Six Symptoms Your Company Needs ERP Therapy
Many of our human physical discomforts are associated with the suffix “-itis”. There’s tonsillitis, arthritis, bursitis, dermatitis, hepatitis and more. If our “itis” discomforts persist, we typically seek expert advice and treatment.
The suffix “itis” simply means something is irritated or inflamed. With minor bodily discomforts, one may choose to “just live with it.” But in business, as in health, the implications of these symptoms may be something to go undiagnosed and untreated.
ERP Systems have irritants too
In years of working with client ERP systems, we’ve identified six common irritants.
- Capabilit-itis: When you ask for information, your people respond that your ERP system doesn’t have the capability to provide it in the form you need to see it.
- Excel-itis: Financial closing is not push button. It is consistently delayed because financial data requires extensive use of pre-and-post processing in Excel worksheets to complete.
- Data Integrit-itis: The data is available in the system but can’t be trusted.
- Integrat-itis: The system is not connected to other key systems required to run the business efficiently and competitively – such as an ecommerce or CRM disconnect.
- Limit-itis: The systems are not capable of supporting planned or expected growth of the business.
- Costing-itis: The system can’t tell you what it’s costing you to build or sell specific products.
The Implications of ERP-itis
Choosing to live with such irritants and constraints has economic, competitive and corporate cultural consequences well beyond the difficulty of employees trying to do their jobs. To conceptualize those implications quickly, you can simply ask yourself 3 questions:
- How much have these irritants cost us in the past 5 years in terms of unnecessary expense or lost revenues?
- How would our competitive position erode if our toughest competitor had an “itis”-free ERP, while we continued to struggle with ours?
- What would the impact be on the value of our business, if, during due diligence performed by a potential suitor, these performance irritants were discovered?
ERP-itis Treatment and Therapy
Here are some recommendations if you find your business afflicted with ERP-itis.
Don’t Panic: Over-reacting and impulsively commanding the team to immediately replace the ERP system can lead to poor decision-making with long term implications and costs.
Get a Specialty Diagnosis: Get expert help. Let the expert run an objective diagnosis before writing yourself a prescription or commencing your own treatment and therapy. Specialists know things you don’t. They typically have experience of a wide array of ERP situations. Along the way they have learned what to look for beneath the symptoms to find root causes. They know what to do and what not to do. Trying to fix the wrong things may exacerbate the problems.
Don’t Build It Yourself: Don’t believe that to achieve a perfect ERP system it must be designed and programmed by your internal staff because “our business is unique.” You may think it’s unique, but truth is, it isn’t.
In our experience self-developed ERP systems take two to three-times longer to deploy than originally anticipated, cost more, carry with them many bugs, and require extensive ongoing maintenance and support. Commercially available, integrated and configurable ERP systems, on the other hand, have had the benefit of hundreds of installations from which to evolve and work out the bugs.
Form a Collaborative Multi-Functional Team: Combining the best of your team with systems and deployment experts goes a long way to assuring few surprises, directly addressing the specific problems and accelerating bump-less deployment and switchover.
Make sure you have adequate committed resources: An ERP implementation can take considerable time, resources and mind-share. It may require rethinking some existing processes or developing new ones to fill gaps.
Do your homework: The more preparation, the better off you will be. That includes process review and development as well as data clean up. The last thing you want is to bring bad Master Data into your new system.
Leave the Past Behind: Avoid customizations and let useless history go.
Attempts to customize a new system to replicate “the way we’ve always done things” is typically unwise and costly – and locks-in the old dysfunctions you are trying to improve upon.
Bringing excessive “History” into a new system typically requires extensive data format changes, while increasing the risk of bringing bad data (aka Garbage) into your new system. Three years of financial history in the General Ledger at a Trial Balance level should be adequate.
Any other desired data – Sales, Production, etc. can be preserved in an easily accessed database, allowing access to your history without the hassle of converting it.
Plan a Quick “Go-Live”: We have seen clients whose self-designed ERP deployments have spanned several years and, in the process, burned up several project managers. In contrast, well-planned and selected ERP deployments can be accomplished in less than 4 months – with just one project manager.
Preserve the Core, Stimulate Progress: This is one of the key premises in Jim Collins’ “Built to Last.” You are changing systems for a reason and making a significant investment to do so. Stay true to your core values and competencies, but don’t let the past – “How we’ve always done it” – constrict your future.
A Final Word
In one form or another, ERP systems have existed for 50 years or more. They have become functionally integrated, technologically optimized and proven to function smoothly. The journey to a successful ERP deployment is not to be feared.
If objectively and expertly guided, there is every reason to believe in a favorable prognosis.
Not a member-scholar yet? Join our financial community here!
Identify your path to CFO success by taking our CFO Readiness Assessmentᵀᴹ.
For the most up to date and relevant accounting, finance, treasury and leadership headlines all in one place subscribe to The Balanced Digest.