Reducing operational costs with Microsoft Dynamics 365
As profit margins come under pressure from all directions, efficiency savings are now a boardroom priority throughout a wide range of sectors. The latest UK government statistics found that 30% of businesses reported lower turnover than a year ago, where 26% were considering increasing their prices because of rising labour costs.
Reducing operational costs has never been more pressing, especially in industries such as retail, hospitality, manufacturing, logistics, and healthcare, where rising operational expenses demand innovative approaches to reduce costs. This is where Enterprise Resource Planning (ERP) comes in.
So, what is an ERP system and what are the implementation and maintenance costs to budget for? Read on to learn how these systems deliver cost savings and efficiencies and the factors to consider when choosing the right system for your business.
Table of contents
- What is an ERP system?
- How modern ERP systems boost efficiencies
- ERP price: how much does it cost in the UK?
- How does an ERP system reduce costs and deliver ROI?
- Choosing the right ERP system
What is an ERP system?
Enterprise resource planning (ERP) refers to a type of software that organisations use to manage day-to-day business activities such as accounting, procurement, project management, risk management and compliance, and supply chain operations.
With an ERP solution, systems and data are integrated providing one, central data source for the entire organisation. Using a single interface, employees no longer must log out of one system and into another to use different tools or access the data they need.
Information is quicker and easier to access, boosting knowledge-sharing and collaboration.
ERPs are incredibly versatile. They bring value and efficiency savings to all types of businesses. Whether your priority is to streamline manufacturing and supply chains, improve customer service or automate financial processes, a modern, cloud-based system like Microsoft’s Dynamics 365 can be customised to reflect your business focus and goals.
How modern ERP systems boost efficiencies
With rising costs and an uncertain business environment, an ERP system delivers digital transformation, boosting efficiencies and reducing operational costs across all business functions. Some of the important ways they deliver this include:
Streamlining processes and increasing productivity
ERPs are invaluable in streamlining core functions such as finance and HR, bringing productivity gains to your business, for example, automating VAT reporting, organising employee information and contracts, and managing absences, but also from built-in integrations with Microsoft 365 and Azure.
This connectivity improves collaboration, strengthens security, and leverages cloud stability, setting Dynamics 365 apart from other more generic ERP systems.
Shop-floor or warehouse employees can locate items they need more easily. Manufacturers can rationalise processes, automate how orders are prioritised, and inventory management to ensure popular items are always available.
Enabling faster, more-informed decision-making
ERP systems connect all your organisation’s data sources so managers get a more complete view, enabling informed, strategic decisions. With real-time information, it’s easier to react to market conditions at a time of rapid change.
Integrating with Manufacturing Execution Systems, (MES), for example, improves visibility of shop floor processes. Combining this data with inventory, supply chain and finance information, managers get an end-to-end view of business operations and can identify the most efficient areas of the business and others with improvement potential.
Adopting efficiency-boosting technologies like AI
Sector-leading systems such as Microsoft’s Dynamics 365 now incorporate AI, bringing the benefits of new technologies to smaller and medium-sized businesses. With AI, organisations can further streamline business processes and manage growing data volumes.
AI-enhanced ERP systems are invaluable in helping manufacturers build production scenarios and plan for demand fluctuations or supply chain disruption. These systems also help managers plan the most efficient production runs, minimising waste.
Complying with regulations
Regulatory compliance is a business-critical but time-consuming process that takes up proportionately more time for smaller organisations. By integrating compliance management into workflows, Dynamics 365 helps companies meet industry and local regulations.
ERP price: how much does it cost in the UK?
The short answer is that costs vary,? It depends . A licence for Microsoft’s Dynamics 365 Business Central Essentials starts at around £57.00 a month per user. This ERP system is a favourite with small to medium-sized businesses and includes everything from financial management to sales processes to warehouse and inventory and supply chain management modules.
Dynamics 365 can be deployed on-premise or SaaS, but choosing SaaS deployment reduces your initial and ongoing expenses. However, there are additional costs to consider:
Setup and planning
Goal setting is vital and needs an investment of employee time. Work with key stakeholders in your organisation to pinpoint core business challenges and the company’s long-term goals and objectives.
Highlight the areas where your business can benefit most from streamlining processes and automation. You can then identify the key features and modules to look for in your ERP system.
Implementation
Organisations without significant in-house IT support often work with a managed service provider such as Texaport to ensure the system is correctly configured. It’s important to get this right. Misconfigured systems can lead to data migration and integration challenges and bring cyber security risks.
Maintenance
The benefit of a modern, cloud-based SaaS system is that updates are automatic and are included in your monthly subscription costs. However, as your business changes and adapts, you may add further features or integrate with new third-party apps, which will incur additional installation charges.
Hidden costs
There may be a temporary dip in productivity as staff get up and running with the new system. To minimise disruption, many organisations choose a phased module-by-module rollout. Starting with finance and accounting for example, before moving on to inventory management. This gives your implementation team time to fully test each module and for team training.
How does an ERP system reduce costs and deliver ROI?
Once you’ve accounted for setup, licensing, and potential hidden costs, the next question is how effectively an ERP system can reduce overall expenses and deliver real ROI. The main cost savings come from:
Automation reduces labour costs
At a time of rising labour costs, automation brings significant savings to both specialist tasks and everyday business functions. Streamlining finance operations is a common starting point. Automating processes like chasing invoices and bank reconciliation saves employee time and reduces mistakes and errors.
Improved visibility reduces overheads
From better budgeting as a result of precise cost tracking, to less waste due to improved oversight over inventory, ERP systems help organisations cut overheads. With energy costs for businesses, forecast to remain 70% higher than before the energy crisis, improved insight into energy usage can help to identify savings.
Minimised IT costs
With SaaS ERP systems such as Dynamics 365, all component modules, including security patches, are regularly updated as part of the subscription.
Cloud-based systems also cut the expense of on-premise servers and the cost of maintaining and securing them with an in-house IT team.
Improved customer service and retention
Organisations of all sizes can take inspiration from Dutch Bank, ABN AMRO. The bank takes a ‘hyper-personalised’ approach to customer service and adopted Microsoft Dynamics 365 to swap fragmented, inflexible customer service tools with a single CRM solution. It has not only saved on costs with improved efficiencies, but has helped the bank make the most of its data to inform customer journeys and campaigns.
With its user-friendly interface, the system also guides customer-facing team members to the specific application they need to address customer queries.
Maintaining competitiveness and driving growth
Organisations need to innovate to stay competitive, especially in a tough business environment. ERP systems deliver improved access to data and collaboration that are key ingredients for innovation at pace.
By streamlining processes, staff can be redeployed to tasks that grow revenue. For example, your sales team can track leads, sales journeys, and spend more time building strong relationships with customers, enabling your business to grow.
Choosing the right ERP system
The right ERP system will boost efficiency, reduce operational costs and help your business prepare for the future. It’s important to choose a system with the functions and modules that will help you meet your long-term goals. With an extensive range of add-ons and apps, Dynamics 365 can help your business scale and adapt to changing market conditions.
Installing an ERP system can transform the way your business operates. Choosing the right system is critical in today’s challenging and uncertain business environment. However, it’s a decision that’s vital to get right. For businesses with limited in-house IT support, partnering with an experienced provider is key.
Texaport can guide you in selecting the right modules, assist with installation and training, and provide ongoing maintenance so you can start seeing efficiency gains right away.
Contact Texaport and take your first steps towards greater efficiency and cost savings.
