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Technology Management Concepts

Planning To Deploy a New ERP system?


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The complaints probably started a while ago.  “The systems is so slow, I can’t get anything done on time”.  Just a few minor complaints at the beginning, and they were infrequent, so they were rather easy to dismiss.  As your company has grown, however, those complaints become more frequent, and more strenuous.  Have you heard anything like “I would have had this report completed earlier, but our system is just impossible to use anymore”.  As the excuses mount, the message is finally received, the system needs an upgrade.  So, you have invested in a more powerful computer or server to operate the old system, and that seems to be the solution.  For a while anyway, maybe about 6 months if you are lucky.  Then the complaints, and the excuses, will start again.

So, with a quick trip to the local software retailer or eCommerce site, your old system gets upgraded to the “Enterprise” edition, and voila!  Problem solved.  Not really, this turns out to be a temporary fix.  As your company grows, the complaints and excuses continue, and now they are coming from a larger number of your employees.  The delays and the frustrations are causing significant pain and a loss of revenue.  Customer satisfaction numbers are dropping.  March 1st has come and gone, and the previous year has still not been closed.  The auditors have to be delayed.

Next, you start to hear from your banker, and your CPA firm: your old system is completely inadequate for your company today.  A change is required, without upgrading to something that didn’t come in a shrink-wrapped box, your company may stop growing.

The stakeholders in the company have spoken, and they are being heard, the evidence has been reviewed and the conclusion is inescapable: now is the time to upgrade your old system, to move to a truly GAAP-compliant, modern ERP system.  This is the good news; recognizing the existence of your problem is the key first step in resolving it.

On to Step 2, which, more and more frequently, is to assign someone in your company to the task of researching suitable replacements for the old system.  For most companies, this will begin with an internet search (which likely has now led you to this very blog post).  While this research step is critical, have you neglected the first steps?  Skipped the first steps entirely?

 

Three Missing Steps

 1.Build your Scorecard

Before the search for a replacement ERP system is started, it is critical to clearly define what the new system needs to provide.  Before I can plan out my summer vacation using Bing Maps, I need to know where I am going.  IF I don’t know my destination, how will I know when I have arrived?

Start by listing the various attributes (the good , the bad and the ugly) of your current system, and assign a grade to each one.  The grading can be very simple (pass or fail) or more detailed (use a scale of 1 to 5, with 5 being excellent and 1 being miserable).  Be sure to incorporate all of the various complaints and excuses that come from the old system, this is important feedback from the users and needs to be part of the scorecard.  Group the various attributes in sections (As an example, use Accounting, Sales, Inventory, Reporting, and infrastructure).  The result is a scorecard that you can use in evaluating the potential replacements for your old system.

At a minimum, the new ERP system must score at least as well as the old system, in every critical area.  Scoring the old system, and the potential replacements, will allow you to identify those ERP candidates that are worth investigating further.

 2.Establish the budget.

Before beginning the search for the new ERP system, it is important to have a budget established, or at least a budget range in mind.  A good rule of thumb is 1 – 2% of gross annual revenue.  After all, does it make any sense at all to research a Tier-1 solutions (an Oracle or SAP-type of system), if your budget will only be $100,000 - $200,000 for the entire new system (everything included, software, hardware and services)?  It is a lot of fun to window shop at the Porsche dealer, but it is far more likely that your eventual purchase will probably be down the street at the Ford Dealer.

 3.Consider The Cloud

You have heard the phrase, “The Cloud” but do you really understand what is meant by it?  Do you already know the difference between Infrastructure as a Service (IaaS), Platform as a Service (PaaS) and Software as a Service (SaaS).  Moving to the Cloud offers many advantages:  reduced infrastructure, the conversion of capital expenses to operating expenses, a scalable infrastructure.  Ask yourself “Do you want to continue to host your own system on-premise, or does moving to hosted/cloud-based system make better long-term sense?”  Here again, the internet can provide a wealth of information, and should be able to help you determine which approach(es) to deploying the new ERP system need to be considered, or which can be dismissed from the beginning.

 

With these three key preliminary steps completed, it is time to begin the research phase, identifying potential candidates for your new ERP system.  The search will also be quicker, because you have already identified how the various candidates will be graded, which potential solutions fit within the budget, and you will know how you want to be able to deploy the new system.  Armed with this information, your search will be briefer, more tightly focused, and ultimately, more productive.

By TMC, your Southern California Dynamics GP partner.

One Response to “Planning To Deploy a New ERP system?”

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