When Is It Time For An ERP System?
Every business owner contemplates an Enterprise Resource Planning (ERP) System at some point when they are looking to get off QuickBooks or another non-integrated financial system. There is no “one-size fits all” answer to this question. Some companies decide ‘yes’ they need it and then halfway through the implementation process realize they really didn’t need one. Or, they answered ‘no’ and in less than a year the company was swimming in inefficiencies. The six essential questions below should put you well on your way to a sufficient analysis of your business to help determine if an ERP system is right for you.
Questions to justify an ERP System:
1. Why are you thinking about moving to an integrated accounting and management system, i.e. an ERP system?
This is the single most important question you can ask yourself as a business owner or executive. Whatever the answer is to this question, it should contain a justifiable business improvement. Specifically, the justification should be a dollar figure attached to the results of the integration. That figure should be based on how much a manual process is costing you, or how much more business your company can do by making a switch to a new system. Take the necessary time to determine these figures, they will either clearly establish the ROI of the ERP system or tell you to stop wasting time thinking about it.
2. Who in your organization has experience with a change management project?
If you don’t have anyone in your organization that has gone through with changing to a new ERP system, then you will have a much harder time moving to a new system without help. When changing to a new system there is nothing better than having employees that have experience with change. Despite what your salesperson/project manager/industry expert/ERP Guru is telling you, this will not be an easy process. Having people that know what the pitfalls are and having a plan to overcome them are worth their weight in gold. Not having employees with experience can be overcome by hiring a firm that has implemented a solution before, but buyer beware, this route will add to the cost of the project. This is where the figures generated in response to question 1 will come in handy. It will again point the way to if hiring the firm to guide the process is an acceptable up-front cost to an expedited solution that will be profitable, or not.
3. Is your business owner/CEO, controller/CFO, general manager/COO, onboard with integrating an ERP system?
Absolutely everyone needs to be on board with the decision to go forward with an ERP system. There cannot be anyone sitting on the fence that might later decide that a system is not needed. Apathy towards this type of project is a great way to kill momentum, extend the implementation time, and ultimately drive up the cost. The consensus is critical.
4. Will your business owner/CEO, controller/CFO, general manager/COO, benefit from this change?
The CEO should be looking for ways to use the enterprise resource planning system to grow organically or to inform mergers and acquisitions. The CFO should be focused on controls and keeping an eye on cash flow, and governance from a new system. The COO should be looking to increase efficiency in operations and improving response time to customers. Highlighting these aspects of the ERP system should motivate top executives as to the advantages of the change, thereby helping ensure its successful transition.
5. Do your current employees love the current system and business processes they are using?
Remember, ‘love’ and ‘tolerate’ are two very different things. Change to a new system is difficult and it is even harder when your employees love the current processes and systems they are using. This is when getting them involved in the process early will help to ease the pain of that change and also boost a company’s user adoption after implementation. By getting your users involved in the process early it gives them the opportunity to add input and helps to make them empowered instead of feeling as if the new process or system is being forced on them. One of the reasons ERP implementations fail is due to user adoption being low or non-existent when a new system is rolled out. Low user adoption also erodes return on investment (ROI) that a company might have calculated early on during business justification of a new system.
6. Does your company have cyclical slow and busy periods during the year?
If your company does have a slow period, then this would be the optimal time to roll out a new system. Try to schedule all testing, corrections, and ultimately go live to coincide with this slow time or in some manufacturing cases a complete shutdown of production at the end of the year. This will enable the company to focus fully on a new system roll-out and minimize any challenges a failed to go live, or testing might have on day-to-day business.
These are the primary questions you should ask yourself and those within your company before moving forward with an ERP project. Please share any other questions you have about Enterprise Resource Planning systems below in the comment section of this blog.By Kenny Williams
VP of Sales and Business Development
Pioneer B1 Kenny has been a leader in the software application industry for more than a decade. He has worked with companies such as IBM, Computer Associates, and SAP to help deliver solutions for companies ranging from small to large enterprises. He has been key in developing sales and marketing methodologies for the companies that he has represented. He has won numerous awards and accolades for his work in building and leading sales teams. He loves to see companies succeed by transforming their business processes and implementing sustainable long term solutions.