ERP for SMEs: When is it worthwhile?

Requirements & solutions

Everyone knows that productivity and competitiveness suffer due to inefficient processes and a lack of transparency. The solution? An ERP system. This applies at the latest when Excel spreadsheets, individual tools and manual processes reach their limits.

Contrary to widespread preconceptions, ERP solutions are not only relevant for large corporations. The more your company grows, the more the market changes and the greater the competitive pressure, the more worthwhile an ERP system is for SMEs too.

Nevertheless, the introduction is a decision that needs to be carefully considered. Especially with regard to what software must be able to do in order to provide you with real added value. Is the investment really worth it? We have the answers to your questions.

The most important requirements for an ERP system for SMEs are:

- - - - Flexible adaptation to specific processes & requirements
        User-friendly & intuitively operable and configurable for rapid deployment
        Cost efficiency within your budget & in terms of added value
        Seamless integration into your existing IT landscape & systems
        Competent partner & reliable support

Is a ‘standard’ ERP system suitable for SMEs?

An ERP system brings together all of a company’s important business processes in a central database. Large industry providers such as SAP or Oracle offer comprehensive solutions, but these are often very complex and sometimes extremely expensive – this can be a good solution for large corporations, but it is rarely the best choice for medium-sized companies.

This is because you are paying for extras that your company does not even need, while at the same time the functions or interfaces that are important for your company are missing. Individualisation is always possible, but this drives up the price even more.

An ‘SAP alternative’ that is specifically tailored to the requirements of SMEs from the outset is often the better choice. It is important that you think about which functions your ERP should fulfil beforehand.

Typical functions of an ERP system

An ERP system usually offers the following functions:

Merchandise management (warehouse management, ordering, inventory management, etc.)
Financial management (accounting, controlling, payment transactions, etc.)
Human resources (personnel administration, payroll accounting, time management, etc.)
Reporting & analysis (analyses, key figures, dashboards, etc.)

Additional functions can be added as required:

Production (production planning, production control, quality management, etc.)
CRM (customer management, sales, marketing, etc.)
E-commerce (online shops, order processing, payment processing, etc.)
Project controlling (project planning, budgeting, progress tracking, etc.)

Advantages of suitable ERP software for SMEs

We wrote above that ERP software should create ‘real added value’ for SMEs. There are some tangible benefits behind this buzzword:

Transparency: all important data from multiple platforms is available centrally, which leads to a better overview and makes data-based decisions possible.
Greater efficiency and fewer errors: processes are accelerated thanks to automation. No more faltering processes due to transmission errors.
Better decisions: Centralised data storage means that all decisions can be made on the basis of measurable data.
Resource planning: Demand forecasts, optimised warehousing, coordination of material flow – ERP stands for Enterprise Resource Planning for a reason.
Competitiveness: A modern ERP solution helps you to react more quickly to changes in the market and strengthens your competitiveness.

When is ERP software worthwhile for SMEs?

Advantages are all well and good – but the real question is when an ERP system becomes worthwhile for a company in the SME sector so that the benefits also materialise. There are three signs that it is time for an ERP solution:

1. standard tools are no longer sufficient

Long loading times when managing constantly growing amounts of data in Excel
Increasing (sometimes fatal) error rate in hand-knitted formats and nested formulas
Difficulties in carrying out analyses
Current tools are not compatible with each other and cannot be automated

2. redundant data & lack of transparency

Several departments maintain their own databases autonomously – duplication of work, errors and time-consuming analyses are the result
No overview of key figures, product profitability, resource utilisation and optimisation potential
Difficulties in obtaining up-to-date and reliable information for decisions and being able to rely on this information as a basis for decision-making

3. inefficient processes & collaboration

Processes are error-prone, slow and inflexible when market conditions change
Conflicts when several people, departments or locations access the same data
Problems have an impact on product or service quality
Processes are equated with employees and are therefore neither fail-safe nor established with lasting transparency

Finding the right ERP solution for SMEs?
Criteria & requirements

Have you recognised the added value and need? Then you should take a look at the criteria and requirements that you should consider for an ERP solution for SMEs:

Standard solution vs. customised development

Standard ERP systems already offer a wide range of functions thanks to their modular structure, but these modules are often far too complex for the specific needs of your company.

Customisation, with exactly the features you need, can be the better and often even more cost-effective choice. Riwers supports you in exactly this, e.g. by developing data broker systems with customised user guidance.

Digitalisation, automation & AI

With an ERP system, business documents are created digitally and managed centrally in a filing system. This breaks down data silos and enables cross-departmental collaboration. By integrating AI, ERP systems also offer a wide range of automation options:

Document processing: Automatic analysis, classification and filing of incoming documents using optical text recognition
Ordering & warehouse management: Independent triggering of orders based on stock levels, demand forecasts and supplier information
Finances: invoicing and receivables management are automated, algorithms create precise liquidity forecasts

Integration into the existing system landscape

The ERP solution should be easily connected to other systems such as CRM, e-commerce or PIM via interfaces or replace them. In this way, you avoid data islands and ensure a smooth flow of information.

Technical & functional requirements

By analysing your business processes in detail and customising the ERP system, you can avoid unnecessary functions that put a strain on your budget. Consultancy specifically for SMEs can help you to identify the necessary modules and functions and take industry-specific requirements into account.

ERP solution cloud vs. on-premises

A cloud ERP solution for SMEs offers the advantage that you do not need your own IT infrastructure and can access resources from anywhere. In addition, security-relevant tasks and the maintenance of data using the latest technologies are always guaranteed.

On-premises solutions that are hosted in a private cloud on your own servers offer more control over your data and are better suited to fulfil special security requirements or compliance specifications. However, these systems are often more vulnerable to cyber attacks as they are not always updated to the latest threat levels.

Scalability & flexibility

The ERP solution should be able to grow with your company and adapt to changing conditions. It should be flexible enough to integrate new functions and processes. A reliable development partner thinks proactively and develops solutions for the challenges of tomorrow.

Is an ERP a sensible solution for SMEs?
Yes, but not necessarily standard products!

An ERP system offers you numerous advantages. However, standard solutions are often not the best choice, especially for medium-sized companies, as they are too complex and expensive. But is it really cheaper to have software developed?

The answer: Yes and no! In many cases, a hybrid approach is the best solution. Rely on standard processes where possible and supplement the setup with customised software so that your requirements are precisely mapped. For this to succeed, you need to choose the right development partner for ERP solutions for SMEs.

As a software development partner, Riwers supports medium-sized companies in digitising processes and develops ERP solutions that integrate seamlessly into existing IT landscapes. How can we help you become more efficient?