Accounting software or ERP software

Old and New phones

When it come to usage of mobile which one you prefer now? obviously the Smart Phone right. Why should someone else decide which phone you have to use? But let’s see what is wrong with the basic phone, it is still working fine. We know there is nothing wrong with the phone but the environment has changed. All around us are using smart phones with many apps, which makes the communication faster and effective. So to be compatible and provide better response, we also have to upgrade ourselves to a smart phone.

But when it comes to the software, the MSMEs are still using Accounting packages, though they know it not meeting their business requirements. They say, since the auditors are comfortable with the accounting software they want to continue with it. MSMEs need to know this decision is affecting on their day-to-day operations. MSMEs need to impress on their Auditors on the limitations and business issues that they go through with the Accounting packages due to non availability of real-time data. They do not get many real time data like:

  • Sale order with delivery schedules and Delivery schedule wise despatches.
  • Sale order and BOM linked Materials Requirements Plan (MRP)
  • Costing (Linking BOM and Purchase prices)
  • Production Consumption (BOM linked) and rejections
  • Quality control (linking Purchase, Job order, Inventory and Production)
  • Debtor outstanding statement to marketing for better credit control

and many more..

Also many of the accounting software does not even have GST compliance. This allows the users to create wrong transaction (non-compliant with GST) and making the GST returns filing difficult.

If you see, large corporation uses ERP systems. They have more stringent compliance to be met with.  When they could manage their systems much better with ERP software, why can’t the MSMEs make their enterprise better with ERP systems. Also many Large companies are insisting their Tire-I vendors to work on ERP system for better data interchangeability and visibility for material & accounting reconciliations.

MSME sickness:

MSMEs need to realise that the Auditors work is to file returns. But the book keeping has to be done by the MSMEs. It is important for the MSMEs  to gain basic financial wisdom to know where their companies are heading. Unless they deploy end-to-end software connecting all the departments, they will not be in a position to measure what is going and where it is going wrong. Lack of financial literacy is one of the main reason for the sickness in MSMEs.

Key Result Areas (KRAs):

Every department need to have measurable KRAs fixed towards the growth and cost cutting measures. MSMEs need to learn this from large corporate. Large corporate grow and survive due to such stringent KRAs. Without an ERP system there will no measurable and real-time data. Hence no efficient Management Systems can be implemented.

Business Excellence:

Many business excellence initiatives like 5S, Lean, Six sigma, Zero Effect & Zero Defect (ZED) needs access to right data for implementing and monitoring theses initiatives. Form this view point too, ERP system becomes mandatory.

New generation entrepreneurs:

One of the main reasons for the next generation not stepping into the MSMEs is lack of transparent systems for accessing real-time data. This leads to many day-to-day fire-fighting which can be avoided with right ERP system in place.

Also the New generation entrepreneurs are tech savvy’s. They would like to associate themselves with professional, dynamic and growth oriented organisations. Good ERP system will make their jobs easier to plan their strategies.

Everything is on-line except MSMEs:

Look at the commercial establishments like Bank,  Telephone, Railways, Bus, Airways etc., they are on-line. See the government establishments like Income Tax, GST, Electricity, Birth, marriage and death certifications, RTO, examination results including the elections are on-line. We know for sure, due to digitisation of these have reduced corruption and drastically improved the service levels.

Not only these, even large temples like Tirupathi and Sabari mala is now on-line. In this whole gamut of eco system only MSMEs are left-out and sticking to their age old accounting systems. This is pathetic.

Helping MSMEs

MSMEs tend to think that large companies have enough money to run it professionally. But it is the other way around. Since they run it professionally they have grown and have access to money and right resources.

Statistics and Industry Associations says that MSMEs are the biggest contributors for GDP, Exports and Employment. So, Digitisation MSMEs are very important for their sustained growth. Many agencies including the following has to come together to help MSMEs to upgrade for the right ERP solution.

  • Chamber of Commerce
  • Industry Associations
  • Auditors & CAs
  • GST Consultants
  • Purchase, Vendor development and Materials Management professionals of Large companies
  • ISO and Quality Consultants
  • Industrial Consultants
  • Computer Hardware and Networking companies.

Syscon’s Business Partner Program 

Government of India has introduced Digital MSME scheme to help the MSMEs to adopt for the right and low cost IT solutions. This is right time for the MSMEs to shift gears to move into the information highway with help of right-fit ERP systems.