Thursday 17 May 2012

E-R-Profitability....

A while back we wrote a blog on the three most important things for a CEO when looking for an ERP solution; Agility, Profitability and Responsiveness. We touched on agility, let’s look at profitability.

What is profitability?

Okay so plainly put, profitability is bringing in more money or value than it cost to make the goods or provide the service. Obviously, your income must be higher than your expenses.

Needless to say (but we will, anyway), this is the driving force for all for-profit companies worldwide. When profits are the only thing that will ensure your company’s survival, it is essential to have the right resources, being human or otherwise (alien?) within your business.

But what influences profitability?

Going about looking for the right ERP system

The heads of departments within your business should be a part of the decision making process when choosing an ERP system. Different views will give you a broader understanding of how to go about looking for that ideal ERP system. Let’s face it, your employees should approve on this system, they are in essence the people that will be working on that system.

A lot of aspects should be considered when choosing the right ERP system for your business. I’m going to keep it sweet and short and give only three examples of what I think should be the most important when choosing your ERP system



Return on investment

So, a lot of money has been spent on your ERP system and everybody is happy and confident in the system. But can this system be used to win back some of your money that you have spent on it? An ERP system should be able to generate time phased plans that can define when money will be needed and what this money will be needed for.

Seizing new opportunities

It is crucial for businesses to always seek out new prospects and business opportunities. This is where the proper ERP system will play a very important role. The ideal ERP system should include a CRM system that is ideal for marketing purposes. This system allows the user to generate different marketing campaigns. This will assist in researching the market and realizing what need there is for a specific product. If you are able to provide different products to different clients, new opportunities can be easily generated.

Activating different functions 

When starting a business you might only need an accounting package for year 1. As your business grows, you will need a manufacturing package as well. So you will scrap the first system and buy a completely new one. After year 3, for instance would you maybe require a system with manufacturing capabilities as well, so again the previous system would be scrapped and a whole new system implemented. This can turn into a vicious cycle where every so often a new system needs to be implemented. A lot of money can be wasted and you could have been able to retire after year 3 or 4. Look for a system where all these functions are included, but not necessarily activated. You can activate these functions as you see fit. Having this choice will save you a considerable amount of money in the long run.

You and your perfect ERP system

The perfect ERP system depends on your own specific needs and preferences. There are a lot of ERP’s out there. The secret is to do your research and get your employees involved. The key to your business’ success is all up to you and the right ERP system.  

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