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What Is the Connection between SMB and ERP?

Article Details
  • Written By: Mark Wollacott
  • Edited By: Lauren Fritsky
  • Last Modified Date: 06 November 2016
  • Copyright Protected:
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    Conjecture Corporation
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SMB and ERP are connected by a SMB’s need to make the best of its resources. SMB stands for Small and Medium Businesses while ERP is short for Enterprise Resource Planning. Smaller businesses have less resources and a smaller margin for error than their larger counterparts. This makes effective planning crucial to a successful business outcome. ERP, therefore, forms the central part of a business’ growth and customer service strategies.

SMBs are also called Small and Medium Enterprises (SMEs). Their classification changes from country to country. One thing the classification systems have in common is that they define size by the number of employees and not by their revenue. SMBs average between two and 500 employees, though some countries define those with less than 10 employees as micro businesses.

ERP is a management information integration system. It is divided into a number of software modules that cover areas of business management such as organizational aspects, human resources and structure. Other modules cover aspects ranging from production to sales and customer service.

The software for ERP runs applications for a core database system. This system is well-organized and consistent across all modules. It is designed so that an employee or manager familiar with one module will be able to use the others. The SMB and ERP are updated in real-time, so changes to the SMB show up immediately on the ERP without the need for time-consuming upgrades.

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A business’ needs link the SMB and ERP together. The ERP is modified depending on what kind of business is being conducted. For example, modules pertaining to plant machine performance and other manufacturing markers are not needed for a business in the service industry and vice versa. Modules can also be customized to cover new areas of business information tracking.

There are many advantages to ERP software. SMB and ERP combinations lead to changes in staff performance, processes and practices. Such software allows for direct machine and technology integration and standardized product coding. It is also used by SMBs to make sales predictions, track orders, track revenue and perform a comprehensive overview of their business.

The SMB and ERP have a difficult history, however. ERP software is expensive to install and requires fully-trained staff. Such training itself takes time and money to put in place. If installed and applied incorrectly, it could be a costly mistake for the company. This improved after software developers created a package especially for SMBs.

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