Your business is growing and sales are up. That’s the good news.
The bad news is that the workload on you and your staff also has increased. This is a good problem, of course. But it begs the question: Should you hire more bodies or invest in technology that makes your existing staff more efficient, namely a cloud-based enterprise resource planning (ERP) system?
The honest answer is maybe. It all depends on your needs and goals.
Where Cloud ERP Helps You Do More with Less
The advantages of modern, cloud-based ERP solutions are many. For the growing SMB, some of the advantages include business process best practices that set the foundation for expansion, improved process efficiency, automation that significantly reduces admin time and busywork, and better planning that leads to revenue opportunities and cost savings.
These advantages clearly will save staff time. But when asking the question of whether to hire or invest in ERP as a way to square the circle, hiring might be the answer depending on your needs for the hiring.
“The relationship between increased productivity and headcount reduction is not always one-for-one,” noted ERP expert, Steve Phillips, in an article for the Ziff Davis site, Toolbox.com. “Rather, much of the total time savings are cumulative across many departments, processes, and people.”
Where do I start my ERP Evaluation?
ERP Over Admins But Not Skilled Staff
Yes, ERP drives efficiency, and that translates into doing more with less. But the productivity gains are more about enabling staff to focus on truly meaningful work.
New administrative staff might be swappable with the efficiency gains from ERP, because cloud-based ERP automates routine and manual processes pretty effectively. Similarly, businesses need less IT staff with cloud-based ERP solution because on-premise systems and hardware are replaced with managed offerings in the cloud.
But the efficiency gains are spread more evenly outside those two job functions. Sales staff might be more efficient and precise with ERP, but you still need someone to cover new territories and talk with prospects. Operations executives might manage multiple suppliers with less work and gray hair, but there’s still the need for operations executives.
Choose Hiring and ERP
So don’t choose cloud-based ERP as a substitute for staffing. That might not end well unless your staffing needs are confined to a few business process hires.
As your business grows, you should instead consider investing in cloud-based ERP and those new hires.
This is something you can do with cloud-based ERP that couldn’t be done 15 years ago, because you now can get Fortune 500-grade ERP systems as a monthly subscription without the big investment in hardware or software. Prepackaged industry solutions like those developed by Navigator also cut down on the implementation costs because much of the setup now can come ready out of the box. You can afford both the new hires and a cloud-based ERP system.
The reason you should consider both is because an ERP system lays the foundation for future growth and overall business efficiency. It is needed for growth, it just isn’t a direct staffing replacement.
Modern cloud-based ERP also is a wise move for the growing business because it cuts down on fake work.
Enable High-Value Work
Much of the staffing efficiency gains from cloud-based ERP comes from a reduction in work that keeps staff busy but isn’t really high-value, tasks that leadership expert Roger Dean Duncan calls “fake work.”
“Fake work is work that’s not explicitly aligned with the strategies and goals of the organization,” explained Duncan in a Forbes article. “It’s not that people doing fake work aren’t busy. They’re often very busy. But they mistake activity for results. And working hard is not a barometer, because you can work very hard and still be building a road to nowhere.”
Signs of fake work, according to Duncan, include people who are unclear about company strategy and the connection between strategy and the work being conducted. Hard work that fails to produce measurable results that matter. Meetings that lack a clear purpose. Communications and offsite meetings are a distraction, projects that suck a lot of time but lead nowhere, and lots of digital “paperwork” in the office such as too much email.
Cloud ERP Helps Reduce “Fake” Work
This is where cloud-based ERP helps with efficiency, and it is worth its weight in gold. It might not lead to reduced hiring, but it improves the overall effectiveness of everyone within an organization by reducing this fake work.
Just look at the list of what Duncan recommends for eliminating fake work, and you quickly see how ERP helps. (The key points are his, but the connections to ERP are mine.)
- Be clear about strategy. Cloud-based ERP helps businesses focus on strategy by bringing visibility to all parts of the business and tying business processes to overall strategic goals. It also helps improve strategy through data-driven analytics and a focus on metrics.
- Use meaningful metrics. Because cloud-based ERP centralizes all business data and makes reporting easy, businesses can more easily focus on meaningful metrics. And they can do it in real-time with ERP instead of needing to compile those metrics periodically.
- Beware the activity trap. Manual processes and much of the busy work is eliminated with ERP because so much can be automated within the system. The utility of a given process can more easily be uncovered with a centralized system that houses and tracks all business activity, too.
- Treat communication as a communal task. Duncan’s point is that businesses and staff should be open to feedback and not operate in a silo. Cloud-based ERP breaks down departmental silos and improves overall business coordination by connecting everyone within the organization through the system.
- Understand the people around you. Fake work and inefficiency thrives in an environment that lacks accountability. ERP brings accountability and visibility into what is taking place within the organization.
So ERP might not be a replacement for new hires at your growing business. People still matter. But cloud-based ERP definitely can drive efficiency and make staff more productive.
It isn’t a choice between ERP and new staff. For a growing business, the answer is more staff and an ERP system.
