In the context of a tough post-pandemic business environment and in a sector where liquidity and cash flow are perennial challenges, SMEs’ ability to quickly adapt to this new normal can be the difference between survival and absolute disaster.
By Dumisani Moyo, head of mid-market: southern Africa at SAP
Beyond navigating financial and operational pressures, SMEs also face substantive challenges such as business continuity and reduced demand for products and services.
The Covid-19 crisis is forcing SMEs to fundamentally rethink their business models, in particular how they manage remote work and interact with suppliers and customers while managing widespread uncertainty.
Technology can empower SMEs to make credible decisions and better adapt to a dynamic and unpredictable business environment. In times of heightened uncertainty, such as what we are currently experiencing, one standout technology for SMEs is Enterprise Resource Planning, commonly referred to as ERP.
Technology enabling resilience to disruption
The purpose of implementing an ERP solution is to provide an end-to-end information management system that connects the right information, to the right people, at the right time. It helps companies manage the countless processes that make the business function effectively, such as finance, human resources, supply chain, procurement, and customer relationship management to name a few.
An ERP solution enables the smooth flow of information across the business and gives decision-makers a real-time view of the overall health of the business, with potential risks and weak spots more easily identified.
The common misconception that technology – and specifically ERP – is only accessible to large companies with big budgets is misplaced. SMEs can also use technology to become more efficient, more innovative and more successful. In fact, compared to larger companies, SMEs are well placed to take advantage of technology. Because of their size, SMEs are more agile and are able to make decisions faster and respond to changing market conditions quicker.
Here are the top five benefits that SMEs can expect from implementing an ERP solution:
Benefit 1 – An integrated business management approach: An ERP system streamlines, automates and integrates multiple sources of disparate information and business processes. This supports planning efforts by, for example, matching raw material purchases to accurate sales forecasts to minimise wastage in the supply chain.
Benefit 2 – Greater transparency, efficiency and cost-savings: ERP solutions enable SMEs to store information once and without duplication. This removes inefficiencies and enables the entire organisation to work off a single source of truth. Without an ERP system, valuable insights, such as production information used to calculate profitability may be stored in multiple silos leading to inefficiencies and potential wastages.
Benefit 3 – Decisions powered by predictive analytics and business insights: Many technology pundits have dubbed data as “the new oil”. The notion is predicated on the fact that raw oil isn’t as valuable as the final products that are produced once its processed. In the same way, data isn’t as valuable as the insights that are generated once it is analysed. ERP enables SMEs to analyse data and extract valuable insights that inform decision-making, enabling them to quickly adapt to changing market conditions.
Benefit 4 – Improved compliance, governance and data security: If data is indeed the new oil, then organisations need to take reasonable steps to safeguard it, both from a security and governance perspective. SMEs striving to comply with the POPI Act or Europe’s GDPR, for example, can leverage their ERP solution to ensure sound governance by maintaining the correct levels of access to data for various stakeholders within the business.
Benefit 5 – Accessibility of business-critical information: Cloud-based ERP systems enable business leaders to access business critical information from anywhere and at any time. In our current state of disruption, having the ability to tap into a real-time view of the total health of the business is invaluable to decision-making. The ability to securely access information about the company’s operations from any device, anywhere and at any time is also an important component of business continuity.