Getting Through the ERP Technology Maze and Selecting the Right ERP for the Long-term: Part 1 – Dynamic Businesses Succeed, Static Ones Perish
Selecting an ERP (Enterprise Resource Planning) solution to run your business is akin to navigating a technology maze and hoping that one does not end up in the sticky dark wondering what went wrong and whom do I sue?
Once one enters the ERP evaluation and selection process – the “maze” – then the ERP vendor song and dance begins in earnest any many a business owner is lured by the sales pitch into a dead-end: a solution that may or may not meet the immediate needs of the business but is a poor long-term choice.
There is nothing worse than that gut wrenching realization that the selected ERP solution was a mistake after having spent over $1,000,000 in company cash: there is no easy “out” when running into that dead-end!
Most business owners know the existing pain points and can evaluate a new ERP from those but looking long-term is the key to making the best decision. Why? ERPs tend to stay in play for a long, long time (8-12 years) because of the initial cost and massive change the organization must go through when adopting a new solution.
ERP systems are complex beasts, have innumerable features and any ERP sales person worth their salt can dazzle a business owner into assuming they are making the right choice when signing the contract. One can just hear the swan song, “but it all looked so great during the demos!”
This post could dive into all the mechanics of how to do a proper ERP evaluation and selection process for immediate ends but the focal point being stressed here is making the best long-term choice.
The first and foremost criteria is: will the new ERP solution provide a quantum leap for the business or only modest improvements in certain areas? Why put your organization through the utter agony of implementing a new ERP solution unless it really can deliver a quantum leap? A new ERP should deliver on strategic initiatives that boost the company and profits! Otherwise, there will be no ROI and a lot of wasted effort.
What is the one critical feature a new ERP must then deliver on?
DYNAMIC BUSINESSES SUCCEED, STATIC ONES PERISH
We live in a world of terrific change and the business landscape can change very quickly requiring fast action to keep up with a variety of factors: economic shifts, competitors, new technology, acquisitions, business process changes, etc. Thus, businesses are not static things but are live organisms that are either dynamic and adapt to shifting environmental factors or stay static and perish.
ERP systems are notorious for being inflexible and a serious drain on IT resources in order to make necessary changes. If those resources are even available it can take weeks or months or even years to get those changes implemented. This situation has caused many businesses to simply clamp down on ERP modifications and mandating that the “company must adhere to how the ERP works!”
Now, when rapid environmental changes occur how well will that attitude fare for the company?
It is absolutely vital that a new ERP be flexible, easily configurable and swiftly modified without heavy IT resources such that the ERP is molded to how the company does business. Otherwise, the ERP “solution” will become the veritable oxen yoke around the company’s neck: ever restricting business expansion and its ability to quickly respond to market demands.
Let’s consider a significant example to underline the point: a large business merger and acquisition which brings major issues to be solved –
- Merging the target business’ financials;
- Incorporating the existing target business’ processes;
- Integrating with an existing large and successful eCommerce website without re-platforming.
Most ERPs handle financials well so that part should be relatively straightforward.
Handling the unique business processes is another matter altogether: traditional ERPs will take significant, expensive and lengthy timelines to deal with the new processes. It actually may take years before the two companies are successfully merged. This all depends on the type of company being acquired but you can count on all kinds of “unique” business processes that you had never thought of before!
Here are some questions to ask to ensure the new ERP is flexible, configurable and swiftly modified which empowers a dynamic business:
- Can your existing IT staff make all the custom modifications to the ERP or will it require external professional services?
- What caliber of IT staffer is needed to make custom modifications? Do you need a $100,000+ per year Microsoft C# or Java developer? Or, does your existing staff need some basic training to make them?
- How fast can modifications be made? Days or weeks or months? Using internal or external staff?
- How expensive are these modifications to make?
- What are the limitations regarding modifications to the base system? Can entirely new functionality be built into the system or must one “wait” for potential upgrades by the vendor?
These points, especially the last one, are critical to understand and a very sharp IT person on your side of the table is your best ally to assess and bring clarity to what is possible with the new system.
Now, what about that eCommerce website that needs to be integrated with the existing ERP?
Read Part 2 – Blurring The Lines Between Web and ERP