And so it often starts with something like this (fist pounding optional). “Why didn’t we know that sales of our higher margin items to our biggest markets have been dropping due to quality and stock issues, and no one put the pieces together. It’s like the right hand doesn’t know what the left hand is doing around here!”
And that’s what starts 6-month search, an 18-month implementation cycle and more money than you ever dreamed you’d spend on business processing automation – all to yield an uncertain result, and questionable ROI.
Nothing can test the will of a business executive like an ERP implementation project. It puts significant strain on a business and all its relationships (staff, clients, vendors you name it). As such there had better be some good reasons to make this transition; or don’t even start.
Over the years I have seen many good reasons people have ventured down this path with fantastic outcomes. But unfortunately, many more bad reasons than good, and ultimately the former tends to lead to adverse outcomes. The journey doesn’t even need to end in an agreement to implement for it to be a colossal waste of time and money. In fact, most often, people run headlong down this path because the commander in chief barked out a desire for change due to a perceived system issue only to have a last-minute wakeup call after having wasted significant resources, time and money – much to the disillusionment of the various constituents involved.
In light of this, I thought it would be helpful to save us all from these critical mistakes by compiling the first ever list of reasons NOT to buy new ERP. You’ll thank me for it, and so will your unsuspecting vendors!
1. Need to consolidate disparate systems:
This falls under the sounds great but not so easy category. So often even the most modern and advanced cloud-based ERP systems still rely on various third-party integrated solutions to support what you thought was a basic business process, core to “all modern solutions”. Not so fast! Third party solutions still reign supreme and are an essential part of a new ERP system strategy. True the bridges may be more fully baked, the connections smarter, faster & better – but be prepared for multiple solutions and databases nothing has it all. While modern ERP does offer more under the single roof (i.e. CRM or in some cases e-commerce) – you need to be cautious that those baked in capabilities are more window dressing.
2. Can’t get the specific data I need when I need it.
Newer systems must make data access easy and so simple a layman can do it, right?
Well, almost! While most modern system have dashboards EVERYWHERE, accounting metrics aside, they don’t often provide you with the specific insight you need on your terms and matching your vision. While it is far easier to harvest the data in a modern system, you must still harvest the data; and doing so means your either going to pay someone or hire someone to get this over the finish line. Yes, industry standard metrics are great – but since when have you ever been “industry standard:” at anything? Be prepared to invest in people to make this happen for you.
3. A new system will do more out of the box than my current system can and its holding us back.
This might be a really bad assumption. Since the days of green visors and arm bands, fundamentals of sales to cash and procure to pay (formerly called sales and purchasing) have been the same. While true that modern cloud solutions delve more deeply into various processes, and generally provide for improved workflow between departments; you need to be sure that your business has a need for these things, and that the basics a new system offers do not represent a giant step backwards as it relates to fundamentals of your processing. Who cares that a new system handles RFQ (request for vendor quotation) management that flows directly to a purchasing system– if you’re never going to use it. But the way in which your current system reports inventory or automates purchasing activities might in fact be better than how the new system might manage things and at a minimum should be known up front.
4. Need to reduce headcount
In short. Never seen it happen. You might redeploy resources. Transition them to different roles or hire more knowledge workers than task workers – but headcount reduction is an illusion. Businesses grow by enhancing the capabilities of the staff they have. Have you ever seen a business cut its way to achieve growth? Or cut costs and sustain profitable operations? Be prepared to invest in your staff. Training, training and more training, and having the management team fully on board with learning as much as they can about the new system.
5. Need better inventory control:
What are we really saying here; bar code scanning, inventory replenishment, forecasting, sales process or backorder management? There are so many things that impact “inventory” that blanket statements like this are nearly meaningless and subject to broad interpretation and in the end, dangerous. Take the time to drill down into the details of what is meant and needed, not what is said. You’ll be happy you did. Recognizing that some of these features can add significant $$ and time to your implementation where more pragmatic solutions are more readily available and a great first step.
6. My data sucks and a new system will be a great opportunity to get off on the right foot:
Well guess what, in a new system, it’s still going to suck. Unless (two parts)
Part 1: Unless – you make a commitment to leaving the legacy baggage behind. The best implementations start fresh with limited history and limited conversions. Take only what’s needed and leave the rest. Think of it like a spy movie and pack your emergency escape bag.
Part 2: Unless – you hire a data czar. Find someone whose only job is to support the implementation by being involved in the data migration every step of the way. Someone who understands the downstream analysis you are craving as well as the overall processing needs of the business. This is the MOST critical aspect of new systems implementation and the biggest contributor to cost. It is also the most often underbudgeted. If you don’t have that person, or plan this aspect – don’t even bother. Good data saves time and money and is the single biggest contributor to migration success. Don’t cheap out when it comes to this, and give your new services company the helping hand thy will need to get the job done.
With the right ERP implementation, you can gain a 360-degree view of your entire business. From orders, fulfillment, tracking and shipping, to marketing, sales, accounting and e-commerce, MIBAR.net gives you the tools and technologies to automate workflow and empower smart decision-making. Learn more about our ERP software and implementation services.
Additional ERP Resources
The Path to a Postmodern ERP Strategy Part 1: Understanding Postmodern ERP
What’s Next for ERPs? Artificial Intelligence and Machine Learning – Part 1