Do I really need an ERP?

As small businesses expand, they typically invest in various stand-alone IT systems - CRM, finance, sales and order processing etc. The gaps between these systems tend to be filled by a chunk of manual effort, and various Excel spreadsheets. Planning, in particular, both financial and operational, tends to be managed in-house on spreadsheets, which can become quite complex over time.

Eventually, the point comes when a business realises that the spreadsheet solution isn’t really delivering what they need, whether in terms of detail, timeliness, reliability or all three. At that point, someone may well suggest that they need an ERP. The problem for the business is that an ERP seems like a very daunting prospect: expensive, time-consuming to implement and either requiring many changes to business practices, or extensive customisation. At this point, it is worth pausing for a moment to identify exactly what is missing in the existing setup, and what benefits are being sought.

What is it that you actually need?

There is no doubt that a good ERP system can bring significant benefits, and at some point many businesses will want to invest in one. However, much of the complexity of implementing ERP systems stems from the fact that they handle the minutiae of a company’s operations and therefore have to be able to cope with anything the real world might throw at them. If what is really needed is something to improve planning or business intelligence, this level of complexity might not be necessary at this stage, so it is important to be clear about what is really being sought. Possible answers include:

  • Greater efficiency - remove some of the manual processes
  • Reduced errors - remove the need to re-enter information into multiple systems
  • Greater timeliness of information - streamline data flows between parts of the business to give a near real-time view
  • Greater responsiveness - ability to respond quickly based on up to date information and good planning tools
  • Reduced waste/inventory - better production planning based on accurate forecasts of sales and supply chain requirements
  • Better business intelligence - consolidated view of all relevant data, combined with powerful analytical tools

How does Compas help?

We should make it clear that Compas is not an ERP system as it does not handle the low-level transactional detail required of such a tool. However, it exhibits many of the features of an ERP system, and for businessess that need to improve their planning and decision making, it can be an excellent alternative that doesn’t preclude deploying a full ERP in the future. It addresses many of the concerns relating to siloed data, manual processes, inappropriate technology etc. whilst being inexpensive and simple to deploy. Nevertheless, it can also complement an ERP, so if and when the business does take the plunge, the two tools can happily co-exist, as is the case for most Compas users. Technically, in the terminology of such things, Compas is more of an Enterprise Performance Management tool (EPM) than an ERP - the key difference being that it operates at a higher, more strategic, level, and is primarily aimed at management rather than operations.

Some of the key features of Compas that are also features of many ERPs are:

  • It operates on a single shared database, removing the errors associated with rekeying information, and making changes instantly visible across the organisation
  • It is broad in scope, creating an integrated set of forecasts, and providing comprehensive business intelligence
  • It ties budgeting and production planning to underlying business drivers, allowing you to see instantly the impact of any changes
  • It combines planning and actuals data, allowing a near real-time view of what has happened, and what is coming
  • It can load bills of materials, allowing supply chain requirements to be planned
  • It offers basic stock control and inventory management
  • It can be customised to match existing procedures, reducing training needs and the need to adapt business processes

However, Compas also has various features that differ from a basic ERP, such as:

  • Scenario/what-if planning
  • Statistical modelling and forecasting
  • Typically does not operate with real-time data, but day-level aggregates

The bottom line

It is important for businesses to have good planning and reporting tools so that they can operate efficiently and still provide good customer service. Whilst a good ERP system can help, such tools can be very expensive and difficult to implement. They are also typically poor at high-level forecasting and reporting. Compas is low-cost, lightweight and easy to implement as it operates on the cloud. For businesses that are not yet ready to implement a full ERP, it provides an easy solution for integrated planning and reporting. For businesses that do have an ERP system, it provides a higher-level layer for strategic planning, budgeting and reporting.

To understand more about how Compas can help you to operate more efficiently, contact us now for a free demonstration.