6 Reasons Your Aren’t Getting a New ERP and Why You Should

Author: admin in: Business Solutions

6 Reasons Your Aren’t Getting a New ERP (And Why You Should)

February 15, 2022

ERP Systems are now commonplace. Almost every company has implemented or is planning to implement an ERP system to help manage their manufactory.

These systems have brought on a large amount of benefits that you should understand when planning to implement, even though these bonuses can take a while to bear fruit.

There are, however, certain things that regularly come up as reasons to keep from moving forward on ERP plans.

Ownership

Some people believe that an IT system, any IT system, is owned by the IT department, even an ERP. Because of this, they leave it up to the IT department to let them know when and what they should get.

While this may be true for your email server or your website hosting contracts, when it comes to your ERP system, it should be owned by the C-suite. Leaving the selection and implementation of the ERP solely with the IT team can be a recipe for disaster. While your IT team will always have a strong role with selecting a system that can suit your hardware budget, and will be walking with you during implementation, your upper management team from the C-suite down should be the leaders and owners. Your top persons are the one that have the business unit knowledge that is required to ensure a successful implementation and adoption. Without their hands on the wheel, the software you pick or how it gets installed may not fit your business needs.

Company Size

Many smaller companies don’t look for an ERP because they believe that such a system is for larger multinationals with deep pockets.

This was a fact of business in the past. Nowadays, new tech and more installations have led to immense tech that is easily accessible to any pocketbook. Some of the things that have helped cut the costs of ERP systems include:

  • Cloud Computing – Services like AWS and Azure allow smaller companies to get the benefits of massive server power for a very low cost.
  • SaaS – You no longer have to bring a huge lump sum to the table for a massive software package. By purchasing a subscription to the ERP system as a service you can have a monthly operating expense instead of a crippling capital expense.
  • Modules – Some more expensive ERP systems allow you to purchase just the modules you need for your business. Others share data with your main systems almost seamlessly. This means your cost barrier to entry can be negotiated to a lower rate.

Price

There is an ongoing belief that ERP systems cost too much to buy and take too long to implement. There’s also the idea that it can take years to see the benefits.

The truth is that while the cost may be a big part of your decision, this is not the most important part of implementing an ERP. Companies that have previous ERP experience have reported that the most important thing when looking for a new ERP is that you should look for a partner in your ERP provider, and not just a vendor. An ERP system quickly becomes a critical component of your business processes. You need an ERP that evolves and grows with you, which needs the kind of support that only a partnership can provide.

Another part of the price is your hidden costs. How much added time and money are you currently wasting with manual processes that can be automated? Or duplicate entries on multiple systems that don’t communicate properly and lead to bad data? How many bad decisions can you afford to make because of bad data? You may think it is costly to purchase an ERP, but what of the cost of not adopting an ERP when your competitors are onboard?

Planning

So far, you have seen that company size and system cost are more accessible than they have ever been. But even when you have the money available and your company is the right size, it feels like implementing a global system change like an ERP takes a lot of planning and preparation.

While a company-wide ERP implementation can be arduous, it doesn’t have to be. Instead of touching all business units simultaneously, a better option can be a phased deployment. This way, you can get comfortable with the new tools at a more accessible pace. This also gives you a better view of what other processes you can start implementing into the ERP. Also, by implementing critical modules with a maximum benefit first, you can net easy wins that motivate your teams to look forward to the next phase.

Reach

Even when you decide to get an ERP, how do you know what business units it will affect? After all, ERP systems can come with tools that you will never need while not helping where you need it.

First, when you are shopping for an ERP, you should try and find one that has all the features you need most. Look for systems that were built to help improve your processes. For example, a coating shop shouldn’t look to acquire an ERP that was built for retail. This will get you features you never use while leaving you lacking in what you need most.

Also, an ERP system implementation is a great reason to run a full process audit. It helps to map your processes when you are implementing so you know where you stand. While mapping, take advantage and review your processes with a PDCA and/or 5S approach. In the innovative world of manufacturing, “This is how we’ve always done it” is the best reason to see if it can be done better. While the mapping steps is one of the most arduous and many a company has skimped on mapping, or skipped it completely, it cannot be understated how crucial it is to improving your shop. Most companies that ignore this warning will often end up with a new ERP that doesn’t offer any improvements to productivity or flow.

Once you have the bulk of your operations properly modelled, it’s always a good idea to contact your ERP vendor to ask about customizations and other options that can help model your smaller processes.

Time

You’ve heard the horror stories with ERP implementations taking years to net any noticeable returns. You’ve heard about 3rd party implementations that were rushed and led to more production woes than had anything been done at all. Maybe you’ve even experienced some of these yourself.

When it comes to the amount of time it takes to get an ERP up and running, there are things that you can do to improve the implementation and adoption.

As stated under reach, map your processes. This can also help you understand how much time you may need to implement everything, the complication of certain operations, and how many process changes you may need, or want, to implement. These changes include introducing new roles, systems and processes. Knowing how many changes you need to make can help you see what else needs changing before implementing the new process.

By knowing what is coming, you can get a more realistic go-live data and that also helps improve morale and adoption.

Conclusion

If you are looking for a new ERP, or looking to implement your first, many of the reasons to avoid an ERP are no longer issues, or they can be managed away. While this is good news for shoppers and vendors alike, the truth is that you must still understand what problems can arise and which lines you will not cross. To summarize:

  • Don’t wait for your IT department to suggest an ERP system. Your C-suite needs to lead this charge.
  • With service-type agreements, companies of any size can and should implement an ERP to help improve their productivity.
  • Service-type agreements have helped lower the cost to entry for ERPs.
  • While implementing an ERP across the whole organization can be difficult, a phased deployment can net you better returns sooner.
  • Look for an ERP that was built for your sector and map your processes.
  • With proper mapping, ownership, and procedures, you can get results from your ERP sooner and with less issues.

Finally, when implementing an ERP system, look for a vendor that has experience that you may lack and that can provide the system that most closely matches your current business practices. This will help you avoid long implantation cycles and costly customizations. Where possible, try and get a system that can integrate all your business units with minimal or no 3rd party plug-ins or applications.

 

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