As a business grows, it can grow beyond its familiar operating environment. This may mean finding a bigger office for more staff, or new warehouses for more inventory in a physical sense. It can also mean a transition to old systems and processes that can no longer cope with financial management.
During our recent SmartCompany webinar, host David Adams was joined by panelists Ethan Nyholm, CEO, STM Brands; Jason Toshack, vice president and general manager, Oracle NetSuite ANZ; and Sholto Mcpherson, Journalist and Editor, DigitalFirst.com. The panel explained how and why companies can adopt enterprise resource planning (ERP) software to manage core business processes through a fully integrated system that covers finance, CRM, e-commerce, inventory and more. In particular, by using a cloud-based rather than on-premises ERP (which requires a business to maintain departmental hardware and servers), a business has the ability to scale, work seamlessly beyond international borders and easily coordinate departments.
Breaking points and transition to ERP
While scaling a business is a positive step, it isn’t always straightforward. Sholto Macpherson has seen that overreliance on spreadsheets can be a real breaking point after spending his career talking with CFOs and finance teams. “One sign that you should consider moving to an ERP is overuse of Excel,” says Macpherson. “If the CEO or the board or anyone in the C-Suite wants to see a report and they have to make a request to the finance team and wait for someone to put all that information together, that’s it. is a sign that you can be served much more effectively by a better system.
For Ethan Nyholm, expanding operations in the US and UK reaffirmed the power of using a cloud-based ERP platform like NetSuite. “We got to a stage where we wanted to do a consolidated balance sheet or figure out where the business was as a whole became extremely difficult and extremely time-consuming,” says Nyholm. For STM Brands, the outage occurred when trying to consolidate business across multiple time zones, currencies, and tax jurisdictions, without the software to support it.
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To learn more about the difference between basic traditional bookkeeping solutions and comprehensive financial management software, check out this business guide, titled: Beyond Bookkeeping: Five ways to scale your business with the right financial management software.
Data consolidation and streamlined processes
At NetSuite, Jason Toshack has seen how consolidating processes with Cloud ERP software — such as finance and inventory management — can address growth issues noted by Nyholm and Macpherson. “You’re consolidating into a single line-of-business application,” says Toshack. “It helps these businesses make quick decisions because they know instantly what the health of the business is, and if a particular change needs to be made, they can make it based on current information.”
Accessing and consolidating real-time data means doing business, even across international borders, has become much easier than with entry-level software. “We were running two separate systems before moving to NetSuite for each region,” says Nyholm. “So a system for the United States that ran American operations, business and finances, a system that ran Australia, and there was no way for them to communicate with each other. You couldn’t get a clear picture of how the business was operating globally. With NetSuite, what it allows you to do is very quickly open a subsidiary that has its own currency, its own forms, its own address, and shares the whole backend. You don’t duplicate everything and then people see everything, so they get the big picture.
Hybrid work and response to change
Cloud-based ERP software has proven to be an essential addition to businesses beyond just finance. With the disruption of lockdowns and a growing trend towards a hybrid working model, having a single source of truth has become essential. “Companies that were still using on-premises systems, and suddenly had to work from home, really suffered,” Toshack says. “So we’ve seen a massive increase in the number of companies putting cloud at the top of the priority list for their business.”
For Nyholm, having implemented cloud-based software several years ago meant the agility to react quickly to dramatic changes. “This transition between home, office and coming home was natural for us,” says Nyholm. “It was one less thing we had to deal with, and it allowed this remote workforce to be much more flexible in terms of work habits.”
Ideas for companies making the change
For companies that have not yet opted for ERP software, it is never too late. While small-scale accounting software can be quite functional, it’s not designed to scale with a business the way ERP software does. “The question small business owners want to ask themselves is, how big do I need to get and how quickly do I need to get there?” MacPherson said. “Ultimately, if the answer is, ‘I want to build a great business and sell it as a profitable business and I want to do it in as short a time as possible,’ then when are you going to move to ERP? Because you won’t make it without it.
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