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Cloud ERP: Leveling the Playing Field for SMBs

Jon Roskill | November 11, 2014

Success in any business is about being able to execute better than your competitors. At the end of the day, execution means being able to perform the business processes necessary to satisfy customer needs, creating a competitive edge if you can do it better and faster than the rest.

Today, business processes related to the fulfillment of customer demand are typically highly automated through the application of information technology such as enterprise resource planning (ERP) software. ERP software automates the process of order capture, inventory management, shipping, billing, and accounting. More than just automating these processes, an ERP system can integrate them so that transactions are entered once, and there is a single, consistent, current store of salient information available to all who need it. Some ERP systems can also provide insight into future customer demand through demand forecasting applications, as well as potential customer leads through integrated customer relationship management (CRM) software.

Cloud ERP: Leveling the Playing Field for SMBs

The capabilities provided by these software applications historically have not come cheaply. Traditionally, ERP software has required the installation of IT servers and networks to host the software on a company’s premises. These servers and networks also required an onsite staff of IT personnel to maintain them. This traditional IT-ERP model provided larger business organizations with an inherent advantage over small and medium-sized businesses (SMB’s).

However, the cloud has changed all that. Now, cloud ERP software suites are available without the need to install computer hardware or communications networks or hire the staff needed to maintain them. Cloud computing can provide sophisticated ERP systems to smaller businesses with minimal upfront investments, providing access on a “pay-as-you-go” basis. When SMB’s have the same process execution capabilities as larger companies, it puts them on an even footing and can allow them to maximize their inherent advantage: speed.

The execution of any business process requires that decisions be made along the way. This is particularly true in handling process exceptions or responding to new business conditions. Those conditions may include adjusting a marketing campaign, responding to product pricing changes by a competitor, or other unforeseen events. These events will more than likely require changes in process execution, such as the override of standard pricing policies, changes in shipping instructions, or modification of invoice terms.

The larger the organization, the more likely it that process changes such as these will require review and approval by multiple levels of management or personnel in multiple departments. They may also require modification of internally hosted ERP systems by in-house IT personnel. These actions can delay a company’s ability to respond to competitive threats.

SMB’s, by their very nature, are more nimble. They have fewer levels of personnel or management to go through before reaching a decision. In other words, decision-making authority is closer to the process of execution responsibility. In many cases, the decision authority may reside with the person responsible for process execution. As a result, SMB’s can react faster. Cloud ERP systems give them the ability to execute at the speed of their decision-making. An integrated cloud ERP solution can automate the transactions within a process necessary to execute a particular business event. For instance, an authorized person responding to a customer request to change a sales order can review the order, check inventory availability, and make the necessary changes without checking with other personnel or waiting for another person to take action on that particular order. As a result, the customer’s request is completed in a timely manner. Similarly, changes needed to adjust pricing processes in response to a competitor’s move can be made quickly to minimize the potential negative impact on sales.

However business success requires more than just an execution capability. It requires knowledge of what needs to be executed. Such knowledge requires timely, actionable information. An integrated ERP system can provide meaningful, up-to-the-minute, actionable information that can identify business conditions requiring transaction execution or even adjustment of business processes in response. In order to be completely effective, an ERP solution must provide, or be paired with, analytical tools to translate data into useful information that can drive effective business actions.

Cloud ERP solutions can level the playing field for SMBs, provided they select the right ERP solution. The selection of a cloud ERP solution should include several key criteria. First, does the vendor’s ERP product meet the functional process and analytical needs of the company? Second, does the vendor’s product incorporate the latest technology in terms of cloud deployment options and integration of mobile accessibility? Finally, is the vendor financially solid, and does it have support capabilities located where the company might require them?

SMBs have always had the business acumen, innovative spirit, and energy to compete and succeed. All they needed were the tools to help them execute. Now, thanks to cloud computing, they have those tools and can compete with anyone, on any playing field.

Blog Author

Chief Executive Officer at Acumatica. Passionate about sports, family, community and Cloud ERP with & thru the channel!

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