Enterprise Resource Planning Software for the SME

Over the past few months, I have written several articles on the issue of enabling local SME with the right tools to allow each to effectively compete and extend their products and offerings to a global audience. The Department of Trade and Industry (DTI), in a disseminated report, attributes the lack of management skills, tools, and techniques as one of the problems hounding the Philippine SME sector to-date, particularly for micro and small businesses.

In interviews I conducted with various chambers of commerce and regional DTI offices, as well as foreign NGO’s focused on establishing market relationships with local businesses, one of the strongest reasons that prevented local businesses from tapping the European market is the lack of readiness of 99% of local SME’s in terms of quality management, capital access, and process automation.

A majority of SME businesses are family-owned and operated. While there are obvious strengths that result from this model, it also introduces complexity, especially when it comes to managing resources and finances. Almost all SME’s still use manual methods to manage their businesses – their finances are recorded in physical ledger books and their version of document management (receipts, invoices, contracts) is “throw-in-the-box or drawer”. Most SME’s tend to mix personal with business expenditures, and because they own the business, most managers do not take the time to read and analyze performance only because it takes so much time for them to encode every detail of spending and income into a physical ledger book or electronic spreadsheet (MS Excel, OpenOffice Calc, Lotus 1-2-3).

The SME version of automation is an electronic spreadsheet, or the use of a pirated copy of QuickBooks, PeachTree, M.Y.O.B, or Microsoft Money. The only reports small business managers typically read are the occasional reports that come from their bookkeepers or accountants (especially during tax time), or from the monthly statement of accounts from their credit card or banks. A majority of critical transactions are often left as a memory item, that is quickly forgotten. For most, margins and discounts are granted using a “fly-by-the-seat-of-your-pants” method only to find that they simply gave too much. The small business is typically plagued with a high volume of incidental costs that are almost never tracked or scrutinized.

Although managers are familiar with existing software products that could truly help them manage the profitability of their business, the prohibitive costs of these products prevents them from justifying any type of purchase. While the need is there, purchasing a product that exceeds business capitalization does not make financial sense.

The management issues that confront small businesses are quite similar to those issues that big business confronts on a daily basis. The only difference is the volume or number of the same issues that need to be managed. Small businesses still have to manage customers, sales, inventory, distribution and support; they have payables and receivables, loans, taxes, and financial reporting requirements that they need to meet—same as big business.

In a global marketplace, those that have the requisite tools to enhance efficiencies are the only ones that can expect to survive. It is a combination of awareness, agility in the production of goods, compliance to quality management standards, compliance with data exchange standards, as well as efficient customer relationship management capabilities. If a business manager was to attend to all these requirements manually, 24 hours would simply be insufficient. The key is implementing tools that permit even those business managers that do not possess formal management training could easily enter data and provide them with immediate access to up-to-date information on the health of their businesses without having to increase the number of employees to track every detail of their operations. What the small business manager needs is enterprise resource planning or ERP tools and software.

Enterprise Resource Planning or ERP software is a suite of integrated tools that allow businesses to manage everything from customer relationships, sales, billing and collection, accounting, taxes, inventory, purchasing, vendor and supplier relationships, as well as logistics and distribution in a single and secured manner. ERP software has been used in medium to big businesses for the past 35 years. Over the years, it has evolved into a level of robustness that make the lives of big business managers more manageable. The only problem with popular ERP software packages today (from vendors such as Microsoft – Axapta and Navision, IBM, Lawson, and Oracle) is that it comes with a price tag of not less than 3M PHP or 60K USD to implement—way beyond the buying range of most SME’s.

In an effort to provide big business tools to small business, I will be offering every local SME with access to an ERP product via a very low monthly subscription fee (lower than the cost of a post-paid mobile phone platinum plan!). All a business needs to have is a PC with access to the internet. The application is accessible to the manager regardless of location, and with the emergence of 3G phones with broadband capability, managers can access their information via internet enabled mobile devices.

Why is ERP an important tool for SME? And, why should SME’s use ERP? Simple: Profitability and global Market posture. The more business processes are managed by automation, the higher its efficiency levels. The less physical resources employed to manage repetitive manual processes, the higher the realization of profit per unit sold, and the higher the productivity output per employee. Rather than add to the labor base, managers can now provide a better quality of life for high performance employees.
By providing a low cost means for more the SME’s in the Philippines to automate we altogether enhance market posture, and increase individual levels of profitability. I am intent on giving small businesses access to the tools that were in the past only accessible to big business. By doing this, I level the playing field and enhance the competitive capabilities of fellow small business owners.

If you are in the manufacturing, assembly, trading, retailing, logistics, growing, or services industry and have a total asset base of not more than 10M PHP, my solution is for you. If you have questions or you want a real solution to the problems described in this article and don’t have much to spend, contact me via email or mobile phone at dennisbreyes@aol.com or +639184158789. Please reference “SMERP4SME” on the subject line.

Together we can increase the market posture of the Philippines to the global marketplace by creating a community of entrepreneurs that are enabled with the best tools information technology can provide for businesses today. Send me and email or call me today! (dennisbreyes@aol.com / +639184158789).