5 years ago we first published a series of posts entitled “Software That Matters.” It was an ERP implementer’s point of view, culled from long experience, on why and how to purchase a business management software system. Later, we turned Software That Matters into a popular white paper that has since been viewed hundreds of times.
After five years, we thought it was time for an update, to reflect lessons learned since then. As it turns out, the vast majority of what we said then remains every bit as true today. Still, five years is a long time… so we decided to carefully retrace our steps, re-edit our paper, add some comments and present it as a series of blog posts that will carry us through November, 2015. We think that’s timely, as many companies at this time of year tend to reconsider the software they use to run their business — and how they might do better.
In our series we will again try to convey what’s important, what to measure, how to buy, what works, what it costs… and the many other business considerations required of this strategic investment, in what is probably the most important (and expensive) software a company will ever buy. In other words, the Software That Matters.
Today we offer post #3 in our series. Our full series begins here. We hope you find it of value and welcome your feedback.
Noting our earlier tenet that ERP is, above all, a strategic investment, let’s take a look at what typically motivates companies to look for a new ERP system.
First off, let’s face it: nearly everybody has some kind of automated system today.
It might be old. It might be entry-level, or outdated. It probably made it over the Y2K hump, and perhaps was purchased around that time. It probably has grown some tentacles over the years. A packaged solution perhaps for accounting or basic bookkeeping. Maybe a service for payroll. A home-made application for tracking jobs, work in process, or inventory. Maybe another program for CAD, with a large repository of drawings often unrelated to and inaccessible by anything else. And spreadsheets. Lots and lots of spreadsheets. Word documents, too. And some nifty FileMaker applications that you probably couldn’t run the business without.
And none of it, usually, mostly… talks to anything else.
So, Motivation Number One for a new ERP system for most companies is simple: information is scattered, hard to find, unrelated to its counterparts, highly unmanageable, not readily accessible to all, widely dispersed and captured at best in ‘older’ systems. Some of it is in a computer, and maybe some of it is not.
Motivation Number Two is related to Number One. With information so scattered across different systems, or only on paper, there is a natural inclination towards redundancy – sometimes massively so. How often for instance must the same information be re-keyed in one form or another? Do you re-key quotes once they become orders? Do you create sales orders that are recreated for work orders that are recreated for travelers, and so on?
Maybe you’re too afraid to want to know the answer. If most business owners added up all the time spent re-keying, searching, storing, retrieving, assimilating, reporting, sequencing, organizing and otherwise following up on all this data, they would probably be stunned by the amount of waste.
And as we all know, wasted time is wasted money.
Motivator Number Three is rapid or even sometimes uncontrolled growth. Ironically, it’s the byproduct of success, which breeds more success — provided your systems can keep up. Most growing companies, rather than change systems, find it easier to work with what they have, stretch its limits, even overload people. They’re too busy growing, and afraid to make changes now. It’s like blowing more air into an already inflated balloon. You can keep doing that – up to a point. But in the long run, it’s not very effective. And eventually, your balloon bursts.
A related motivator: a desire to grow. We’ve often observed that companies who plan to grow… who wish to grow… simply don’t have the software infrastructure to allow it.
Any or all of our three motivators – scattered information systems, redundancy and waste, and fast growth – are usually the key factors in any decision to “get serious” about upgrading to a modern-day ERP system. The goal: dramatically improved operational efficiencies… reduced expenses that yield strong ROI… improved customer contact leading to an improved customer experience… less waste… the list goes on.
In our next post, we’ll look at a few small business ERP success stories — motivators in themselves you might say. Stay tuned…