Is it time for a new ERP system? Part 1
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No matter what business or industry you are in, at some point someone will ask, “Is it time to change our ERP, or should we continue with our current system?” This is not an easy question to answer. If you decide to keep your current system you risk falling behind technologically and functionally. On the other hand, if you decide to change your ERP, you will be faced with making a large investment, undergo varying degrees of disruption to you organisation, and risk a failed implementation.
What is the right answer for your company? Every company faces unique problems and each might have a different reason for staying on the current system or for making a change. In many cases their decision boiled down to five drivers of change.
- Business Processes. Business processes driven by older, inflexible ERP systems become constrictive.
- Systems Technology. Technology becomes outdated, making integration difficult and causing a loss of strategic technological advantages.
- Software Vendor. Changes with the software vendor such as acquisitions or mergers directly impact the capabilities of the software and its future direction.
- Reporting. Older systems are often full of information that cannot be accessed without significant time, energy, and effort.
- Total Cost of Ownership. The total cost of ownership of the current system justifies the cost of purchasing a new ERP system.
Business Processes: Bad Processes Forced by ERP System
The functionality and capabilities inherent in your ERP software have a big impact on your business processes. As you assess the effectiveness of your current system, you must first review your core business processes to determine if they enable maximum efficiency and productivity. If they do not, investigate whether the software system imposes constraints on your processes. Are your users saying “I do this because that’s the way the system makes me do it”?
When ERP systems were introduced 20 years ago, they were rigid in their functionality. They forced companies to conform business processes to the dictates of the software, or required them to significantly customize the software to meet their specific requirements. However, business processes evolve over time while the software remains static. This causes a disparity between the way the software was originally implemented and the new requirements of the business. This evolution continues until you get to the point that the processes in the system actually constrict the ability of users to efficiently run your business. In common with the CEO mentioned above, this is a major reason why your company might end up implementing a new ERP system.
New enterprise software applications offer flexible business processes based on best practices and process tools such as workflow. Workflow is the ability to set up and change process flows within the system. It includes many capabilities such as electronic routing of documents, event notification, and automated processes based on triggers. Many ERP vendors offer flexible rules-based workflows that allow businesses to create custom processes based on their operations. These workflows can be changed as their preferences and requirements evolve.
In some of the more sophisticated systems, power users are even able to diagram and implement new workflows with drag-and-drop technology. Such flexibility allows the ERP system to evolve with changes in business processes and practices in your company and industry.
As you assess the effect of your current ERP software on your business processes, you should consider the following questions:
- Do your current business processes decrease efficiency and productivity?
- Are they in place to make up for inefficiencies in the ERP system?
- Have they been dictated by the system because of lack of functionality?
- Have your business requirements changed over the years making the reasons you selected your current system no longer valid?
- Have users created many sidebar and workaround systems outside the ERP?
Implementation of a flexible ERP system allows your company to take advantage of new capabilities, functionality, and fresh ideas. An implementation partner that understands your industry is an excellent resource for efficiently implementing the system and effectively setting up your business processes. Selection and implementation of a modern ERP system can reduce manual processes, eliminate redundancy, and reduce paper documentation giving your company the opportunity to:
- Review all business processes in place and determine which are required, which can be modified, and which can be eliminated.
- Identify and eliminate redundancy and manual data entry.
- Standardize business processes across all departments.
- Adopt the best practices available in new software to obtain greater efficiency over the current ways of doing business.
- Make use of flexible workflow functionality to take advantage of automated business processes, document routing, events, and alerts.
