Considering an ERP implementation at the initial stage of a business can be a bold decision and a smart one too. If the promoters have a clear-cut vision of their project, they can choose to invest in an ERP over any other intangible investment. ERP systems provide the much-needed analytics to the management which is used for significant decision-making processes. The earlier the organization starts digitizing its data, the easier things get. There are many more advantages in setting up the ERP software system during the startup process. Many important business processes can be streamlined in a better way such that the it gets refined and digitizing becomes simpler. Resource planning for ERP can also be done in the initial stage itself and it reduces the rework or re-alignment of work required if introduced at a later stage. The initial phase of the business can include a trial run of the ERP also and any discrepancies in the software can be identified and rectified before the actual data is input. Another advantage is that the business can also identify the shortfalls in planning for the ERP and take corrective actions for the same. Basically planning an ERP at the initial stages of a business can be very advantageous for the organization in the startup process.
Whether to go for a conventional ERP or a new generation cloud-based ERP is the next step to discuss. A conventional ERP is quite expensive contributing to a considerable part of the capital expense of the startup. But it allows a great deal of customizations and data security. A conventional ERP also requires investing in IT and human resources to maintain it within the organization. The updates and upgrades will be time-consuming and costly for on-premise ERPs. Cloud-based ERPs are trending in the market now as they cost much lesser compared to the on-premise ERPs. But the organization has to adapt to the process flow available in the ERP as a minimal or no customization is available in cloud ERPs. The resources or the software are shared by multiple users and hence the upgrades are planned such that the downtime of a cloud ERP is minimal. Since the cloud ERPs are subscription based, the cost will add to the operating expenses of the organization. But the advantage here is that in case the organization decides to terminate the Cloud ERP, all they need to do is to unsubscribe, whereas in the conventional ERP the entire investment on the software is wasted.
Points to be noted while selecting an ERP
Since the organization is just setting up, the actual process flow may not be well defined and the implementation cost factor also needs to be considered widely. Cloud-based ERPs are a trend now in the market and hence a great alternative to on-site ERP implementations. This is especially helpful for a startup organizations since cloud ERP can streamline many processes of the business in the starting stage itself. By the time, the trial run is over and the organization enters the real market, the process and data will be available in-line.
- Choose from experienced players in the industry – Make sure the ERP vendors are experienced in catering to the line of business directly related to the startup organization. This can help streamline the processes as the ERPs processes would have evolved over the experience with many clients. All existing government regulations like the tax, PF contribution, TDS filing etc. will be available in an existing software. Any new industry regulation imposed will be automatically added by the ERP vendor to comply with the government mandates as it affects all their clients.
- Understand the business process – The ERP should be chosen in consensus with the promoter(s) and an industry expert within the organization. The industry expert will know how the business works or the process flow involved. The promoters need to understand the importance of the ERP and agree to the cost incurred in investing on it.
- Cost does matter – Though cloud-based ERPs are less expensive, it will be a considerable part of the operating expenses rather than the capital expenses. Choose an ERP that is feasible cost-wise also to the organization. With so much of competition in ERP software solutions, it will not be a big issue in the startup stage. Otherwise, if the software needs to be switched into a lesser expensive one at a later stage, the migration can get very expensive in terms of the amount spent and time and resources spent on migration too.
- Take only what is needed – Do not complicate the processes by subscribing to unnecessary modules of an ERP just because the vendor pushed it hard. The additional cost and resources can be spared for some other useful purposes like digital marketing and SEO.
- Keep the ends open – while unwanted modules need not be subscribed to, the ERP should always support additional modules at a later stage when it is required. For example, if a manufacturing ERP is chosen for the organization and later they decide to get into selling the same products they manufacture, the sales or POS module can be integrated with the existing software. Keeping the ends open ensures that the ERPs can also adapt to the changing business processes.
- Plan for the ERP – Whether cloud-based or on-premise, the ERP will require at least one specialized resource who will be in-charge of managing the data and its security. For on-premise ERPs, a huge line of resources ranging from system engineers to network administrators and security administrators are required on the personnel front. IT resources like the server, workstations, network equipment etc. also need to be arranged. But the ERP software and data will be fully secured and can be customized to a great extent. For cloud-based ERPs, a maximum or one or two dedicated resources will be enough to handle the ERP in the organization. A basic user training is all that is required to access the cloud-based ERP. Since special skills are not required for managing a cloud-based ERP, the resource will not cost too much.
Implementing the right ERP during the startup stage itself can be quite advantageous to the businesses.