The Promise of ERP

By Guest Contributor

Enterprise resource planning (ERP) software implementation is a business trend that show no signs of stopping, albeit growing at a slower pace than in the past.  For many growing businesses ERP seems like the ‘obvious’ solution to address many of the growth issues that their business is facing. And for some, it feels like not opting to deploy an ERP system is akin to conceding to the competition.

But is this really the case? Does ERP deliver the goods for most businesses, most of the time?

The answer of course depends on who you ask. Data about ERP implementation results is contradictory and depends largely on the definitions used to determine the final outcome. Some studies suggest an incredible 72% failure rate, while others indicate meaningful benefits to working with an ERP software consultancy.

For businesses considering a new ERP system it’s a good idea to tread carefully. When it goes right, ERP can be an irreplaceable driver of productivity. But when things go wrong, they go really wrong.

The Good News

In a best case scenario companies will benefit from using a software designed for their specific needs. Best practices are baked right into the system, which could improve some internal processes. And the company will likely save on IT costs and costs related to using multiple software services.

Furthermore, ERP enables a deep level of visibility into the current status across all aspects of the company. This makes it much easier to deploy resources more effectively and address issues before they become critical.

Best of all, integrated and automated workflows replace wasteful manual work moving data across systems. For example, if an order is received then every relevant person across multiple business divisions is immediately updated and knows exactly what is expected from them to complete the order.

The Bad News

Unfortunately ERP doesn’t always go well, and many businesses end up paying more than they planned to develop a system that meets their needs.

The biggest problem facing ERP implementation is human, not technical. For ERP to be successful in a company it needs to be championed by all the leaders across all the divisions. The software needs to meet the very disparate needs of many different departments; but quite often the department leaders aren’t directly involved in the ERP customization process. In fact the ERP leadership team is often just the IT team, who don’t typically know the workflow processes for every division in the company.

Another factor that potentially hampers effective implementation is customization. ERP software can usually be customized to meet the needs of almost any company. But if the software is too customized then it makes future changes difficult. And if the system is under-optimized then the company runs the risk of not meeting the needs of their users.

What to Do?

If you are thinking of introducing an ERP system into your company then start from a position of skepticism, and question everything. ERP can have an amazing impact on your business, but it’s too important to get wrong.

Consider whether ERP is even necessary? Can a 3rd party analytic tool combine inputs from your existing software to generate the deep insights you hope to gain from ERP software? Can better integration between your existing software be achieved another way, without being dependent upon ERP?

Before speaking with an ERP vendor make certain you know your internal systems perfectly. This will better position you to evaluate your software needs.

When speaking with an ERP consultant, be sure to get references that are specific to your industry, and check those references carefully. You want to work with someone who is not just expert in ERP, but knows your field.

Final Thoughts

ERP can be a major productivity driver for companies. The insights and automation it provides can improve operation speeds while potentially reducing costs. But ERP isn’t something to be entered into lightly. It’s easy to select the wrong ERP vendor partner.  And ERP requires significant buy-in from everyone in the company, or else the results you expect to achieve won’t materialize.

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