Three Ways For SMBs To Reduce ERP Spending

In recent years, the already massive profile of enterprise resource planning (ERP) software has expanded and elevated. Once ERP solutions were mostly back-office IT systems for large companies that focused on supporting the centralization and integration of work for certain business functions. Plenty of processes, people and small and midsize businesses (SMBs) worked outside the shadow of ERP platforms. Not anymore.

ERPs are fast becoming the operational, as well as the transformational, core of organizations worldwide, including SMBs. The intense global growth of the ERP sector is evidence of that evolution. Allied Global Research recently reported that the global ERP market reached?$39 billion ?in 2019 and is projected to reach $86 billion by 2027.

As ERP cloud, automation and analytical capabilities expand, smaller businesses that are eager to unify disparate company systems and data are focusing on ERP investments to generate game-changing business intelligence, efficiencies and opportunities.?

How To Mitigate ERP Costs

As cloud-based solutions make ERP more accessible and practical for all businesses, SMBs have a tremendous opportunity to streamline operations and intelligence. At a time when inflation is affecting business expenses of all kinds, finding a way to reduce ERP spending may sound like a long shot, but it’s not.

Here are three ways SMBs can spend and save wisely to gain and maintain a top-notch ERP backbone:

1. Lighten up your requirement specs.

Establishing strong requirements and specifications by internal end-user groups can lead to enviable adoption and satisfaction rates when it comes to software selection and customization. That said, it is possible to go too far in this process, and it’s important for SMBs to balance user needs with efficiency advantages.

For example, only part of the workforce will be leveraging the ERP. A 2021 report by Software Path found that, on average, only?26% ?of the staff across an organization actively uses the company’s ERP system and, as a business grows, that percentage falls.?

To save costs, time and disappointment, SMBs should follow these guidelines when completing requirements specifications:?

? Allow only must-haves to make it into specs. Do not treat the process of identification requirements as a big wish list for all potential users. Focus on the population that will use the tool every day.

? Rather than allowing entire user groups to weigh in on specs, choose a few key decision-makers to manage the process at the top and communicate with groups.

? Set expectations that some processes will change as a part of the upgrade. Focus on the benefits of a better, unified system and the chance to improve overall operations and intelligence.

? Emphasize user experience (UX) when selecting an ERP solution. If the UX is a solid upgrade for users, they will be more likely to embrace the new system and accept new processes even if it doesn’t check every one of their boxes.

2. Avoid overpaying for ERP support and maintenance.?

The tendency is to use the ERP platform provider to handle support and maintenance contracts, which is often the more expensive route. While brand-name solution providers typically focus more on product innovation than support, some companies with fewer cost pressures might still opt to have the same critical supplier for both the application and its maintenance to get more direct access to platform development teams and updates.??

A more frugal (and often more effective) option is to tap into third-party ERP support and maintenance services providers. According to an article by ERP Today, a 2019 report by Gartner, Inc. showed that businesses gain a?50% average annual savings ?from their software budgets by choosing third-party maintenance services rather than the software vendor’s offering and policies.?

A dedicated ERP support and maintenance provider is not only less expensive but can also offer a strong bench of skilled and experienced professionals who are consistently addressing support needs and challenges across the platform. That steady focus on optimizing and troubleshooting the ERP arms these providers with experience to accelerate the identification and resolution of ERP issues. That’s both time and money saved.

3. Embrace next-gen training.

ERP integrations and upgrades require substantial user training, but there are ways to reduce the cost of learning without reducing productivity. Prior to the lockdown era due to Covid-19, a great deal of ERP training was done in person and featured extensive customization for various user groups. When in-person work stopped, businesses were forced to adapt to remote learning and the results were not all bad. In fact, I find that some pandemic-revised training approaches suit ERP better than pre-pandemic ones. For example:

? Shorter is better. The modern mind is often most receptive to brief, engaging lessons. This is true whether learning is in person or remote. Rather than long Zoom training sessions or half- or full-day, in-person learning, breaking down ERP training into short bursts can save time and accelerate knowledge gain.

? Video lessons work. Ready for viewing by learners at their convenience and requiring no occupancy limits, video trainings (again, when short and smart) are excellent, low-cost tools for underscoring ERP processes and protocols. They also offer an easy way to provide ongoing training in a quick format that serves the most people, which is key to keeping ERP engagement high among existing and incoming talent.

? Let the learners drive. Self-driven training tools, as opposed to set scheduled trainings, may get better response and engagement rates. Trainees can learn when their schedules allow, ensuring productivity remains high while removing higher-cost, in-person training barriers.

While on-premise ERP solutions are still an option, cloud options offer a more affordable, simplified path to ERP transformation. The many benefits of cloud delivery coupled with thoughtful strategies for reducing customization, support and training costs put ERP solutions within budget and reach of most SMBs today.??

"Three Ways for SMBs to Reduce ERP Spending " originally appeared on Forbes.com.