Beating downturn with IT, ERP software

SME companies operate in an environment that becomes more aggressive and competitive with every passing year; even more so in a downturn economy such as the world is currently experiencing.

“In this tough environment, small to medium-sized companies need to grasp every advantage they can get,” says Cornel Schoeman, business development director of SAP Business One accounting and ERP software solutions provider 4most.

“Information can either provide a powerful competitive edge or drain away a company's focus and energy. Only those able to correctly align information technology to their business objectives will stay ahead of the game, because having access to the right information at the right time invariably leads to focused, quick business decisions that deliver profits.”

Agility is a major weapon in the SME armoury. With generally flat structures and more procedural flexibility, SMEs are able to plan and implement strategies much quicker than the major organisations when the market changes or opportunities present themselves.

“In this age of accelerated technology, markets change rapidly; what was good yesterday may be mediocre tomorrow. Customer expectations move ever upwards and shrinking product life cycles contribute to market volatility,” says Schoeman.

“SMEs, particularly those with well-planned IT and ERP software environments, are well-placed to turn market changes into opportunities. Such environments offer management foresight and the ability to anticipate change while supporting long and short-term strategy.”

The goal of ERP systems such as SAP Business One is to provide the SMEs with the speed and flexibility needed to develop and deliver innovative products and services and be first to market. Another important aspect delivered by the ERP is scalability for expansion and contraction as required.

Flexible, integrated information technology makes it easier for SMEs to adapt their business modus operandi in response to changing needs, while at the same time providing tools that create platforms for out-performing the opposition.

Schoeman says the quickest way to respond to change is by anticipating it. “There is no crystal ball, but companies can begin to predict changes because the right ERP system will enable them to see 'the big picture' within their own organisation, as it unlocks critical business information stored in different departments and systems.

“Without accurate insight it is very difficult to anticipate rising demands. However, a company with a well-designed and properly implemented ERP solution will have cohesive, streamlined internal operations, access to critical business information and be well-prepared to respond quickly to change. ERP connects all of the functional areas, allowing them to work together smoothly and swiftly with forewarning of changes in market demand.

“If a company instead relies on an assortment of spreadsheets, unrelated databases and manual processes instead of ERP, a rise or fall in orders can result in materials shortfalls or excess inventory purely because the impacts of changing demand cannot work their way through the organisation quickly enough for it to make the required shifts in supply and stock levels.”

Adaptable IT systems that are easy to modify will accommodate changing needs and can be extended to grow with the business should be preferred. Also preferable are systems that will accommodate tax, currency and language changes if the business extends into foreign markets.

Reports and returns on compliance with industrial standards, safety, environmental practice, business and tax legislation, laid down employment and labour practices can be difficult for SMEs with limited resources and infrastructure, but ERP systems can significantly reduce the burden by providing information and statistics in the required reporting format.

Schoeman says companies should look to the IT and ERP systems to extract the relevant business information to provide a clear overview of the company's current status and analytical and reporting tools to conduct gap analysis to determine what it needs to do to achieve further growth and profit.

“The ERP system can create a framework for performance planning and review against set objectives,” says Schoeman. “To achieve company goals, management needs to see where its best opportunities lie and be able to apply its most effective resources to convert those opportunities. IT and the ERP system provide the information and the analysis to identify both the opportunity and the appropriate resources to convert them.

“Simply put, ERP software gives SME management the ability to make focused business decisions, do more with less by creating an environment that monitors, manages, and analyses progress against the business goals on an ongoing basis, as well as the flexibility to adapt when the goalposts move, as they surely will.”