In our last post we listed some of the pros and cons of both industry specific software and enterprise resource planning software. Now we're going to expound upon some of those topics and show you why ERP systems are the way to go.
ERP systems handle core accounting and financial reporting functions far better than industry specific software. Oftentimes you will find companies with industry specific packages for route accounting, manufacturing, warehousing, etc – whatever the software is designed for – but use some sort of ERP solution for financial work. While it is possible to build a “bridge” and integrate industry specific software with ERP software, it will result in additional costs: the price of two softwares, their installation, and their maintenance as well as the need for dual upgrades.
Another problem with industry specific software is that it’s often site specific. If, for example, a company has a plant in New York that does distribution, one in North Dakota that does manufacturing, and one in California that repairs damaged product, an industry specific software company may charge per facility for their software. Then, when it comes time for upgrades, industry specific software companies might require that a business hire consultants to upgrade each of their offices. With that possible extra expense, a company might decide that perhaps the California office doesn’t really need the upgraded features and so they only upgrade New York and North Dakota. Other upgrades may lead to similar decisions, and eventually the software is completely out of sync and the company's offices can barely communitcate. This cannot happen with an enterprise resource planning system.
Another pitfall of industry specific software is the size of the publishing company. Industry specific software companies are often small, which can result in an unstable environment – what if the publishing company goes out of business? What if the expert in this software leaves the publishing company for some reason? What if the publishing company decides that that software isn’t lucrative anymore and stops supporting it? Working with a global software vendor is much safer.
Industry specific software, as previously mentioned, rarely integrates with other software. This can be problematic not only insofar as requiring a business to have more than one software package or to do double data entry, but for companies that might acquire other companies. If Company A buys Company B but Company B doesn’t have the right software, the companies will not be able to combine their systems and work together fully as one company.
So do you NEED enterprise resource planning software to be successful? Not technically. Industry specific software will work the majority of the time. But choosing an ERP system will force your organization to improve its business processes, which leads to cost savings and increased revenue. If you understand your company’s needs and can visualize how you’d like to improve your processes, you can successfully implement an ERP and enhance your business in a way that industry specific software won’t allow.
