Outsourcing an ERP system (enterprise resource planning) was once thought of something that only large, corporate businesses would venture in but the benefits of outsourcing ERP systems have now caught the attention of smaller companies. Smaller companies are finding that the improved efficiencies in implementing an ERP system are more than covering the cost of outsourcing their ERP.
Before we look at the benefits of outsourcing, it would be beneficial to look at what exactly outsourcing your ERP means to SMBs. This can be broken down into three basic stages:
Application hosting – This is hosting in its traditional form and is the component of hosting which most people will be familiar with. This is when resources or hosting space are purchased from an external company with the intention to store software such as an ERP system
Application Management – An SMB which chooses this component will hand over the technical requirements of the ERP system to an external company. The SMB will look to the external company to keep them up to date with all software upgrades, patches and bug fixes.
Helpdesk outsourcing – The outsourced company will become a direct line of support for the SMB and will work to resolve any queries that it’s staff may have on a daily basis.
An SMB may choose to outsource any one of these three components but will only see the full benefits of outsourcing when all three are outsourced together.
Get expert ERP advice
Organisations who deal with outsourced ERP systems carry out ERP related tasks on a daily basis which means that they may not be experts in all fields but when it comes to running a successful ERP system, they are experts in their field. Having people who are experts in their field on your side will give you the confidence to make the right decision after obtaining advice from knowledgeable people who are fully aware of the direction which the industry is heading towards at the current moment.
An experienced ERP specialist – such as ERP Guru, Inc., one of Netsuite partners – will be able to advice you on key ERP related decisions including the type of software upgrades to opt for as well as being able to fully utilise your ERP system in order to reduce operational costs and optimise the usage of resources.
Lack of IT resources
Unless the company competes in the IT industry, most SMBs do not have a large IT department with highly skilled, technology savvy staff and are therefore although the benefits would be substantial; the company is not well equipped to be able to run an ERP system. Once the ERP system has been outsourced, the company is free to focus on the factors which it is strong at rather than to worry about its IT problems.
Medium sized business would no doubt have some form of Human resources or Finance department so they would be able to focus their attention on these departments and smaller businesses would be free to focus on getting more sales.
Reduced implementation time
It should be known that there is a difference between implementing an ERP system and implementing a successful ERP system, which is able to effectively improve efficiency within the business. Implementing a successful ERP system requires a vast amount of time and preparation. It requires a huge amount of manpower and IT resources which are two things that many SMBs lack. However outsourcing your ERP system means that the external company will take care of all the implementation requirements leaving you with an ERP system that works and one that will reduce your overheads by improving productivity.
About The Guest Author: Rashed Khan holds a Master’s degree in Software Engineering and is a regular guest blogger on behalf of ERP specialists at Epicor.
Rashed,
This is a great article. SMBs save considerable time, money and internal resource allocation by outsourcing tasks. The best tasks to outsource are ones that SMBs are either not skilled enough to do in-house, simply do not have the resources for or ones that another outsourcing firm can do better/faster/cheaper. One thing to note, if there are SMBs who are concerned about outsourcing because they don’t think that they are “big” enough yet – I heard a great quote from my coach once when I was starting my Virtual Assistant business. She said “Work as if it’s the business that you want, vs. the business that you have.” Think big!
You make some really good points about the expertise you gain in outsourcing something. There’s also cloud based systems to consider, which can be far more viable for smaller businesses instead of managing their own servers.