Do ERP’s and CRM’s help a business or do they just pretend to?
If you’re not familiar with the terms ERP or CRM, chances are you’re running your business in a very manual way. That’s not a bad or good thing.
In today’s article, we’ll explore what they are, why so many companies use them, if they really help a business improve and more importantly, if you should be using one.
ERP’s and CRM’s, what are they?
ERP (Enterprise Resource Planning) software is designed to centralise data across multiple / all business departments to aide in process automation, reporting, collaboration and much more. Ideally, it allows greater visibility and understanding of your business.
A CRM (Customer Relationship Management) system can be found within an ERP or be a standalone product. Typically, a CRM is useful when a business is looking for better insights into a customer’s buying journey, what converts them, what repels them, and how to nurture them into paying clients.
So why do so many companies use them?
In our experience, there are many reasons a company may choose to use an ERP or CRM. Here are some of the common reasons we hear:
- To improve efficiency throughout the business
- Have more data about the business
- Better tracking of projects, materials, staff etc.
- Centralised data instead of using multiple spreadsheets, usually saved locally on multiple computers making it difficult to update and track versions.
- Reduce the number of software applications used within the business
- Automate as many areas of the business as possible
- Other people in the industry are using one, so we should too
When it comes down to it, every business we talk to is really trying to achieve a common goal. That goal is, to improve.
Do ERP’s and CRM’s help a business improve or is it all a fancy show?
There’s a difference between effectiveness and efficiency. Effectiveness is about doing the right things; Efficiency is about doing things fasters, with less effort. If you’re not doing the right things, then there’s no point in doing them faster!
ERP’s and CRM’s can assist with all the reasons listed above, but, beware, they can also speed up ineffective processes! If your current processes and business flows have not been optimised in terms of effectiveness you’re likely to spend a lot of time, money and effort in customising a system to replicate this.
Since a lot of your processes can be automated, it will naturally feel like you’re making some real positive steps towards the improvement goal. If it feels like things are running faster after implementing an ERP or CRM, it must surely mean they are, right?
Think of the following scenario: if you were asked to get from one side of a football oval to the other, how could you go about it?
You might decide to walk around the oval until you reach the other side. It’s one way, but not the most effective way. Let’s say that’s how many businesses currently operate. Now, if you were to run instead of walk, following your original path, you’ll get there faster. This is similar to implementing an ERP or CRM.
Have you reduced the steps taken to get to the same destination? The answer is no.
What if you simply walked through the oval to get to the other side? Not only would you get to your destination faster, you would also eliminate a lot of unnecessary steps along the way. This is what it means to optimise your business processes and flow.
As great as ERP’s and CRM’s are, they’re only as good as what you program them to do. Paying for one of these systems and asking it to follow your current path, if not optimised, will likely result in minimal return for the time and energy spent implementing it…enough to fool many into believing the tool is the answer.
Very often, implementing an ERP or CRM will be much more complex than the salesperson makes it sound, and cost many times greater than the original budget forecast. Beware: there are many cases where, after spending many thousands of dollars, businesses have given up on trying to implement an ERP system as the cost of implementation was a bottomless money pit, consuming loads of time and resources.
So… Should you be using one?
Business improvement is a way of thinking, not an outcome of a tool. As you know, a tool is only as good as the person using it. In saying that, should you be using an ERP or CRM? We believe using one of these tools is usually more a matter of when than if.
If you’ve optimised your processes and business flow, implementing one of these tools can be one of the best decisions you’ll ever make.
If you’re thinking of investing in an ERP or CRM but aren’t sure if your business is ready for one, reach out and we’ll will give you a complimentary 30 minute Discovery Call to help evaluate your suitability. Don’t worry…we’re not affiliated with any ERP or CRM supplier…we just don’t want to see you fall into the traps we’ve seen others fall into.