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Importance of ERP in Small Business

Once available only to large-scale enterprises, ERP—Enterprise Resource Planning—has now become an important tool for small businesses, especially those looking to scale their operations. These resource planning solutions are designed to manage a business's day-to-day activities and core functions. Before looking at the importance of these tools, let’s consider the most important features of ERP solutions for small businesses.

Key Features of ERP Systems for Small-Scale Businesses

Depending on the needs of a business, an ERP system can be used as a management tool, customer relationship building tool, employee productivity tool, and more. A small-scale industrial ERP software should have the following key features;

  • Accounting: Every industry-specific SAP software comes with an accounting module to help businesses simplify their financial reports and manage resource allocations.
  • Human Resources: ERPs should offer seamless administration of HR business functions.
  • Inventory Management and Manufacturing: An ERP should track information on product supply and help forecast manufacturing costs for easy budgeting.
  • Supply Chain Management: ERPs should track products as they move through the supply chain. 
  • Analysis and Reporting: An ERP should provide analysis of business data to assist businesses in decision-making.
  • Automation: The above features should be automated, especially when it comes to recurring business processes. 

Importance of an ERP to Small Businesses

Once you know what to look for in an ERP solution, you can understand why many small businesses implement them.

1. Automated Workflow

One of the biggest benefits of implementing an ERP is the automation of important business processes. Repeated processes conducted by humans increase the chance of error–when business processes are automated, customers will receive a consistent experience more often.

2. Accountability and Transparency

Unlike traditional management with an independent database for each department, an ERP for a small retail business provides a centralized database where all important information from all departments can be shared and accessed by everyone. A centralized database reduces error and promotes transparency in an organization.

3. Supports Scalability

Small businesses looking to scale can enjoy game-changing benefits with an ERP. Scaling up can involve an increase in the volume of business processes that become unmanageable by manual processes. The automation of industry-specific SAP software reduces the burden on employees while increasing overall productivity.

4. Reduces Operational Cost

By reducing the number of manual tasks needed, ERP solutions can drastically reduce the operational cost of small businesses. In addition, by reducing turnaround time, production capability increases.

5. Monitor Business Performance

ERPs connect to all major business processes, making it easy for small business owners to monitor the performance of different parts of their business in real-time. This makes it possible to identify problem areas and improve the speed of decision-making.

6. Improved Management

The integrated nature of ERP systems gives small business owners an overview of all business departments. This allows management to monitor the performance of different departments and make appropriate decisions regarding departments individually and as a network.

7. Employee Coordination

By creating a centralized information pool, ERPs facilitate employee interaction. Many ERP solutions integrate direct, online communication between members of the network, allowing growing businesses to easily foster a remote workforce.


From the above, it is clear that there are numerous benefits of ERP solutions for small businesses. When a small business has identified these benefits as crucial for its growth, it should look to implement a software that best meets its requirements.

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