Don’t Throw your ERP Baby Out with the Bath Water

Many companies approach us when they are looking to evaluate a new ERP Solution for their business.

One of our key discoveries is that management and staff feel disappointed with their current supplier and there are usually common themes including:

  • The current solution is 10 – 20+ years old and no longer meets the changing requirements of the business users.
  • The technology platform is outdated and support from the Vendor is diminishing or no longer available.
  • The business has outgrown the solution and it isn’t able to scale to accommodate growth.
  • Users have an overwhelming impression that the old solution doesn’t work properly.
  • The relationship with the Vendor has broken down due to management changes or mergers and acquisitions by other organisations.
  • Change in staff and lack of training and documentation means that most of the information, especially management and financial reporting is being done “outside” of the central ERP.
  • Key functionality needed by the business is missing.

What are your options?

If you want to improve your operational effectiveness, reduce costs or improve your customer and staff experience, you may not necessarily need a new ERP Solution. It may be more cost-effective and lower risk for you to remain with your incumbent vendor.

Consider the following options:

1.     Remain with the Current Vendor

  • Upgrading the existing solution to the latest version of the software to take advantage of new functional enhancements. Your current Vendor may have acquired or developed new products in their portfolio that you may not be aware of, so these may extend the life of your enterprise solution.
  • Review and improve your business processes, redesign your organisational structure or consolidate your supply chain.
  • Acquire 3rd party advanced “point solutions” that can be integrated to your current ERP to extend the functionality of your existing system.
  • Conduct a Training Needs Assessment and if required, provide additional training for new and existing staff based on their specific needs and roles.

All of these options may offer considerable cost savings to the business over an entire ERP replacement. Another reason that upgrading can be less expensive is because your employees are familiar with the current solution, so you will have to go through major change management and training effort and costs.

2.     Go to the market for a new ERP Solution

If you do decide to go to market to assess alternative ERP solutions, consider including your current ERP Vendor as a potential option. This will provide you with a view of the latest capabilities and options as well as more negotiating leverage.

Other Vendors competing for your business will understand the potential cost savings of you staying with your incumbent Vendor, so will be more likely to present creative solutions and competitive proposals.

Summary

Whichever way you decide to go, your ERP Solution must also be able to support and align with your future business strategies. In many cases, new ERP software will not solve your business problems. If your business processes are flawed, even the most advanced enterprise solution isn’t going to help.

When you don’t assume you need new ERP software, you’re more likely to look for specific justifications for ERP since you’re not assuming it’s an obvious choice. Specific justifications are exactly what executives need when considering whether to invest in a new ERP.

Regardless of which direction, you choose to go in, it is important to be able to clearly articulate why you want to change to a new ERP solution. Prepare a cost model comparing the options and identify the pros and cons of each.

Consider a new ERP as an option, not a mandate. Then, you will be motivated to outline the specific benefits you hope to gain, and this will form the basis of a compelling business case for moving forward with your decision.  If the business case is unclear; consider whether you may need a more formalised and structured evaluation approach.

“For some of our clients, it is very clear that their existing ERP system will no longer support the growth of the business in the future and they absolutely need to go to market and evaluate a new ERP.

However, for other clients, it makes sense to explore whether there may be alternative options available”


Peter Goes, Managing Director – Combined Management Consultants