Home Blog 5 Common Misconceptions about ERP Software, Part 1

5 Common Misconceptions about ERP Software, Part 1

Jon Roskill | March 17, 2015

Let’s be honest here. Most of those who follow this blog are familiar with what Enterprise Resource Planning is and why a company might need a Cloud ERP software system. But outside of company owners, business experts, or corporate leadership, ERP isn’t necessarily a household term. Our most-searched-for website page is What is Cloud ERP? When we talk to clients and partners, we find that plenty of people can see why an ERP solution is important (especially when they are dealing with broken or insufficient tools), but there are a lot of misunderstandings out there about when and why to implement one. This week we’re focusing on common misconceptions about ERP software, starting with today’s three:

Misconception #1:

ERP is all about Internal Process Improvement

Asked why they implemented an ERP system, most companies will give one of the following answers:

  • to automate our supply chain
  • to eliminate non-value-added steps in our key processes
  • to better manage our inventory

While these are all great reasons, they’re secondary to the real issue.

At the end of the day, a huge part of business success is about getting the right product to the customer at the right price at the right time, also known as Customer Satisfaction. By integrating order fulfillment, inventory management, invoicing, and accounting, ERP software can solve and integrate many processes to ensure that customer needs are met efficiently and consistently.

ERP solutions that add in Customer Relationship Management (CRM) and analytical applications that provide critical insights into business performance can streamline business and customer intelligence, as well as reveal new selling opportunities to drive growth and profit strategies. We asked some of our users what drove their decision to purchase a new ERP solution. Here’s what they said:

Top 5 Decision Drivers for Purchsing ERP Solution

Misconception #2:

ERP Software is too expensive for small companies

When integrated ERP systems first became available, they were expensive to acquire and implement, needing huge onsite IT infrastructure and staff to operate and maintain.

Only larger companies with established IT departments and substantial financial resources could expect a reasonable ROI from these weighty ERP implementations. 

It’s no secret that Cloud technology has dramatically changed the economic reality. Cloud ERP solutions now available for small and mid-sized Businesses (SMBs) in a Cloud SaaS configuration have changed the game. The benefits of Cloud ERP software and SaaS are clear in significantly reduced up-front acquisition and implementation costs, as well as subscription licensing. Cloud ERP software gives SMBs the same planning and execution capabilities as larger organizations, allowing them the same competitive advantages.

Misconception #3:

ERP software requires massive customization

ERP systems rarely, if ever, meet 100% of an organization’s requirements. Each business will be unique in process, even within a given industry. Special markets, niche industries, foreign locations, and unique internal process methods will always dictate slightly different supply chain processes or financial transaction terms.

Internal needs should be addressed and accommodated during the ERP implementation process. Processes can be modified or solved by the core functionality with training, avoiding the extra costs of customization except where truly necessary.

Where customization is needed to address a need, integration will be an important consideration.

Customized functionality to meet special needs provided by an ERP vendor’s Independent Software Vendor (ISV) partners or affiliates can integrate smoothly and maintain the integrity of the software, keeping your information connected instead of spread out over many business software tools.

Did we miss any other common ERP software misconceptions? Stay tuned for two more on Thursday’s post. And don’t forget to view the Acumatica ERP demo!

Blog Author

Senior Advisor at EQT (Former Acumatica CEO). Passionate about sports, family, community and Cloud ERP with & thru the channel!

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