ERP systems in business

The benefits of good software in the operation of any business have long been proven.

Despite that fact, it's still rare to see Bulgarian companies using entire integrated ERP (Enterprise Resource Planning) and BPM (Business Process Management) systems. Why is this and how effective would it be to introduce such solutions in Bulgaria? Do they fit the budget of small and medium sized companies that dominate our market? We will find the answers of these questions in our interview with Veselin Stoilov, founder and CEO of StivaSoft.

StivaSoft is a Bulgarian web development company that, like many other IT companies, works mainly for the international market. What is interesting about them is that their core business is the provision of products and services not only for the end user, but for  other web developers/designers. In addition, they also offer the so-called "tailor-made" individual business software solutions. They have tailored such a solution for their own needs, an ERP software that, as they say, has significantly improved their work and customer service.

What is an ERP?

The acronym comes from Enterprise Resource Planning and it is a software that facilitates the management of company resources. There are two main features that the software must have. First, it must be comprehensive and cover all major company resources - human, capital, material and technological. Second, it has to be able to manage these resources, to follow their activity and status and better yet, to actively participate and carry out the company's processes as they occur. The ERP system allows control of these processes from different management levels. 

In other words, it is a business software that is closely tied to the company and becomes part of its work ethics and one of its technology resources. Imagine, for example the production of a mobile phone. The ERP system is not producing the product itself, but monitors the performance of the whole process, taking into account its production start date, respected technology, employees involved, component suppliers, their stock, test results on individual parts and finished products, etc. In this sense, the ERP system is not directly involved in the production process, but is a major driver, data collector and monitoring tool in the manufacturing process. In other cases, particularly in services, a customer communication module is implemented within the ERP system. This is the case with StivaSoft. 

Overall, the most common ERP system is simultaneously a software for quality management, CRM (customer relationship management), an accounting software, sales and procurement planning software, including a manufacturing module, a project management software, a human resources management software, I can go on and on with the list. What is included in an ERP system depends on the sector in which the company operates, and the organization of the company.

When does a company need to move from managing projects in Excel, Skype, email, and other programs to an ERP system? What are the benefits of an ERP system?

Usually, when all else fails. (laughs). Typically, companies come to this decision when work load, staff, customers become so numerous and often so varied that the management of the whole business starts to gasp. Even the daily task management becomes difficult-accumulated errors at all levels, money being lost because the quality  of customer service has decreased, employee productivity level goes down, etc.

After all, the time spent on planning, managing and controlling the business slows the progress of the whole company.

Then, various traditional management methods and specific software solutions, say accounting software, warehouse programs, HR software and others that do not communicate with each other, find themselves unable to cope with these problems. Sometimes years of diverse experience in software used to support a certain process or activity, or to solve a specific problem, even begins to interfere. So, on one hand, we have the objective need for a change and improved organization, especially in emerging and larger companies, and on the other hand it's a matter of desire for better management of the company's business processes.

Even companies that are fully capable of managing their business processes, may seek optimization, leading to a reduction of costs and further quality increase.

The costs of purchasing and implementing a new ERP should be less than the amount spent on maintenance and development of existing non-uniform software, plus the potential reduction in cost of the new system, including the loss of time and resources, increased opportunities for sales and service, plus vacant managerial potential. In other words, evaluating the situation in terms of "investment - benefit." It is easy to say but very difficult to predict and calculate accurately.

The benefits are endless and in any case cannot be listed here. Adding a CRM module to the ERP allows the system and everyone involved in customer service to have information about a certain purchase, to know everything about the customer, what was agreed, what are the trouble spots in communication, to know the status and stage of an order, etc. This increases the quality of service and interchangeability of employees in this process. The inside communication, storage and sharing of information become significantly easier, "ignorance and forgetfulness" are significantly reduced, and coordination between employees increases.

Project management is also improved by adding a module for tasks distribution Project managers can see who did what, what remains to be done, where are the bottlenecks in the process, etc.. On one hand, planning a separate project becomes easier, so does the job of individual employees, who often work on several projects simultaneously. On the other hand, easily accessible and well-presented data allow for timely response when problems and delays in implementation arise. 

Quality and manufacturing process management allows for quick determination of product defects, was it "incidental" or a manufacturing defect, was it a specific component, supplier, material, or even an employee involved. The system allows for a timely response, thus reducing the cost of lost product and time. Preventing problems with counterparties and customers in network marketing is invaluable.

A well constructed and comprehensive ERP system can include such seemingly small things like constant access to scheduled vacations, but have a positive and significant impact on workflow. In this example, each employee knows how to carefully plan a joint project and avoid encountering the common problem that the colleague from another department is on vacation when an urgent issue arises.

Examples are endless, because of the variety and the scope of software itself are immense.

How much does a good ERP system cost?

This question doesn't have a concrete answer. The difference between ERP systems can be tens of thousands of dollars. Furthermore, we are now talking about ERP, but we must consider that it is a kind of a business software. In some companies a complete solution for business process management can be much less than the above-mentioned example of ERP or it can be even bigger. That is why I personally prefer to talk about business software and business management software in more general terms, because there is a big each system is individual. Perhaps the key question is whether it is "custom made" or a "ready to use" software solution. This is a whole separate topic.

 Which option do you recommend?

 Real recommendation can refer only to a specific case, because there are many factors to  be weighed. My personal view is that comprehensive solutions such as an ERP system is better to be customized to suit the specific needs of the company and its way of conduction business. Furthermore, a customized system allows for greater flexibility over time, and this is one of the main factors to consider when investing a significant resource of money and time to implement such technology. It is why we only offer custom solutions. Some colleagues use a certain type of modularity that allow for changes, adjustments and corrections to be made by the software company. Thus, they are able to achieve largely individual results in the end product, intended for use by the customer. This is also an interesting option.

 The most common mistakes business make in terms of ERP?

The decision to use an ERP system is not easy. The process of building such a system and its implementation is relatively long. Therefore, numerous errors can be made.

First and foremost is the need to determine the right timing when introducing and implementing such a system. This applies mainly to the startup companies that are in the process of growth and when many of the processes that occur are still in development and need optimization. The introduction of an ERP system too early in time may result in a need for additional and frequent changes in the future in order to fit the system to these processes when they are properly sorted and implemented. 

Another major mistake is the weak participation of the client in planning the ERP system, a detailed description of its functionality, and its testing. Planning the ERP system is perhaps the most important part of the process of its development and implementation. After all, this is the moment that defines the basic modules, their interconnection, the way they work. And the client is the one who knows their business best - the way it operates, the processes taking place and a vision of how the system should run. Any error in planning would be difficult to repair later on when the system is fully operational. Here, of course, we are not talking about the so-called bugs that unfortunately are an inevitable part of the development of any software, but for any deficiencies related to the construction of the core of the system. 

The effects of these types of error vary, but generally it can significantly reduce the effectiveness of such a system, raise significantly the cost of additional enhancements, make it difficult to develop over the years, and at worst, it can hinder the work instead of facilitating it.

And last, but perhaps one of the most important factors for many companies is the price. The decision for or against the introduction of such software and its particular choice should not be solely driven by price. If you look at the company as a living organism, with time your ERP system will be the brain of your company - it will tell you what, where, and how it happens. I'm sure you would want your company to have Einstein's brain rather than King Kong's (laughs). And this, of course, has its price!

Because the reason of our meeting was StivaSoft's ERP, could you tell us a few words about what it does and what you achieved with its implementation?

We offer web-based software products and services to our customers. Our core businesses are customer service and project management (internal and external). Accordingly, our ERP system contains two main components: CRM module, with well developed customer support ticket system where we communicate with customers from all over the world, and project management module. We comply with the principle that an ERP system must cover all resources and for us it is mainly human, financial and technological. But in the end, the communication and management of the human factor remains most important to us. Especially considering that the company has tripled its staff in the last year or two. So, besides a bunch of business modules and databases, we have several communication channels in the system that facilitate work in different units, different processes, different stages in development, as well as in our new projects from  the idea to their final implementation. We even have a jokes module, which is part of our efforts to provide a pleasant working environment and enhance cohesion and motivation.

In other words, since we introduced our ERP system, we greatly facilitated and improved our customer service. Now we are interchangeable and do not need to waste time to exchange or seek information about a client. Furthermore, the process can be easily monitored by the manager of the team and we constantly make improvements.

Planning and management of all projects noticeably improved as well. On one hand, we reduced project implementation time, and on the other hand, team organization improved as well, minimizing idle time.

"Lost" information lacks as a whole.

We have big progress in mutual support and sharing knowledge and ideas of any kind among colleagues. New product developments and new business goals are determined with the participation of the team at an early stage, without the need to attend long meetings (we work in 3 separate cities on 2 continents), and without wasting valuable time. And the end result is much better compared to before the ERP when only the core team was responsible for product development.

And I can go on with the examples. But in a nutshell, the ERP system improved the quality, ease of communication between us and greatly improved the management of the company as a whole.

How do you see the development of ERP systems in five years, for example?

They will get smarter! Over time, the ERP systems will not just be a database with a user-friendly interface, something that most systems do at the moment - they give you access to information of your business' performance. Nowadays, it is important that the ERP system your company is using monitors problems (reduced sales, increased costs, lower quality of service) and informs you promptly of them so you make informed decisions related to work optimization -which process takes unnecessarily long time, what are the costs that can be reduced, how to improve the quality of client service, etc.)

More about StivaSoft the services offered by the company can be found at: http://www.stivasoft.com