Considering Implementing ERP?

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If you are considering either replacing your existing ERP or imeplementing an ERP solution for the first time then you should seek expert impartial advice. The costs of implementing the wrong system or poor implemtation can be high.

ERP

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ERP

If you’ve ever been involved in implementing a new ERP system, you will already know the pain and frustration that accompanies the process.

It tends to go along the following lines:

A sharp dressed, smooth talking software salesman convinces you to commit huge sums of money to something you cannot see or touch for many months to come, with some vague expectation of unclear rewards at some ill-defined point in the future. They wave a “project plan” under your nose as proof that they know what they are doing. This is probably the last time you will see the plan.

Your business is then invaded by “implementation consultants” for the duration. They speak in jargon you don’t understand. It’s not long, you begin to equate them with cockroaches – you’re not sure why they are there, and you wonder how you will ever get rid of them.

Your staff are hounded to provide information and explanations, whilst trying to perform their normal duties. Your staff now feel that they are being taken for granted and asked to give more without acknowledgement or reward. As the project drags on, they become less and less enthusiastic and cooperative, and the quality of their contribution to the project declines.

As the “Go Live” date approaches, with too many details to attend to and not enough hands or time to deal with them, frustration builds, tempers flare and conflict increases. The words “Out of scope” crop up frequently. It becomes apparent that there are many things that you assumed your new system could and would do for you, which are just not going to happen. At least, not right now. That will be Phase 2 of the project. (You didn’t know there was a Phase 2, did you?)

The big day arrives. You begin to use your new system. Unlike the feeling of anticipation and excitement you experience when, say, driving a new car out of the showroom, driving a new system fills you and all your employees with dread. The unfamiliarity of the new system makes familiar tasks seem daunting. Things which used to take them 10 minutes now take an hour. They make mistakes and don’t know how to fix them. The consultants are running around like ants, rushing from one irate user to another, putting out fires on every front. You don’t know where to look for that critical information that you rely on to run your business. You begin to fear your first month end – will you be able to supply the board with those fancy management reports you promised them?

An unsuccessful deployment has the potential to severely compromise or even destroy a business. Why would anyone without a certifiable masochistic streak ever contemplate it?

There are sound reasons to contemplate deploying a new system, upgrading (read re-implementing) your existing system or replacing an existing system with an alternative. Basically, they all fall into 2 broad categories:

    Bullet  You hope to gain some significant benefit from the new system.

    Bullet  You need to mitigate some significant risk to your business.


Five VALID reasons to contemplate deploying a new system:

The business has changed.

If your business model has changed significantly since you implemented your current systems, or you have identified a new opportunity you would like to exploit, it may be that your existing systems do not have the required functionality to support you. If your business has grown significantly in volume or complexity, processes and systems which were adequate 5 years ago may no longer cope. Bottlenecks appear, impacting your ability to conduct day to day operations.

Changes in underlying technology.

Your software application relies on networks, hardware and supporting software such as operating systems and database engines. These underlying technologies change at a much faster pace than enterprise-level applications. Over time, you may find incompatibilities creep in between say the current version of Windows deployed on your end-users’ computers, and your business applications. You may be faced with a choice of keeping desktops and servers on older versions of operating systems, or upgrading your business applications to current releases.

Your existing system is becoming unsupportable.

IT professionals are driven by a need to keep their own skills up to date with the latest systems and technology.  The state-of-the-art, market-leading software which you bought 10 years ago may today be considered archaic and uncool. The experts you rely on to support and maintain your system have slowly drifted off into other disciplines and products, and no newcomers are entering the market to take their place.  Those few who remain start becoming VERY expensive. If you rely on your systems for daily operations, this represents a significant risk to your business.

Regulatory compliance.

Governments, standards authorities and other regulatory bodies are continually imposing new or changing statutory requirements, from built-in controls to reporting, on stretched businesses. Meeting the requirements can be onerous, time-consuming and labour-intensive. Yet the cost of non-compliance can be very high. Hefty fines from government, suspension of operating licences or loss of key accreditations can potentially force you out of business. So you need to find ways to comply with the requirements as cheaply and efficiently as possible.

New technology brings new opportunities.

T he rapid advances in information technology and communications brings interesting opportunities to those with the insight and guts to be a trend setter. Some older-generation software applications are not designed to easily slot into the new wave of technology.

Five BAD reasons to change systems:

It’s cool to be on the latest version.

If your current system is doing everything you need, and it’s not costing you a bomb to support, why put yourself  through all that pain? If it ain’t broke, don’t fix it.

The software vendor is withdrawing support for your installed version.

When a vendor withdraws support for an old software release, it simply means that they will no longer provide patches to address bugs, performance issues or compatibility issues with other software (such as Windows). Your implementation partner will also not have direct recourse to the vendor to assist with any issues that may arise. Realistically, the implementation partner is generally pretty self-sufficient in servicing your installation, and seldom if ever refers problems back to the vendor.   From the day the software vendor stops support on your installed version, you have 4 to 5 years before shortage of qualified skills or technology incompatibility becomes a serious threat to your business. So yes, it’s time to start thinking about replacement, but there’s no need to panic and sign up with the first software salesmen who darkens your door.

You will be able to make better decisions based on better information.

No, you won’t. You need an ERP system to control your stock, invoice your customers, pay your suppliers, and prove to the tax man how much profit you made. Despite being great collectors and manipulators of transactional data, ERP systems are not that good at translating all that data into meaningful information. If the need for better information is your primary reason for buying an ERP system, you are looking at the wrong type of product.

You will be able to cut overheads (ie staff) and be much more efficient.

Yes, hopefully you will be able to achieve greater operational efficiencies, but it’s unlikely that you will be able to reduce staff as a direct result of deploying a new system. In fact, you may end up increasing staff.

The system will enforce procedural discipline.

No. If your business is struggling because the business processes are not working, or not being adhered to, putting in a new system will not fix it. Fix the processes, instil the discipline in your staff, then look at your systems.

It goes without saying that the value of benefits you hope to gain, or the risk you hope to avoid, must exceed what you will spend on buying and implementing a new system. Before you even start talking to software vendors, document what it is you hope to achieve. Quantify the benefits or risks in monetary terms. Define ways to measure the defined objectives before and after.  How else will you know if all the pain and expense was worth it when it’s all over?