaced spreadsheets, but the disadvantage is that they’re on-premise. Here are 3 key problems with Legacy:
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- You need to have servers (which are expensive), and you need a local area network within the premises of your company to be able to connect the PCs to the server. That’s expensive.
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- Secondly, Legacy systems aren’t really scalable. If you want to add more functionality to your business, either you have to go back to the software provider which will cost you more, or you have to add on through API / EDI development, which is very expensive and, therefore, the scalability isn’t there.
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- And finally, if you wish to add on additional modules or you want to download data such as a CSV file, many don’t let you do that even!
Due to the problems outlined above for both spreadsheets and legacy in 2023, if a business wishes to scale, which is to have better onboarding, better buy-in from staff, and a minimal amount of onsite infrastructure cost, they need to find a cloud solution and conduct an ERP implementation. This is the only way to truly beat the crowd, make effiency gains and navigate the current economic situation.
Q: What are some risks SMEs need to consider before implementing an ERP?
The ERP implementation starts with planning, this is key. Before we even talk about project management, what does planning mean? Ask yourself these questions:
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- Do I have enough knowledge?
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- What are my resources? (e.g. time or money)
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- Do I really know my business? Have I got workflows? Have I got a concept of the flow of sales and production fulfilment?
Document these. You need to plan what your requirements are because once you have a workflow, you can work out your pain points, your requirements and your goals.
Next, you will need to select software. There are so many criteria for selecting the right one that we could write a book about this. However, apart from what is financially palatable for yourself, it has to be a product or a solution.
Q: What does a good ERP software look like?
There are three main characteristics an ERP software must have
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- It needs to be scalable. As your business grows, you should be able to expand it.
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- It needs to be accessible from anywhere (especially now we are working from home).
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- It has to have great buy-in from staff and so the UI has to be good and user-friendly.
However to ensure that the implementation of any ERP is succesful, then the key is project management. And this is not really appreciated enough.
You may go on the Internet and say: “Okay, I need inventory management”, and Google lists you all these great inventory management software. As you go on a website, you see videos saying how you can do this all in five or ten days by just loading up your data, configuring the settings and you’re ready to go.
Well, guess what?
It doesn’t work that way.
Data itself is a major area, but ultimately with your workflows, you have to test and configure the ERP system to the way your business works. Remember, these ERP systems on the cloud are “fit for all”, in other words, they are there for many markets, many sectors, and many industries. What works for you may not work for another company based on the integrations, how you structure the data and how you use the software because there are just so many permutations.
Setting those parameters for ERP is key, which again, comes down to project planning and ultimately, knowledge.
Let’s say you’ve looked at the software and you like the way it looks, but you don’t really know how it works. So where do we go from here?
You need expert advice and knowledge. That knowledge comes from professionals and partners who have already implemented those systems.
Experts have knowledge of software, managing an I.T. project, and also business acumen. Ultimately, you’re involved in a commercial endeavour; Its workflows is your business, and software is a tool to make your business efficient. Therefore, whoever you take on (i.e. a professional partner who will help you with the implementation), should have project management I.T experience, knowledge of the software itself, and ideally some idea of your industry or what commercial requirements you have.
Q: How do you know what is the right ERP system for your business?
Each company, each sector, and each region of the world will have its own requirements. The questions you need to ask yourself are:
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- What software you choose is further down the line, first, it’s finding the solution.
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- What are you trying to achieve?
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- What are your workflows?
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- And how does it all look as a solution?
Once you’ve got that written down, then you can easily select your apps based on your industry, your size, and your requirements.
Q: Do you have any real-life examples
For example, you are a sophisticated manufacturer. You build equipment or machinery, your bill of materials are quite deep, you have a lot of subassemblies and the finished product is complex. You want some software that can cope with a deep bill of materials which can have a couple of hundred or maybe thousands of components. Your operations also may be quite wide in terms of the number of sub-assemblies.
That sort of scenario would mean you would go with something like MRPeasy, which is very good in heavy manufacturing operations.
But at the other end of the scale, say you are an e-commerce business. You’ve got a couple of stores on Shopify and maybe a retail outlet, and now you want to do B2B sales. You don’t build anything, but you buy stock from China or somewhere abroad. You’ve got 20 or 30 suppliers, you bring stock in, you may have your own warehouse, and you may also be storing goods at a third-party warehouse (3PL).
That’s a different type of setup. Here, you may look at software that’s got very good connectivity with online sales, a marketplace (e.g. Amazon), able to connect to a 3PL through EDI or API, help you with shipment, label printing, able to connect to your CRM and so on.
That sort of software needs to connect to something like CIN7 or DEAR systems which have got very good native out-of-the-box connectivity. They connect to dozens and dozens of apps which perform certain functions that, when combined, provide you with the whole sales fulfilment workflow.
Q: Lastly, do you have advice on what business can do TODAY in order to overcome the economic situation.
Overstocking is the main problem at the moment. Companies really, really need to sell that stock, in other words, if you’re producing products, build and market them. If you are simply buying, make sure that product appears on your online shops and sales channels.
The goal is to increase demand in order to decrease stock holdings, which decreases cash. This will lessen the possibility of failure and problems where your cashflow then becomes the main problem. The current issue for businesses is cashflow, and to be honest, that’s in most circumstances. But especially if you’re a product-based business, you’re probably sitting on too much stock- so get rid of it!
We hope you found this conversation with Manzer insightfulin why you shouldn’t use spreadsheets and legacy in 2023 to run your business’s operations. The key here is to find a solution that best suits your industry and requirements, and get an unbiased implementation partner to provide their expert opinion for their business as this is when results are most efficient and helps businesses scale!
You can also learn more about the looming inventory crisis here
