Are you considering if it might be time to dump your current Enterprise Resource Planning (ERP) system? Is it really too old to do the job?
Every executive wonders about the current computer system being used to run the business. It’s not uncommon to field complaints from employees concerning functionality and ease of use, but the challenge is to figure out if complaints are justified.
There will always be those who complain about a system. Is the software capable of running the business adequately, or do the issues reported represent real obstacles in operation?
To make this determination, shortfalls in the system should be documented. Shortfalls need to be evaluated to see if they are truly problematic. All ERP systems are underutilized. While this may seem too absolute, most systems are built to have far more functionality than a company can effectively use.
The first step in reviewing a systemis to determine if it fulfils the business needs. Review the software for “pain points,” but also look for users who are advocates for the software. Oftentimes, complaints are voiced by some, while those who derive benefits from the system say little because it’s doing what they need.
Once all the shortfalls have been recorded, you must determine if the software is incapable of doing what the users need it for (or if, perhaps, it isn’t being fully utilized).
Sixth Floor consulting Groups has worked with companies that planned to purchase new software, when the current software was fully capable of doing what they thought was missing. This step requires calling in a software expert -- not your local sales rep. You need an objective expert who can determine the following:
• Can the software do what the business wants to accomplish?
• What steps are required to enable the software do what the user is looking for?
- Setup/configuration changes
- Master data changes
- Additional/changed transactions
In most cases, this research is done internally, as the company has inside knowledge of the existing system and the business requirements -- as well as the ability to figure out any unknown transactions. If an employee has a good rapport with the software vendor, they can often get a software specialist to document the above requirements. However, the company should be aware of any answers delivered without the details listed above.
Once the needs are documented, the business can rationally decide if the software can actually perform what is required. We’ve seen “work arounds” that called for the user to input two extra transactions to get the outcome they required. That is not a solution.
While these steps might seem tedious, savings in working with what you have over buying a brand new ERP system can be enormous. A company we consulted with saved more than $1.2 million by not buying a new ERP system. Instead, they spent between $25,000 and $50,000 to document processes and train users to use the tools they already had.
“While more fully utilizing existing software may temporarily eliminate complaints, this doesn’t necessarily mean that it’s the best option for the business.”
Does this mean clear sailing if we can get most of the shortfalls covered? Normally yes, but a key point to consider in any system review is sustainability. We can get it working today, but will it work tomorrow?
When reviewing the existing ERP software, it’s important to determine if what you have in place will be usable looking ahead five or ten years. If you think its stressful choosing to convert a system now, imagine having to convert a system at some point down the road when nothing is working to meet your future needs.
A key factor to consider is if the original software vendor is still in business. If the software has been sold to a third party, there’s less likelihood it will continue to be supported. While thick computer manuals are a thing of the past, every system should have an easy-to-use help feature that actually helps.
Most companies fail to review their system on an annual basis. That frequency may not be necessary, but are there newer technologies that make sense to implement now? Software-as-a-Service (SaaS) solutions -- also known as "cloud computing" have helped to make traditional ERP functionalities more accessible and affordable to smaller businesses. Today's cloud-based solutions enable ERP systems to be easier to implement and manage.
Perhaps even more important to consider is that cloud based ERP systems enable real-time reporting and BI, making them even more valuable to executives and staff seeking deeper insight into business operations.
Options are available. With the right ERP solution, employees have access to accurate information that enables them to make better decisions faster. The right ERP solution is beneficial in eliminating redundant processes, dramatically lowering the overall cost of doing business.
If you are seeking guidance with the software section process, contact Sixth Floor Consulting Group today.