Over the years, many small-to-medium businesses (SMBs) have taken a best-of-breed approach when building an enterprise resource planning (ERP) system. They have pieced point solutions together to solve problems as they arise. From accounting to order fulfillment to inventory and cash management to reporting. Initial problem solved, but with every addition, complexity grows, scalability grinds to a halt, and profitability plummets. Makeshift ERP systems are much more prevalent than one would think. In fact, during a recent APQC survey, 60 percent of participating organizations claim that their ERP environment is convoluted. In fact, 34 percent stated that they operate with multiple ERP systems (from various vendors) with disparate infrastructure platforms. But that is not all. When growing companies continue to fix problems by adding even more additional systems or applications, integration becomes even more jumbled and complicated, causing:
That ERP system that you tirelessly vetted, implemented, and connected will become so complicated and provide such a lousy user experience, that your users will stop using it. They will start working outside the system, using Excel spreadsheets, email, and even post-it notes and paper invoices, etc.
And that migration back to spreadsheets is a sign that it is time to fully integrate your financial system in the cloud.
Point solutions are designed to support a limited set of accounting processes. They might solve a problem, but they limit how growing companies can run their operations. Growth slows as connections between solutions break and siloes form. It is easy to lose runway when companies have customer, vendor, or inventory items stored in multiple system databases.
Business growth requires scalable transaction volumes and speed. Scale and siloes cannot co-exist peacefully. Growth also depends on new revenue models, second and third product iterations, and the ability to expand into new markets. Siloed financial systems also struggle to stronger financial controls, better SKU management, comprehensive audit trails, or more complex financial processes, such as recurring billing and invoicing.
To remain automated requires the constant re-engineering of short-term fixes. As a firm’s finance and accounting requirements become more complex, a multi-vendor ERP system cannot support everything. This requires continual addition of short-term fixes and workarounds. In most cases, the gaps tend to be filled with spreadsheets. Think about the irony of that statement. Your ERP system was implemented to eradicate spreadsheets, but here they are again, worming their way in between the functionality gaps in your business processes, much like weeds in the cracks of sidewalks.
ERP workarounds happen when an employee comes up with an alternative way to complete a task that could be done within the ERP system. Employees come up with workarounds because (in their minds) the ERP system is too complex, too slow, not intuitive, and not aligned with the current business process. To the individual coming up with these spreadsheet-based workarounds, they seem harmless. After all, business has to get done. But when done by a group of people, workarounds can jeopardize the company.
ERP systems were established to integrate and centralize data, but spreadsheet-based workarounds do the exact opposite. They create silos of data and several different versions of the truth (depending on the number of copies floating around the company), which reduces productivity, increases security risk, and undermines the company’s automation goals and workflows.
ERP is the DNA of your growing company, and ERP software that can’t keep up with your evolving business needs is inherently out of alignment with your growth strategy and forcing you out of any type of market leadership role.
After dealing with siloed applications suites, manual processes, multiple spreadsheet versions, and a lack of actionable data, many growing companies come to appreciate the power of end-to-end integration. An integrated ERP Cloud suite makes managing data more—well—manageable. Dual data entry is eliminated since all information is stored in a single data repository. Employees don’t have to log into multiple systems to get answers, which leads to surprisingly high productivity gains. A fully-integrated ERP Cloud solution enables growing companies to start with the basics and add functionality over time, or immediately if the market dictates it.