How to Know When It's Time to Replace Your ERP System

Posted by James on July 28, 2016 at 3:00 PM
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Deciding to Replace Your ERP System

Your Enterprise Resource Planning system is the heart of your business, and nobody looks forward to a heart transplant. However, if your current system is not supporting the needs of the business, limits your flexibility, or inhibits customer service, it may be time to evaluate your options. ERP system replacement is a monumental business decision that requires a serious commitment of time and resources. So how do you know if you should even be considering it?

Your current ERP system may have exceeded its expiration date if:

  • It doesn't support the fundamental needs of your business. This problem might include a lack of functionality, requiring all sorts of manual processes outside the system, and slower-than-molasses response time.
  • It weighs down your organization's efforts to adapt to changing customer requirements or market demands. This is often the result of 80s-era technology that has simply been given a face-lift without any true improvements being made to the underlying technology.
  • It's operating costs are too high. In other words, you're paying to compensate for what your system isn't doing naturally.
  • It provides no path to places where you want to take your business: team collaboration, new media technologies, intuitive analytics, and other innovative directions.

Furthermore, you should consider changing to a new ERP system if any of the following is true within your organization:

  • Your teams rely on spreadsheets to get things done.
  • You are unable to meet industry-standard customer service benchmarks because of system limitations or inflexibility.
  • Competitors routinely outperform you on cost/price, quality, lead time, and/or service standards.
  • Your system can't provide the visibility and control required to support the changes required by your business to grow.
  • Executives get little in the way of useful insight from the system.
  • You experience difficulty complying with requirements from regulators, creditors, or board members.

Sounds like your ERP system? If you determine that you really do need to replace your system, the good news is that a new ERP system! Many of today’s offerings are impressively comprehensive while designed to be flexible, scalable, and adaptable to rapidly changing business needs. The best of them include integrated business intelligence along with a full suite of industry-specific applications. In this mobile era, relevant systems also need to be accessible anytime, anywhere, through any device with a browser. With all of those bells and whistles available, it's important to ensure that the systems on your short list check a few essential boxes.

A properly selected and implemented ERP system:

  • increases sales and improves customer service
  • improves cash management and reduces outstanding receivables
  • reduces purchasing and production costs while increasing efficiency
  • improves inventory turnover
  • better utilizes equipment and materials
  • is intuitive for its users

Ready to get started?

Once your company has come to a consensus about replacement, start the process by gathering a team of your best people to identify the priorities for a new system. After you've identified problems you want to solve and benefits you plan to receive, determine the most realistic time-frame for making the switch. Many projects fail or fall short of their goals simply because the organization did not plan properly for the work required to implement a new system. To ensure success:

Icon-Agree.jpg Obtain agreement across all areas of the company regarding project goals and benefits.

Icon-Budget.jpg Establish an accurate budget that everyone understands the details of.

Icon-Analyze.jpg Complete a cost-justification analysis to determine your company's anticipated ROI.

Icon-Organize.jpg Identify an executive sponsor and project team that will champion the project through to the finish line.

After you've researched and identified a list of potential ERP system suppliers or implementation partners, they may be able to help you answer questions about costs, benefits, and implementation requirements specific to your organization. A knowledgeable firm should be able to tell you about companies similar to yours and refer you to testimonials for first-hand experience.

 Download an Implementation Case Study

Topics: ERP Selection

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