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Posts Tagged ‘Upgrading ERP’

Deciding finally to upgrade your old accounting system into a modern ERP system is never an easy decision.  All too often, we’ve seen that nebulous fear cause many a client to wait too long.  Usually, it takes the sunsetting (i.e., discontinuation) and total loss of support for their current product – with maybe a touch of hardware obsolescence and crumbling network infrastructure thrown in – before they’ll finally bite the bullet.

We think that’s because it’s hard to quantify the cost savings and efficiencies that will be gained against the much more plainly understood “cost” of the system.

All too often our constant reiterating wail to clients that ERP is a strategic investment in your business – just like a machine on the plant floor – falls on deaf ears much like the baying of the coyotes outside my windows on an Indiana night.

Just this week a client told us that they are not spending any more money on software for the rest of this year.  That’s like saying I’m not spending any more on oil and maintenance for our equipment.  The difference?  Most businesses have difficulty appreciating that – done right – the improvements to processes and business alike that result from a strategically used ERP system can save five, ten or even 100 times their costs in wasted or redundant labor and other inefficiencies.

Except of course: We’ve always done it this way…

You can’t blame them really.  Most folks are coming off “accounting” systems built in the 80s or 90s that mostly documented business ‘transactions’ and not much more when it comes to process improvement.  It’s a stretch for them to appreciate that ERP is just the tool we use to codify and standardize business process improvements.  It’s not about the software, per se, it’s about the improvements to processes and the reduction in costs that ultimately flow through it, once processes have been realigned and the software is configured to accept them.

It’s hard for clients to wrap their heads around this, when all they know is what’s worked in the past: build better widgets, and increasingly more of them, as cheaply as possible, and all good blessings will flow.

The idea that wide swaths of a business might be “leaned out” through the implementation of improved processes woven into an extensive enterprise management system that makes those changes ‘stick’ takes some education and some getting used to.  And it takes an investment in the foundation (like working a little compost into the garden dirt) before the changes can begin to grow and bear fruit.  In other words, it can be a leap of faith.

So in the post that follows, we’ll take a high-level look at three steps to weighing the costs of implementation against the cost of continued inefficiency.  Stay tuned…

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erp-reportsThe business world is now over twenty years into the adoption of what today we call ERP systems – Enterprise Resource Planning.  The term ERP is actually derived from its predecessor – MRP, or Material Requirements Planning systems.  The term is said to have been coined by someone at The Gartner Group around 1990 as an extension of MRP intended to encompass a larger vision of the organization as a whole.

A survey conducted a while ago by Thomas Wailgum of IDG Communications noted that CIOs indicated that ERP systems were “essential to the core of their businesses, and that they could not live without them,” as noted in a recent white paper from an outfit called Edgewater Technology.

But as also has been often noted, many of these systems have grown out of date and long in the tooth.  Some still harken back to the old green-screen days, and a good number of companies today still run on antiquated (and increasingly more difficult to maintain) systems like the AS/400 and other legacy platforms.  In many cases, these systems’ shortcomings, cost and complexity can often work against the very efficiency goals they were once meant to improve.

If you are among these dinosaurs, we’ve found a few questions from others (but with which we concur and often ask them of clients ourselves) that you might want to ask of your own organization, like…

Should you continue with your current system?… Is it time to upgrade?… Is it time to change?

Following are a few questions from a white paper from Edgewater Fullscope (a software reseller with offices in the southeastern U.S.) that we thought provides a good starting point for looking at how effective your current information and reporting system is.

  • Are you getting the reports and information you need to run your business effectively?
  • Can users run their own reports queries or do they need to turn to IT for support?
  • If so, what are those costs in terms of time and labor to develop these custom reports and inquires?
  • How easily can you access reports and inquires?
  • How easily can you export them to desktop applications like MS Excel?
  • Is the information you’re getting real-time, actionable, and easy to understand?

There are many more similar questions you could ask, and there is a lot more drilling down to the fundamental WHY questions that are so important in this process.  But we think Edgewater’s questions are a good start.

Companies who are not satisfied with their answers are ripe for a doing a little self-examination.  That’s best done when assisted by competent subject matter experts from outside the firm who are well-versed in asking – and help you answer – those questions.

But until you start asking and analyzing, and then reviewing processes and conducting a fit/gap analysis, you may only be extending your current pain, and not moving toward a better solution.

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