Because of the cost of Enterprise Resource Planning (ERP) packages, many organizations like to see it as a big knot to crack, but it does not always have to be treated as a capital expenditure.
As Pedro Guerreiro, managing director for West Africa, SAP told BusinessDay “Even today, SAP is seen as a big company, but then there are some small mid-market operators that can use our solutions and just as there are the big guys that have options they can use in our solutions.”
The need for capital intensive, full acquisitions to set up ERP is no longer required like before.
While many people think that there’s a lot of capital expenditure that needs to be done upfront, the reality is, it doesn’t work that way today. In Nigeria for instance, SAP offers what it calls enterprise cloud where you pay by month for the infrastructure and service used; also referred to as Infrastructure As A Service (IAAS). Then there is the Software As A Service (SAAS) which instead of buying a perpetual license that costs you a tremendous amount of capex upfront, you buy a subscription based SAP ERP.
Adopting cloud based provisions will see any prospective adopter having to pay only a nominal monthly fee; depending on the scale of the business which will be implementing the solution.
But then, what does ERP actually offer? An ERP unifies many of the systems that may currently be fragmented in the organization, and this ranges from everything from product development and supply chain management to IT support, management and more.
Pedro Guerreiro, of SAP, told BusinessDay in an interview that companies in Nigeria need to be more aware of the need for more ERP adoption and make it a priority.
“If you’re the MD of a company, you think of your business model, your go to market and IT these days in a digital economy is key for those business models to be revamped to find new ways to make business. And that comes not only on enterprise resource planning, which SAP is known for, but there is a lot of other things that SAP does which goes beyond that. We have 25 industries, very specific business processes and solutions,” Guerreiro said.
Expatiating on use cases that extend beyond conventional ERP in optimising business processes, Guerreiro explained that “take for instance the market share for a Telco, it does not necessarily require ERP but customer oriented types of applications which SAP also has in its portfolio. Even in banking; core banking, management of portfolios, loans, investment banking, commercial banking, and agricultural banking, all of those processes are covered in SAP.
Another example is in agriculture where we have processes in SAP that go from the farmer, to the investor that buys commodities to place in the futures, and all of that supply chain in between. If you think of the agricultural space, on one side you have your ERP needs because you still need ERP to manage your finances, accounting, people, procurements, and your sales but that is the core enterprise resource planning. But you need much more than that; you need to able to reach out to thousands of farmers, you need to engage them and to plan their production. You need to be able to provide them with seeds, create them lines of credits, loans, and manage this entire ecosystem. And we have solutions on the cloud, on premise that manage all of this.
Adopting an ERP system will serve to unify systems, and this will create cost efficiency and improved business processes. More than that, an organization can save money by eliminating the need for different users to be trained on different systems. All will be trained on one system, and there is cost and time savings associated with this.
Enterprise Resource Planning also can improve business performance of the organizations by implementing an efficient planning and control system that synchronizes planning of all processes through organizations. Solid information systems (IS) are required for competitive business that it will align with business processes. ERP system can give valuable information as well as enhance operating efficiency by changing the company strategies from developing in-house information system to purchasing application software.
Enterprise Resource Planning can streamline the business operations and play a role as a key of successful ingredient to gain competitive advantages within the organizations. The systems also can help companies by integrating their business functions into a unified and integrated business process.