Features Business and Operations
Business Advisor: August September 2011

Is it time for your growing business to switch to an enterprise resource planning software system?

Is it time for your growing business to switch to an enterprise resource planning software system?

Most businesses start managing their financial lives using an off-the-shelf accounting system like QuickBooks or Simply Accounting that works well initially. There comes a point when it is time to move beyond an off-the-shelf accounting system and find the right business management tools that will position your company for long-term growth.

Today more than ever, advances in technology and global competition are forcing businesses of all sizes to do everything they can to meet the needs of their customers. Small-business owners, including bakery owners, now have access to new markets that once belonged to large companies. However, a small business has to realize that in order to compete with large companies, it will have to deal with the same challenges and scrutiny that large companies do.

Identify the challenges
Small businesses face many of the same challenges as medium-sized and larger companies, including pressure from competitors; the instability of the economy; the need to attract and retain new customers; and the need to cut costs and increase profitability.

They also have other constraints, including limited access to financial resources and higher operating costs. Those that have larger companies for customers and/or suppliers have to adopt electronic data interchange (EDI) or other systems to connect with these enterprises and exchange orders and documents in the appropriate format.

These factors can slow down growth and complicate business processes.

With all these things to think about, small business owners increasingly are asking an all-important question: Do we need to replace our off-the-shelf accounting program and implement an enterprise resource planning (ERP) business software system?

Typically that’s a tough question for business owners because the common perception is that implementing and maintaining an ERP system is expensive, time consuming and too complex for a family business. However, the good news is that advances in technology have also altered the makeup of ERP systems. These systems now give small businesses the tools they need to compete with larger companies without breaking the bank. An ERP doesn’t have to be taken on with a big bang approach. Some mid-size businesses just don’t have the capital investment for a full-blown ERP system. One option to consider is building your foundation first. Many small businesses start with the basics and implement additional functionality year after year to ramp up, but also moderate the amount of change that occurs with a new system.

Although implementing a full ERP system has faster payback, your business can also benefit from implementing an ERP system using a phased approach. For instance, phase 1 of the project could incorporate general ledger, accounts payable, accounts receivable, finished goods inventory management, and sales. This type of phase 1 project is less costly to implement, is less intrusive to your business, and gives your business a stronger foundation to build on.

Focus on your vision
If you’re thinking about investing in an ERP system, the first thing you should do is clarify your vision and your needs. An ERP system is never about the technology. You have your own unique characteristics and your own critical success requirements. The question that we ask is how will an ERP system help you achieve your critical success requirements?

Over the years Fuller Landau IT advisory group has guided a number of our food and beverage clients through this complex process. Here are some key questions to keep in mind when you embark on this journey:

• What changes is your business likely to see as it matures?
• What are the key challenges that your business is likely to face during this period?
• How will your customer or supplier base change?
• Is it likely that you will be selling to larger companies in this time frame?
• Will you add new operating/warehousing locations or new retail locations?
• Will you sell to customers in foreign countries?
• Will you sell your products or services via the Internet?
• Will your business purchases expand to include goods from foreign countries?

It’s no secret that as a family-owned and/or small business you have fewer financial resources available for IT projects, and you’re more susceptible to the volatile economy as well as the consequences of flawed business decisions. That means you have to be absolutely sure you are investing in the right ERP system.

Choosing the right ERP business management system for your bakery can be a daunting task, but it should be thought of as a system for life. It can give your business the tools needed to drive faster growth, operate efficiently and deliver greater profitability as you take your business to the next level.

Vlad Guzenberg is president of the Fuller Landau Information Technology Group in Toronto, which has been recognized for its technology initiatives with several North American and global technology awards. www.fullerlandau.com