The High Cost of Not Deciding about an ERP System

Posted by James on July 10, 2017 at 10:13 AM
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Cost of Doing Nothing Featured.jpgThe High Cost of Not Deciding about an ERP SystemInaction in the face of options is a form of decision-making. Yet in business, doing nothing when presented with alternatives to solve a problem typically just delays negative consequences. While you procrastinate, the issue continues to grow and compromise the company's agility. As people who each day see the market advantage of keeping software up-to-date, we often offer this advice: The lack of making a decision to replace or upgrade your current software platform from a legacy system is possibly having a negative impact on the future success of your organization. Unfortunately, amidst routine and habit, it's hard to recognize that one's company is coping with - rather than overcoming - its internal challenges. Likewise, it's difficult to quantitatively demonstrate the loss created by taking no action.

Recently, however, Aberdeen Group technology research company released new analysis showing the financial effects of a non-decision when it comes to Enterprise Resource Planning software. They concluded that every month you delay or decline to make your decision could be hampering the efficiency of your business and hurting your bottom line.

You can read about it in Aberdeen Group's new white paper
The Cost of Doing Nothing: Why You Can't Afford to Sit on an ERP Software Decision

Here are a couple of highlights from the report.

Why Companies Put Off the Decision to Implement or Upgrade

It may not seem like moving to a modern ERP system should be a hard decision. The truth is that deciding on the correct system that provides the best functionality, technology, and usability can be a formidable challenge conceptually.

According to Aberdeen's report, the thought of committing capital to a new ERP solution can cause companies - especially small, growing ones - to hesitate. Buying new ERP software is, after all, a major investment. A surprising number of these growing companies do business without ERP software in place and perceive that they are doing just fine with homegrown resources. In reality, for these companies to develop into their potential, they’ll need to move beyond manually maintained spreadsheets. Yet many still hesitate to pull the trigger.

Aberdeen's white paper demonstrates this perceived obstacle in their finding that 49% of the companies surveyed believe they’re too small to justify an ERP solution. Some 26% believe they’ve functioned well without ERP in the past, and 23% think they’ll function well without it in the foreseeable future.

However, Aberdeen also found that the lack of an ERP solution is holding these same companies back in several ways. For example, the survey also uncovered that 35% of respondents said that having no ERP software caused redundant data in their organizations. One-third said their business systems can’t interact with one another, and 28% admitted that their solution can’t track the company’s business processes.

The takeaway message is that once your company reaches a certain size, you’ll need to implement an ERP system to reach your full potential.

How a New ERP System Can Enhance Your Business Performance

The Aberdeen Group report notes that many companies that do use ERP systems aren’t achieving full value from their solutions. Among those that want to replace their current ERP platforms, the top reasons cited are obsolete technology (43%) and a lack of features (41%).

Perhaps some of the most interesting data indicates that many companies are happy with their current ERP solution, but they elect to update it anyway. The survey shows that the top reason by far was a desire to take advantage of new functionality. Savvy companies like these know that implementing a modern ERP solution and staying abreast of the latest version is an important part of a growing business.

According to the Aberdeen survey, companies that run their businesses on the latest version of their Enterprise Resource Planning platform perform better across key business metrics, including Days Sales Outstanding (DSO), complete and on-time delivery, inventory accuracy, and customer satisfaction. Their counterparts who use outdated ERP software lag in comparison. The bottom line is that taking action and making the big decision to move to a new ERP platform has measurable positive impacts on your business performance.

Download the White Paper

Download the free Aberdeen white paper now to get the full story regarding the high cost of not deciding about an ERP system. And if you're wondering how a decision now might enhance your business's competitive edge, talk to your trusted technology advisor.

Topics: ERP Selection

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