Many CEO’s feel frustrated or constrained by their ERP systems and are looking for better ways to get the information they need to measure and manage their businesses. ERP, or enterprise resource planning systems, manage sales, inventory, production, distribution, accounting, sales and more. Many also include some customer relations management (CRM) abilities as well and some have project tracking and costing abilities. A correctly implemented ERP system is a strategic asset supporting the growth of your business not a distraction holding it back.
Enterprise Resource Planning Decisions
Below is a summary of the process to discover your next steps with your current Enterprise Resource Planning System.
CEO’s often directly experience the issues caused by ineffective ERP systems when product isn’t delivered to customers on time, inventory levels are too high, margins too low and so on. They may also hear from employees about how frustrating the system is to use, how much time it takes to get things done or get information out of the system. The IT group often experiences high levels of frustration with systems when they are burdened with the additional effort and cost of supporting multiple systems, home-grown workarounds and users who are spending too much time doing tasks on the system. Sales teams pushing to meet quotas get frustrated when they can’t quickly get information about what customers are buying and not buying. Accountants can spend inordinate amounts of time sorting through the inadequate data collected and generated by the systems. And all of these concerns can be exacerbated when a company experiences significant growth.
Moving Your ERP Forward
Based on prior bad experiences with ERP systems some CEO’s may also be afraid that selecting and implementing a new ERP system will yield similar frustrations. They can fall into the trap of not knowing what to do and end up doing nothing, which can cost time, money and customers. To help mitigate these risks, select a project team and project manager who can take the company through a deliberate process that will determine whether to Repair or Replace the current system. Then make sure the team understands what the objectives of an ERP system are and how those objectives fit with the company’s strategic plan. Next, have the team collect the concerns and frustrations with the system and document the costs associated with addressing the key concerns.
Once the project team knows what the objectives and issues are, they should investigate what internal and external resources would be required to make the system work for the company such as additional training or report development (the Repair approach) and compare that to the ongoing costs of doing nothing. If that approach doesn’t resolve the issues with a reasonable return on that investment or the issues cannot be resolved via the Repair approach, then have the project team work on selecting a new system (the Replace approach).
The team should create a process that compares systems on the market to the business needs and select a handful of vendors as finalists. Have those finalists demonstrate how their system can be adapted to your business needs and get the project team to do a detailed assessment of how the solutions fit. Then select a finalist, check references and get a final quote including software, services and support costs. Do your final return on investment analysis and negotiate a purchase if the ROI is sufficient.
Often CEO’s will bring in consultants experienced in ERP systems to get an outside opinion about the effectiveness of their current systems and assist with improving processes and the performance of their systems. These consultants can add additional information based on their past experiences in the role of advisor or project manager. By the end of either approach, your goal should be for your system to be a strategic asset that provides the right information in an efficient manner to decision makers when they need it.