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Should We Replace Our ERP During a Pandemic?

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Derin Hildebrandt April 30th, 2020

As COVID-19 has spread throughout Canada over the last several weeks, most small and mid-size businesses have gone through the same process. You develop your business continuity plans, transition your team to working from home as much as possible, and implement additional safety measures for any employees that can’t work from home. Then your focus shifts to managing short-term cash flow and developing plans to generate cash over the next 3, 6 and 12 months. The end goal is to survive this crisis and get back to operational health. But we can’t assume that life or business will go back to normal – what comes on the other side won’t be the normal we’re used to.

Watch Now: 7 Ways to Optimize Cash Flow in a Downturn

So, how do you prepare your business for the ‘next normal’? Look internally at your ERP or other business management systems. Your ability to adapt quickly in a rapidly changing situation depends significantly on the systems you use to run your business. Likewise, your ERP system will play a critical role in how long it takes for you to restore regular operations and recoup any losses in revenue.

For many small and mid-size businesses, the current crisis has uncovered critical gaps in their systems and processes that pose significant risk to the business. Here are just a few examples:

  • Information is hard to access because it’s spread over multiple systems. By the time management has the data they need, the information is outdated, further increasing the challenge to respond quickly and effectively.

  • Finance teams struggle to create accurate cash flow management plans because they don’t have visibility into sales forecasts for the coming months.

  • Identifying at-risk customers and the potential financial impact to the business is challenging with accounting and customer data stored in separate systems.

  • Sales efforts are ineffective without the ability to identify key accounts based on profitability and lifetime value.

  • Paper-based processes make it nearly impossible to perform critical business functions. Companies are forced to rely on additional manual effort, like scanning documents, to give remote workers access to the information and minimize handling of a physical paper trail.

  • Working from home simply isn’t possible because they don’t have the proper technology in place for employees to access their systems remotely.

  • Processes are highly manual, with knowledge limited to only one or two people. With an increased chance that key people will be temporarily unavailable due to quarantine or illness, the risk of significant interruption is high.

If you’re feeling this type of pain in your business right now, let’s have a conversation. Helping small and mid-size businesses overcome challenges like these is what we do everyday. If your gut still says this is the wrong time to invest in a new ERP system, keep reading to learn why now is the perfect time.

Boost efficiency to come out of the recession stronger

Cost cutting is necessary to maintain financial stability during economic downturns. While most companies look to the obvious measure of reducing staff, improving systems and processes can yield even greater returns. According to research by Harvard Business Review, companies that focus on improving efficiency tend to fare better in a recession than those that only reduce their headcount. While layoffs have an immediate cost savings, they also make recovery more difficult as it takes time to hire and train new staff.

An operational focus, on the other hand, has a long-term impact on both cost reduction and profitability. An ERP system allows you to achieve levels of efficiency that simply aren’t possible with stand-alone tools or home-grown systems. You can reduce manual effort, get rid of paper processes and accomplish the same work in a fraction of the time.

Take Aircom Instrumentation for example. After implementing SAP Business One, they achieved efficiencies in their sales process that saved one full-time staff position. Those savings were then re-invested back into customer-focused activities to continue generating revenue.

Position your business for the future

In a growing business, you’re always thinking ahead to what the next growth phase looks like. In the current climate, this type of strategic thinking is more important than ever. What do you want your company to look like at the end of the pandemic? What does it look like in 3 years?

Now, take a step back and look at your current systems in the context of your future state. Can they effectively support your operational needs over the next 6 to 12 months? Right now, flexibility is key. Companies are finding new customers, selling their products in new ways, and changing their product lines altogether. The ones that do this well, have systems that give them the flexibility to pivot. Will your systems scale to support your plans over the next 3 years? If you have a network of disconnected tools and applications, or an outdated ERP, the answer is probably no.

So, why invest in an ERP system during a downturn? Insights from Bain indicate that the strongest companies coming out of a recession invest in key priorities to transform their business. The return that an ERP system can deliver for small and mid-size companies should bump it to the top of the priority list.

While we’re currently in an unprecedented global crisis, this certainly won’t be the last economic downturn we will experience. With the right ERP software, you’ll have access to timely, accurate information about your business so you can respond more effectively and minimize the financial impacts in future recessions.

The way that businesses support their customers through this crisis will make or break customer loyalty. Now, more than ever, people and businesses want to buy from companies that are truly helpful and prove their commitment to their customers. That mindset isn’t likely to change once the crisis ends. Companies will be driven to streamline every process that impacts the customer experience, similar to what Construction Fasteners & Tools has done with SAP Business One.

Time is on your side – use it wisely

Selecting and implementing an ERP system takes time. We typically advise scheduling implementation for a slower time in your business. With travel restrictions and the economic slowdown, many businesses have time right now. You’re more likely to have a successful ERP project when you can dedicate the proper time and attention to your selection process, implementation and training for your staff. So, use this time wisely. Whether you’ve been considering kicking off an ERP project, or the current crisis has highlighted the need for one, this is a rare opportunity that you should seize. If the financial investment is deterring you from moving forward right now, keep in mind that there are options available to make the project more affordable. A lease is worth considering to help you manage the up-front cost and still reap the benefits of a new ERP system.

To truly prepare your business for the ‘next normal’, you need to act now. The reality is that some of your competitors won’t survive this crisis. Others will struggle to regain the strength they once had. And you have an opportunity to come out as a leader – stronger, more nimble and ready to grow.

Start a conversation with ProjectLine about a new ERP system for your SMB

Find more content on managing through the COVID-19 crisis in our SMB Survival Kit: Leading Through Crisis.

April 30th 2020
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