ERP 101: Choosing the right solution for the business
Aging ERPs can fail to meet business demands, which has some organizations seeking change.
As companies modernize, working to find more effective ways to run the business, some organizations are looking squarely at enterprise resource planning systems and how they are woven into operations.
Market Research Future expects the global ERP market to grow from $32.44 billion in 2017 to $49.03 billion by 2023.
Given how many more cloud-based solutions exist on the ERP market — a more nimble, faster solution is most likely out there.
"The ERP should be the backbone for all of the transactional systems and processing" an organization does, Brian Dooley, vice president of AIMMS, told Construction Dive's sister publication CIO Dive in an interview. "It's the day to day running of a business that spans all aspects."
Businesses already have these tools, but as ERPs age they can fail to meet business demands. This has some organizations looking for a change. Given how many more cloud-based solutions exist on the ERP market — a more nimble, faster solution is most likely out there.
When to make an ERP switch
Companies often look to switch ERPs for one of two reasons, said Dooley.
One is that they've been through a lot of mergers and acquisitions and "have inherited lots of legacy ERPs from different companies" he said. "Trying to build interfaces between all those systems is highly inefficient."
The other is that the existing ERP is out of date.
"These implementations tend to take huge amounts of resources in terms of both people and cash but they take a long time too," he said. "If you've had the same ERP for 20 plus years, it's time to revisit, particularity where technology has now moved onto the cloud with subscription services and less requirements for on premise hardware."
The need for a new ERP is often seen as either a push or pull decision.
It's a push if the current ERP is no longer being supported, or if there have been too many customizations or the performance or infrastructure costs of the system may be too high.
It's a pull if "you're seeing changes in your business that cause you to say 'I can't live with what I have today and I think I need something new to grow,'" Steve Gary, vice president of enterprise solutions at enVista, told CIO Dive in an interview.
ERP is a business, and not just an IT decision
While ERPs have traditionally been in the wheelhouse of the IT department, Dooley says that shouldn't be the case anymore. An ERP is a businesswide decision and a businesswide implementation, taking it beyond the bounds of an IT department.
"It's often been the IT project with most of the leads coming from the IT folks and really what the business requires and what the business needs to operate functionally has come secondary," he said.
Leadership can come from the highest levels of the company. While this may mean slightly shifting the role of the IT department, it can also allow them to hyper-focus on what they can do best, like security, disaster recovery and data backups.
"The project can be owned and lead by the business with the focus being on specking the functionality that the business requires," Dooley said.
Pick a metric and check in on it
A company should know what they want their ERP to do, but those goals can't be too general or open ended. Otherwise, a company won't find the right solution or they'll overspend on it, Darren Roos, CEO of IFS, told CIO Dive in an interview. He said that a metric needs to be put in place as a goal, and to set at a very specific "level of granularity."
"It sounds incredibly obvious, but you would be amazed how often customers don't have a clear understanding of what those metrics are before they start a project."
If a company wants to improve revenue, reduce costs, mitigate risk — whatever it is, that should be decided before moving ahead with an ERP. Having all stakeholders focused on the target is vital.
"It sounds incredibly obvious, but you would be amazed how often customers don't have a clear understanding of what those metrics are before they start a project," he added.
Organizations have to also work with users of the new system to make sure the new ERP is a good fit for them.
"A common situation is the senior team in an organization will be thinking that we've made this huge investment, we've got all this super-functionality and the latest technology and look at what a fantastic job it's doing of running our organization," Dooley said. But when talking to the end users stakeholders can find they aren't using it.
It's not uncommon for end users to have resorted to Excel because they find the solution too cumbersome or complicated or it can't quite do what they want it to do and senior management is blind to it, he said.
This is why businesses can deploy internal user forums to check that functionality delivers what is promised, he said. Organizations should also continue to talk with vendors post-roll out to make sure it's working, or if they're experiencing any hiccups or bugs along the way.
Follow Jen A. Miller on Twitter