How are Benefits of ERP Different for SMBs and Large Enterprises?

By Kevin Stewart
Updated: August 31, 2011

 ERP systems are a natural choice for large enterprises, because large enterprises need to manage system growth and keep information systems integrated. ERP was created primarily for large enterprises. The focus of early development in ERP was almost exclusively on large manufacturing companies. But in today's business climate, all businesses, including small to medium sized businesses (SMBs), can benefit from ERP.

Managing inventory and supply for production

Inventory control is a major benefit of ERP systems. Managing inventory is critical to just-in-time production methods. This is an important factor for even the smallest business, because keeping inventory levels as low as possible provides immediate cost reduction benefits. While the numbers may become larger with the size of the enterprise, they are significant for any business, even SMBs.

For a smaller operation, the benefit of inventory control would be realized through decreased production costs in manufacturing. In a larger enterprise, inventory control would have additional system integration benefits that might not be as important to a small or medium sized business.

Financial management and controls

ERP usually includes robust financial management capabilities. Although most small businesses are not required to use the highest level of financial controls, SMBs can improve cost containment and expose areas of potential advantage through use of the ERP financial management modules. For most SMBs, the focus is usually on eliminating waste and improving return on investment wherever possible. For large enterprises, ERP benefits come from consolidation and integration, which are less important factors for SMBs.

Managing growth

A less obvious benefit of ERP is the potential to manage growth from a small to a medium-sized enterprise. Making use of the project management capabilities of ERP can provide a small organization with the tools to manage growth not just in information technology, but across the enterprise. One of the problems that ERP addresses is managing system growth and providing an integrated information base.

SMBs can take advantage of their size and adopt planned expansion and growth using ERP, making it a tool for managing the transition from SMB to large enterprise. Instead of making the transition from a small to large enterprise without the guidance of ERP, smaller companies can avoid the pitfalls of unmanaged growth. This is a benefit that is particular to SMBs.

Whether your organization is small or large, there are important benefits to consider from implementing an ERP system. Although these benefits may be measured and realized differently, they can provide important business advantages for any organization.

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