For many growing businesses, there is a common misconception that once they reach a certain size, they have outgrown Xero and must face the costly and complex reality of implementing an expensive Enterprise Resource Planning (ERP) system.
Whilst this is true for some larger businesses, it is by no means true for all.
In this month’s Fintech Friday we explore how, with the right integrations, Xero can effectively manage the needs of many growing businesses without the need for a full-scale ERP system.
The challenge with conventional ERP’s
The allure of a conventional ERP system lies in its comprehensive ability to integrate and manage an entire suite of various business processes.
ERP systems are intended to streamline operations by incorporating financials, supply chain, operations, manufacturing, and a whole raft of other activities in one system.
The benefits are clear: centralised data, embedded reporting and increased efficiency. However, these benefits come at a significant cost which can prove prohibitive to some SMEs:
- High initial investment: The upfront cost for ERP software can be substantial, ranging from license fees, to capable hardware, and everything in between.
- Complex implementation: Deploying an ERP system is often a lengthy and complex process, requiring extensive customisations and training for your requirements.
- Ongoing costs: Due to the bespoke nature of your system, there is no global fix to updates available. The maintenance, support and upgrade costs can soon add up, making ERP’s an ongoing financial commitment.
Have you really outgrown Xero?
Xero is a robust cloud-based accounting software, which offers accounting tools that are ideal for SME’s. However, there are limitations given the price of the based software and, as businesses grow, their needs become more complex.
Common stress points for this come in the form of inventory management, project tracking, advanced reporting, and incorporating other business processes.
There’s an App for that
Xero provides a huge range of integrations which are often overlooked and which can alleviate some of the common stress points we mention about.
Xero has an Open API which essentially allows developers to create custom integrations between a Xero organisation and other programs. This creates a lower barrier for entry for Apps looking to provide a tech solution to specific problems (e.g. inventory management, project tracking etc).
To date, the Xero App Store features over 1,000 apps, which serve to alleviate a multitude of problems.
Key benefits of Xero’s App ecosystem
- Cost-effectiveness: Typically the integrating apps don’t incur the level of initial outlay that you will find with an ERP system. The scalable pricing that most apps deploy mean that you only pay for what you use.
- Ease of integration: With the framework of the integration largely pre-defined, the software implementations can be easier, both in terms of complexity and time spent. The modular format of the software also allows you to phase your introduction of software.
- Flexibility and customisation: With a wide range of apps to choose from, businesses can select the best system for their unique requirements. You may be restricted slightly in terms of creating a bespoke platform, but the majority of the data and processes can be manipulated to fit your needs.
- Real-time data: Having data flows between the systems, the integrations are live and real-time. With the software being web based, there are no offline periods for software updates as well.
Conclusion
While it’s natural for scaling businesses to consider migrating to an ERP system, it’s important to fully assess the available alternatives.
Xero, when combined with its extensive app store, can offer you a flexible and cost-effective solution which meets the evolving needs your business.
By leveraging the ecosystem, companies can enhance their financial admin, streamline operations, and unlock the insights they need to drive growth – proving that sometimes, the best solution is right at your fingertips.
For more information, contact our digital advisory team by emailing fintech@haroldsharp.co.uk or call 0161 905 1616.