6 frequent misconceptions of ERP systems



Myths about implementing an ERP system





Nowadays, it's hard to imagine a business without an ERP system. This abbreviation is firmly integrated into the entrepreneurs' vocabulary as a buzzword. But the application value of the application, which helps to control all business processes, maintain accurate accounting, and manage the company as a whole, cannot be overestimated. In this article, we do not refer to any of the ERP software vendors and do not advertise anyone's product. We are just trying to reason about the benefits of these solutions in general as well as how to approach the issue of implementation properly and where it is better to place an ERP system.



Why some companies still afraid to implement ERP systems

Business critically needs an accurate accounting and monitoring of all aspects of its activity to be profitable and grow. It is a matter of convenience — knowing your income and expenses, financial flows, tax payments, sales volumes, as far as facilities of production and sales, you easily can plan further steps.


You can learn more about ERP system components and architecture, its basic principles, and why the cloud is the best place to deploy ERP, by reading our article Why does ERP system feel better in the Cloud?».

However, some misconceptions about ERP systems and their implementation are still widespread. Despite the positive experience in the market, some companies wary of looking at accounting systems. Meanwhile, these fears are based on a lack of awareness, which we can easily dispel in our article. So, let's look into the most common myths about ERP systems.


«I do not need ERP, I’ve got CRM»

Wow, it is the most frequent misunderstanding! Just remember —CRM and ERP are not identical. They have different purposes, tasks, and functionality:


  • ERP — Enterprise Resource Planning system, is an application pack for enterprise process management, resource accounting, strategic planning, and development of the entire organization;
  • CRM — Customer Relationship Management System is a system that facilitates control of customer interactions. It is often used as an additional tool to manage a supply chain. De-facto, CRM is one of the modules of the ERP system, but it also can be used as a standalone product. But you should realize that CRM is a specific tool with a quite narrow focus, so it cannot be used instead of ERP.

«My enterprise is too small, and I easily manage it without ERP».

Well, even if you are a single entrepreneur, you still have to keep financial and tax records, haven't you? While you are working alone, you may not need ERP. But business growth always increases processes and operations. For example, you add a recipe for eclairs with mashed blackberry to the product menu of your family-owned mini-bakery. So, you also add:


  • a new production process;
  • need for ingredients (flour, milk, butter, sugar, starch, blackberry);
  • increase of utility consumption and production means (gas, electricity, water, dishes, time, labor);
  • new suppliers — you have to get berries from somewhere;
  • new customers who love eclairs, blackberries, and mashed berries;
  • marketing and logistics costs.

Even if your mother is your accountant, and the nephew works the dough, keeping records and calculating all processes in the composition book of 72 sheets is inefficient. You need even though a reduced ERP system, with an emphasis on the financial module. And you exactly needed it before adding the recipe for eclairs. In the current world, there's no business too small to use an ERP system!


“An ERP is too massive for my company, and we never use all its features”.

An ERP system is very convenient due to its modular design — several independent modules are integrated into a single system and access a single database (the emphasis on "independent.") The modular structure of the system allows compose it to meet any needs and wishes. In other words, you can install only those modules that you need at the current stage of your enterprise development. E.g., firstly, you can use only an accounting system and CRM, and then, as your business grows, you can add other modules.


Many companies use only the basic system, which is sufficient for accounting, business process management, planning, and reporting to regulators.


The ERP market is very rich in offers, and choosing the most suitable one for your company will not be difficult.


«ERP is not adapted to my business».

Another option is — "ERP is not adapted to the legislation of my country."


For some reason, this is a widespread misconception. Meanwhile, the fundamental principles of ERP are:


  • Any ERP system has a mandatory basic that matches for any company, regardless of its size, a form of ownership, industry, or country;
  • Any ERP supports specified industry features depending on the business profile;
  • Any ERP supports multilanguage, multi-currencies, and it can be easily adapted to the legislation and regulatory rules of various countries.

For companies of various sizes and business areas, specialized industry modules have been created. Large vendors of ERP solutions that operate on a global — SAP, Oracle, Microsoft, OneBox, and so on — market have developed local versions of their products for the countries of their presence. But there are still many small local software developers that create products only for their countries and regulatory rules. So it's's easy to find the ideal system for you — just look around attentively.

«ERP is danger — it collects all my data!»

The enterprise management system is just an application pack. But the location of the database server with critical business information is quite a different story. In case when the server is on-premises, in your office, or the loft of a neighboring house, it's clear that you have to look forward to security troubles. But if you arrange a virtual workspace for your company in the cloud, and your ERP system is also deployed in the cloud, it significantly reduces any risks of unauthorized entry to your office and data loss due to the server removal. BTW, in the second case, your employees have secured access via RDP to a remote office at any time of the day from anywhere in the world. Thus, even being on vacation, you can control work processes. And if you decide to transform your company's working process to a remote model, it will be quickly and easily. A cloud server allows you to operate with ERP, much effectively even working from home.


BTW, we know the best cloud for ERP in Germany. It is SIM-Cloud IaaS.


«ERP will overload my server, but I’m not going to purchase new equipment!».

Firstly, if the on-premises corporate server is out-of-date, you will be forced to replace it anyway, especially if the business is growing rapidly.


Secondly, the quality of hardware plays a huge role. You should use Enterprise class equipment to ensure fault-tolerant and reliable operating of your processes. But powerful high-end servers for round-a-clock working under high loads is too expensive in purchasing and maintenance. For the best fault-tolerance, your server and network equipment are better to be redundant. And you shouldn't forget about climatization. Yes, it is tooooo costly!


Thirdly, buying a server is not a one-time action — it needs support, maintenance, systematic upgrades. All this consumes your time and money.


Is the better option exists? Sure. You can rent a dedicated server by the German infrastructure provider. It will be a much more cost-effective and convenient solution.


However, in the case, when your business is snowballing, experts recommend deploying the ERP system in the cloud infrastructure. So, many SIM-Networks customers host their corporate resources, including various ERP systems, in a secure SIM-Cloud IaaS cloud. Besides, in our cloud infrastructure, there is a specific type of instance, Power, especially for high-load apps. Power instances are based on powerful Intel Xeon Scalable processors of the 2nd generation with a base clock frequency of 3.3 GHz.


You can learn more about high-frequency CPUs of “Power” flavors and their purposes in SIM-Cloud IaaS by reading the article High-speed CPUs launched in the SIM-Cloud for high-load tasks.


How to choose and implement ERP correctly

When thinking about implementing an ERP system, remember that this is a severe strategic step, an investment in the development of any enterprise. In addition to the cost of equipment and software licenses, the company will require actual expenses for user training, obtaining service packs, maintenance, and technical support for the system developer.


Implementation of a corporate ERP system should not be based on the question of money. Free ERP software will not solve the issue of high costs — quite the opposite. No one is responsible for the work of a free app, it cannot be adapted to changes — an increase in the volume of processed data, changes in legislation and regulatory documents, etc. Sooner or later, you will have to start using a commercial ERP system that is developed and supported by professionals. But before doing it, you will need to extract and move all data from existing systems that your company uses. Sometimes it is impossible inherently since this capability was not provided by the developers, or it will require a lot of labor due to the mismatch of data formats, the need for training of employees, and the search for integration tools. Thus, you will experience the truth of the sentence "Don't be penny wise and pound foolish".


So, we recommend choosing proprietary software for your ERP system right from the start. When choosing a vendor of ERP products, you should analyze its project portfolio, learn best practices, find customer reviews, so on. Operating experience of ERP shows that the optimal solution for each enterprise is always individual, and needs to be selected taking into account the business specifics, scaling, organizational structure, periods of peak loads, localization, and many other factors.


But many more opportunities in saving you can find by choosing the better platform where you will deploy your ERP system. In the current environment, investing in arranging an on-premise infrastructure is unreasonable. The viable concept of corporate IT costs is moving from CapEx to OpEx, which is enabled by renting the infrastructure solutions from the provider. Moreover, the provider of infrastructure solutions has enough capabilities to offer you the best quality equipment and top-notch, experienced support engineers.


What kind of an infrastructure solution for ERP deploying is better to prefer — a dedicated server, VDS, or a cloud? The answer always depends on an individual case. In some cases, it is reasonable to rent a scalable cloud IT infrastructure; in others, it is enough to rent a dedicated server (either VDS or physical) in a remote datacenter. You can also use the colocation of your equipment in the provider's datacenter.


Taking to account all the pro et contra when choosing the best place to deploy your ERP system, keep in mind the data presented in the AMI-Partners study — after moving ERP from on-premises servers to the cloud, business reduced its costs by an average of 30%, while its income increased to 35%.


Whatever your choice, at least, you should agree, it is better to delegate non-core tasks of maintenance of the IT infrastructure to the provider's experts. Thus, your employees can focus on achieving the strategic goals of the business. BTW, cloud hosting of your ERP will easily allow your company to switch into the trendy remote working.


Digitalization is the reality where we live. Do not be afraid to change — we will help! We are waiting for you in the clouds!




Share this:

close