Successfully implementing an ERP system can take significant time, effort, and resources from nearly all areas of a business. Even when this effort is starting to become a distant memory, as long as the system seems to be working OK, it’s not easy start thinking about changing it.
Often an organisation will only consider changing its ERP or business management software because an event or events have forced them to. For example, the current system can no longer cope with new or changing business requirements, the vendor no longer supports it, it’s slow or won’t work with new types of technology, or it’s just too difficult or expensive to keep it running.
If you’ve waited until you’re compelled to change your ERP software, you’ve probably left it far too long. Not only have you been using a system that’s been eating into your time and resources when you could have had a much better system in place, but the longer you leave it, the harder it is to change.
Modern ERP solutions such as Microsoft Dynamics NAV are designed for quick implementation, flexibility, and above all rapid return on investment. So the challenge of deploying new ERP software, although it’s never going to be pain free, may not be as great as you think. In fact, research has shown that 77% of Microsoft Dynamics NAV customers achieved a positive return on investment with an average payback of just 23 months*.
Unless you wait until you’re compelled to, how do you know when it’s time to change your ERP software? Here are seven early warning signs:
1) You do things a certain way, but not necessarily the right way
One of the common indicators that it’s time to review your system is that you find people adapting the way they do things to fit with the way the ERP software makes them do it. That’s OK if that’s the way you’ve designed your processes, but it’s a problem when it’s not the most efficient or effective way of working. If your ERP software is old and inflexible, this process adaption is unlikely to reflect best practice or, more importantly, the best way for your business to do things if it had the choice.
2) People work outside of the ERP system
Another strong indicator that it’s time to reconsider your current ERP software is if people are doing things outside of the system which should be an inherent part of your ERP system processes. This significantly diminishes the value and effectiveness of any ERP software. It creates silos of information, introduces process inconsistencies and inefficiencies, makes monitoring and reporting difficult, cumbersome, and inaccurate. This all points to the fact that your ERP system is broken.
3) No clearly defined vendor product plan
With rapid developments and major changes to technology, many small ERP vendors don’t have the will or resources to significantly develop their products. Effective integration between finance or ERP and CRM solutions, for example, poses a serious technical challenge to many vendors. So, it’s important to check whether your vendor has robust and realistic short, medium, and long-term plans for the software. They may no longer be developing their software, or perhaps they are diversifying into other areas and potentially withdrawing support in a couple of years. This is in contrast to the ERP products, for example, in Microsoft’s Dynamics range. These have carefully planned roadmaps, clearly stated milestones, goals and objectives, and provide guaranteed long-term product support from a highly stable company.
4) Outdated licencing
Costs are of course an essential part of the decision to retain or replace an ERP solution. However it’s all too easy, having done careful cost analysis at the start of a project, to still accept these as correct later on. Along with developments in technology, licensing and cost models for ERP software also change. For example, the costs of Microsoft Dynamics NAV licenses are flexible, offering different access and functional levels (as well as being highly competitive). Unlike many older ERP solutions, they enable you to keep costs to a minimum, adapt to changing environments and expand your system as your business grows. Although licenses are only a part of the overall cost of an ERP project, it is important to regularly check the cost of your current ERP system against that of implementing a new one.
5) Cloud compatibility
Whether cloud computing is of interest to you or not at the moment, it is changing the way many organisations work and is not going to go away. So you also need to consider the implications of the cloud on your current ERP software. Not all traditional on-premise ERP solutions will move to the cloud; some for technical reasons, some for the business reasons of their vendors. Similarly not all businesses will use a cloud-based ERP solution. However, products such as Microsoft Dynamics NAV can be deployed as a cloud-based solution or as an on-premise solution, so you know that the option to move to cloud ERP is there if your future business strategy decides it. If your current ERP software is not ‘cloud-compatible’, and has no clearly stated plans to be, you should start looking at other options.
6) Strong reliance on one or two key staff
Older ERP systems, particularly those developed in-house or that have been heavily customised over a number of years, often rely on just one or two people in the businesses to keep them running. They know the system inside out. But what if these key people leave your company? Being reliant on one or two members of staff is a potential threat to business continuity and a signal to review your software.
7) Heavy reliance on one business partner
Similarly, a large amount of bespoke development on older software may also mean you rely on a single business partner as they are the only ones that fully understand the way the system has been programmed. With proprietary ERP products such as Microsoft Dynamics NAV, which has accredited business partners across the world, you’re never reliant on a single business partner, no matter how complex your business processes.
Deciding when to change your ERP software is never easy. The important thing is to regularly review your system and processes, look at how your business requirements may have changed, and check how your current system is performing. New technology, new developments and new price structures can make a strong case for changing your ERP solution, and it is unlikely to be anywhere near as painful as last time.
Changing your ERP system can be a catalyst for a wide range of positive changes throughout your business. Just don’t leave it too late!
By Concentrix TSG - Microsoft Dynamics NAV partners in the UK
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