Excel is frequently a cause of disastrous mistakes that just wouldn’t happen with an ERP system. Switching to ERP provides a fully integrated system that automates business processes and can analyse your data. However, there are many different aspects to consider when switching from Excel to ERP.
It’s common for new businesses to get started with software like Excel Spreadsheets and QuickBooks. Manufacturers often have an ERP system but still use Excel to cover the areas that their ERP system doesn’t. Excel gained its extreme popularity when it was at one time the best alternative to writing information out by hand, but it is still widely used, even by organisations who would benefit more from switching from Excel to ERP.
Despite this, many companies don’t make the switch when they really should. Sure, Excel is familiar and simple, but there are a host of problems that come with relying on it. First of all, spreadsheets tend not to be safeguarded from human stupidity, so errors in spreadsheets are widespread. According to a report from the University of Hawaii, 88% of spreadsheets contain errors. Evidence of this pandemic of mistakes has been recreated elsewhere; Coopers and Lybrand found that 90% of all spreadsheets with 150 rows or more held errors. In a sample of 22 spreadsheets, KPMG found errors in 91% of them.
This is especially alarming when you consider that, according to Microsoft, there are almost a billion Office users, and that Excel is used for almost half of all financial reports. These mistakes don’t just lead to miscalculations in budgets and inaccurate balance sheets, but can lead to poor financial decision making. In the JPMorgan ‘London Whale’ trading scandal, a badly constructed spreadsheet was cited as contributing to their $6 billion trading loss. This problem is so prevalent that groups such as the European Spreadsheet Risks Interest Group have been founded to try to prevent these kinds of mistakes.
This isn’t to mention the lack of efficiency that stubbornly enduring Excel brings. If you’re writing all of your quotes in Excel, then you probably have to manually create sales orders from these quotes. Each report has to be created sheet by sheet, and the only way your inventory can be managed is if someone goes in and manually updates your information every single time. The problem with spreadsheets is that they’re isolated from the rest of the organisation, which makes it difficult to collaborate. Data can’t be easily incorporated into the system, and when it is, there is still the risk of the double entry of data, distorting results. Using a program like Excel also runs the risk of losing files by accidentally deleting them or the system crashing.
Why should I consider switching from Excel to ERP?
An ERP system allows you to track your information in real time without the need for multiple spreadsheets. This allows you to automate your sales order creation. You can now easily search for data, and efficiently share that data between departments. You also no longer have to be plagued by wasted time from making mistakes such as double entry or lost data. ERPs allow full visibility of business processes through real-time dashboards.
Most businesses acquire a huge amount of business-related data daily. An ERP system can efficiently use this data to provide critical insights into a company’s performance and improve your decision-making capabilities, and therefore your business processes.
Companies also have to make sure that their profits aren’t being endangered by its financial processes. ERP can deliver a real-time integrated financial workflow that can automatically collect billing data from every area of the organisation. This guarantees a centralised process for all financial activities, including month end, invoicing, supplier payments, and payroll.
ERP can also analyse your employee performance compared to project costs and timelines. This is done through a comprehensive workflow system that provides your team with the information they need at any time to ensure that whatever project they’re working on is on target, including resource bandwidth and billable rates. This information lets you know if the right people are working on the right project at the right time.
How to make the switch easily
Selecting a vendor is just the first main stage in the process of transition. The difficult part is preparing your organisation to migrate to a new system. Such a dramatic change requires a large re-evaluation of your existing data processes. Think about the information that your company currently collects, how that information is used, and what further information would be valuable.
As well as scrutinising your data processes, you should also consider your historical data and think about how it’s used. How often do you use it? Is there anything you can get rid of? If you select a certain date, and only transfer files from after this date, you can streamline your processes, saving time and effort. You always have the option of re-adding data if necessary.
Another major decision that needs to be made at the transitional stage is whether the data sent over to the new finance system should shift all at once, or whether there should be a gradual transition. Most of the time, businesses profit from a steady process, but sometimes a quick transition is necessary. For example, sometimes the data is used regularly and needs to be accessed in its entirety, even during the transition.
Your specific business processes need to be considered so that you’re aware of what kind of systems your organisation requires. This will help you evaluate the options you have to consider when installing ERP, including both out-of-the-box and customised functionality. For example, some ERP systems prioritise certain functionality such as marketing, which may not be suitable for a company that outsources its marketing tasks. There are many different ERP systems that are tailored to many different types of organisations, so it’s just a case of searching for one that suits you.
There is so much to think about when selecting and implementing ERP, from finding a vendor who can provide a suitable system, to planning the transition, to preparing your team. Thinking about all this can cost you a substantial amount of time and money. What if you could sort everything with a simple phone call?
With our team of qualified experts, Software Advisory Service can help you. We offer a service providing non-chargeable buying advice, and can offer a shortlist of the most appropriate ERP software vendors for you, depending on your business’s requests. Just click here to complete your details and we will get back to you with the assistance you need today!