Do small businesses need ERP software? A plain answer

ERP stands for enterprise resource planning. In practice it means one system that connects the parts of a business that usually live apart: stock, purchasing, sales, accounts and people. The name sounds large, but the idea is simple. Enter something once and let every department see it.

When a small business needs one

• You have more than one branch or department, and each keeps its own records.
• Purchases or expenses need approval before they count.
• Your stock figures and the shelf disagree.
• Staff enter the same information in more than one place.
• You cannot answer a simple question, such as what a branch used this month, without an afternoon of work.

When you probably do not

A single location with a handful of transactions and one person who does all the data entry can run on accounting software and a well-kept spreadsheet. Adding a large system early creates work without removing any.

Off-the-shelf or custom?

Off-the-shelf software starts quickly and follows a standard process, and it usually charges per user. You adapt your business to it. Custom software follows your process, your units and your approval chain, and you pay to have it built. You adapt the software to your business.

For many small businesses, a useful middle path is to build the one module that hurts most, such as stock or attendance, and add modules later as the business grows.

Questions to ask any vendor

• Can I export all my data whenever I want?
• Who supports the system after launch, and how quickly do they reply?
• What do I pay per user, per module and per year?
• Does it handle my units, my currencies and my approval chain?
• What happens to my data if I stop using you?

The short answer

If your problems come from people working in different files, you likely need a shared system. If your problems come from something else, such as sales or pricing, software will not fix them. Work out which problem you have first.