How long have you been using your current Business Software System? Does it meet your current requirements? Does it need to be replaced? These are excellent questions, but do you really know without a doubt that you need to make a change? If you are like most firms, the signs are not so obvious unless you ask yourself and the people within your organization. If you are like most firms, you have been plodding along, making do with your current Business Software System. People tend to accept reality as the norm. You get used to your current Business Software System and do your work within the confines of the capabilities of your current system.
You know your current Business Software System isn’t perfect, but rationalize that it’s no better or worse than any other Business Software System. People may complain (softly though) that it takes too much time to complete transactions (e.g. enter sales orders), or that too much work has to be done manually to support requirements the current system cannot really meet effectively, or the system cannot generate needed reports because there are insufficient data fields, or maybe critical planning and operations control is just too difficult.
Every Business Software System will deteriorate over time, even systems you purchase today. The underlying issue may be software related, but in many cases firms simply outgrow the capabilities of their current system. Firms change over time. Growth and expansion into new markets are the primary change motivators, but it is possible that your current Business Software System has not kept up with market demands. The reasons aren’t really that important, but your failure to recognize that it’s time to change is the real issue. If you wait until you can no longer compete in your market effectively, then it’s too late. If you constantly evaluate the performance of your Business Software System and anticipate change, then you will be able to stay ahead of the race to remain competitive.
The decision to replace your current Business Software System isn’t a black or white question. It’s based more on an accumulation of issues that at some point tip the balance. Rather than waiting until you are forced to replace your current Business Software System, adopt a proactive approach whereby you are constantly evaluating your current accounting or ERP system. This doesn’t necessarily mean you need to replace your current system every year. If you are going to remain competitive, you have to conduct something you might call an Annual Business Checkup. The concept is similar to an annual physical. Rather than waiting for physical deterioration, you should visit your doctor on a regular basis. Submit yourself to a battery of tests that either confirm your state of health or indicate that a physical issue is beginning to develop. Evaluating your current Business Software System follows the same rational. Ask yourself on a formal basis what works and what isn’t working as well as what you require to improve your competitive position. If you follow this path, you will be able to determine when you need to change and just as importantly what your Business Software System needs to do to support your quest for excellence.
Business Software System Evaluation Process
Analyzing and improving your current Business Software System isn’t just a matter of asking and answering a series of specific questions. That just leads to a fractured series of required improvements. Your analysis will certainly lead to the specification of very specific improvements, but you have to first define what you need to do very well as a firm to compete effectively in your industry. That highly detailed “picture” can then be used to determine precisely what your Business Software System should do to support your quest for competitive excellence.
1) Vendor / Product / Reseller Failing
This is perhaps the easiest sign that you need to replace your current Business Software System and it is the most urgent in terms of reaction on your part. If the vendor is not updating their Business Software System on a regular basis or is not providing adequate support, this may be a signal that either the vendor itself is starting to suffer financial difficulties or they have decided that their Business Management System can no longer remain competitive. If this is the case, you should accept the fact that change is mandatory.
If you are not receiving adequate support from your local reseller, but the product itself appears to be solid (i.e. it’s still competitive), you may need to search for a replacement reseller. This is your absolute right and as long as you can find a knowledgeable reseller who really wants to work with you, you should not necessarily scrap your current Business Software System. This doesn’t necessarily mean you shouldn’t replace your current Business Management System. Maybe this is an opportunity to look at alternate products.
2) Your Business Software System does not adequately support the needs of your customers.
The key to your business success is attracting prospects, converting them to customers and then holding this relationship into the future. You must meet each customer’s expectations and business process requirements so they will continue to order from you. Your Business Software System will give you the information and functionality that will enable you to provide your customers the best possible experience. If your Business Management System cannot adequately meet the needs of your customers, this may be an indication that you need to make a change.
3) Your CRM system does not adequately support your marketing and sales strategies.
Most people think in terms of “sales and marketing”, but that approach is really backward. Your must first attract “new blood” and then sustain that relationship. Marketing is all about attracting prospects and sales is all about closing the deal and keeping the deal closed. Your CRM system must help you do both. If your CRM system is not seamlessly integrated with your Business Software System or if your CRM system does not assist you attract and hold customers, it may be time for you to either
4) You will be competing in a new industry.
If you are expanding into a new industry (e.g. manufacturing) and you current Business Software System does not support critically required functionality, you must replace your current system. This decision should be viewed as mandatory as well as proactive in that you should make no move into the new industry unless your Business Software System supports the functionality you need to compete effectively.
5) You will be acquiring a new company or opening new offices.
You current Business Software System may support operating from a single location or operating as a single unique legal entity, but what if you open offices in remote locations or acquire a company that operates from a different location or competes in a different industry? As we discussed the issues surrounding an expansion into a new industry, you must proactively determine the structure and functionality requirements if you open new offices or acquire another company. If your current Business Software System does not support these expanded business requirements, you must determine if you need a new system before these corporate changes take place.
6) You cannot complete business activities and tasks effectively and efficiently.
Once you receive a customer’s order for products or services, how do you then record, monitor and complete the customer’s order and do so for the lowest possible cost (least cost = maximum margin)? That’s where the notion of effectiveness and efficiency come into play. You need to give custom’s what they want (appropriate products and services at the right price, on-time delivery, quality and communications). You also need to complete each order as efficiently as possible. Your Business Software System must first help you meet the needs of your customers (effectiveness) and then help you complete business transactions at the lowest possible cost (efficiency). If it takes too long to complete business tasks, you may need to search for a new Business Management System that supports business effectiveness as well as business efficiency.
7) Employees must resort to manual tasks to accomplish their job assignments.
Business Software Systems should help people do their jobs efficiently, but that’s not always the case. In many cases people have to resort to manual tasks and that’s inherently inefficient and ineffective. A prime example is tracking and collecting overdue invoices. While all systems produce an Aging Report, everything an employee has to do after that point is manual. As you are evaluating your current Business Software System, identify every single manual task and determine whether this task can be supported by a software application that seamlessly integrates with your Business Software System.
8) You can no longer adequately control your operations.
Completing business tasks efficiently is certainly important (e.g. recording and completing sales orders or manufacturing orders), but there are any number of activities that will help you run your business more efficiently. Maintaining inventory ensures that products will be available when orders are placed. Planning production operations ensures that each step in the production process will be scheduled at the right time with the right material by the appropriate workgroups. All of these diverse activities need to be coordinated and the only way this can be accomplished is via some form of software supported operations management systems. The question you must answer is whether your current Business Software System can give you the operations support you need.
9) Your current system does not support effective business decision making.
Software supported planning and execution functions help you record orders and control operations so that each order is completed in a timely manner, but that doesn’t help you understand where you are and where you appear to be going. As an example a distributor needs to ship orders, but controlling inventory levels is one of the keys to your success. Tracking inventory turns will help you understand if you have too much inventory or too little. While it’s possible to create reports that calculate inventory turns, you may have 5,000 or more separate inventory items to track and that’s going to require a lot of time.
You could sort the calculated inventory turns to create a list that helps you concentrate on only those items that require your attention, but a single value really doesn’t give you a complete picture. You need a graphical representation of inventory turns for (as an example) each of the past twelve months. Now you are building a picture of your operations that will help you understand where you have been, where you are today and possibly even where you appear to be heading. You could also define for each month where you need to be. The creation of what you could call a budget vs. actual representation of inventory turns will give you all of the information you need to control inventory more effectively.
While this discussion is somewhat detailed, the key concept is creating a business decision making system that helps you identify where you need to concentrate your efforts. It starts with the identification of the key business drivers or Key Performance Indicators (KPIs) that affect your business. If you don’t really know what’s critical to your success, then all of the rich data that can be extracted from your Business Software System will be useless. Forget about row and column reports, pie charts and bar charts. They represent just a snapshot of your firm at a single moment in time and effective decisions should never be based on a single data point. Adopt instead a graphically based reporting system that helps you become more proactive when it comes to business decision making.
As you are evaluating your current Business Software System, take whatever time is required to define precisely what information you need to make sound business decisions and the format whereby this information can be most effectively displayed. If your current Business Software System cannot give you the information you require, then this may be a strong indication that change is required.
10)You are not taking advantage of current technology and functional possibilities.
The functional and technological capabilities of Business Software Systems have grown significantly over the past five years. Your current Business Software System may not support all of these new capabilities or it may but you haven’t adopted them yet. The fact that you can do something doesn’t necessarily mean you have to stay on the cutting edge. As you are evaluating your current Business Software System, ask yourself if you should move to the Cloud, or access systems from any device anywhere, or collaborate with employees and even customers, or utilize workflow, or adopt exception management or task management. Once again you will need to place yourself in a learning mode so you can understand these technical and functionality possibilities and whether they may be useful. Don’t buy into the latest and greatest. Prove to yourself and your employees that each of these changes are logical, cost effective and will help people become more efficient or effective.
Knowledge is the Key to Business Software System Excellence
One of the least known signs that your Business Software Systems may need to be replaced is a lack of knowledge of what’s possible in terms of today’s functional and reporting capabilities. If you are going to thoroughly evaluate your current Business Software System, you have to identify the strengths and weaknesses of the system as it exists today. In addition you need to identify what’s possible in terms of capabilities with which you may have no current knowledge but which could assist you become more successful. Knowledge is one of the keys to the success of any software evaluation process.
Before you launch this project, invest time educating yourself. Read industry publications that may shed some light on products and capabilities that might be of interest. Identify several products that seem to have developed a following in your market. Learn more about these products. Talk to several software vendors. Ask them what they think may be of interest to you and your firm, but don’t add these capabilities to your list of “must haves” simply because one or more products provide such functionality. Once you have educated yourself, you can launch a far more effective evaluation of your current system.
Create a Continuous Competitive Evaluation and Improvement Plan
What do you need to do very well in order to compete effectively in your market(s)? Forget about specific software functionality. Instead, look at your firm as a single entity and evaluate your ability to capture your fair share of the market(s) in which you compete. This analysis has nothing to do with running your business efficiency and generating profits. It’s all about generating revenue and that should be your sole focus. This competitive analysis should be a “document” that is updated continuously. Rather than launching a massive competitive analysis of your firm every year (as an example), key executives and line of business managers need to know precisely where they are every day. If you don’t know where you are, how can you possibly compete more effectively? Small adjustments are much easier to implement than massive change that disrupts your business processes and your employees.
There are actually two forms of planning you should consider. The previous section dealt more with short-term planning (say two years) and this question can be thought of as more of a strategic planning initiative. Strategic planning deals with “what-ifs?” that may or may not occur. This doesn’t mean you should ignore these possibilities. In essence you need to look down the road as far as possible (no blind guessing though) and identify possibilities. If these possibilities then become more certain, you will have already identified them and can move them to your shorter-term competitive planning document.
Business Software Systems do not fail precipitously. They process transactions and generate reports just the way they did when they were first installed. However, Business Software Systems do fail gradually over time to support a firm’s ability to complete key business processes, compete effectively in their market and generate appropriate reports that support the decision making process.
People make an organization profitable, but they need help. Your Business Software System will give people the tools and information they need to excel. The system itself doesn’t actually do anything. It helps people do their jobs more efficiently and more effectively and it helps people make sound business decisions.
If you are going to excel, your Business Software System needs to excel. That goal can be achieved only if you continuously evaluate what you need to do very well and how your Business Software System should support your quest for excellence. Rather than waiting for serious problems to develop, adopt a proactive approach whereby you identify what you need to do to excel and specifically how your Business Software System should support your organization and its employees.
If a company is not organized for success (culture, leadership style, business processes, etc.) a new Business Software System will accomplish little if anything. The decision to replace an aging system or upgrade to a more powerful system must be driven by and supported by every person in the organization, not just disinterested executives. Without this universal commitment, the software selection process will fail.
You need the right system that will help people succeed. That means that you must continuously evaluate everything, including your Business Software System. Rather than waiting for a crisis, adopt a proactive attitude whereby people are constantly searching for ways to serve your customers more effectively and carry out their jobs more efficiently.
Contact the experts at Altico Advisors and we'll guide you through the evaluation process, through your search, to a Business Software System that will actually meet your requirements. Here's how to reach us:
By Marcia Nita Doron, Altico Advisors, Microsoft Dynamics ERP and CRM Partner serving New Hampshire (NH) and beyond.