Aging ERP: Should you shift to newer software technology?
Part 1: Obsolescence and the ERP system.Part 2: What becomes of aging ERP technology and its users?
It is inevitable that despite upgrades and constant development, enterprise systems will age and eventually become obsolete. The million dollar question for the organizations which depend on such systems is not if they should be replaced, but rather, when they should be replaced.
How to make the decision to upgrade your ERP Software
Probably the most important consideration for executives faced with this issue is the necessity to separate the decision to change from that of deciding when to migrate and which system to select. This distinction has become more significant in our quarter-century experience in the industry. Here is why.
Deciding that it is time to move off the existing system should have little to do with the choice of its replacement. The reason is quite simple. At issue at this juncture is a really quite simple evaluation: is the existing application no longer suitable? If the answer is ‘Yes’, then a replacement should be sought.
When evaluating the existing system, he says key issues to consider include its ability to support the business operations and strategy. The system may be acting as a constraint, perhaps as a limitation of the underlying technology. For example, many DOS-based accounting systems prevented companies from performing functions now considered the norm. Automatic production and emailing of PDF invoices and statements was not possible; companies using such systems were limited to cumbersome paper and fax based solutions, resulting in unnecessary costs and processing time.
More recently, integration and workflow technology have evolved significantly. Many older systems cannot provide integrated business processes, requiring external systems which add complexity and which reduce efficiency.
I need to upgrade my ERP software, now what?
Once it is established that a shiny new ERP solution is the way forward, a new set of challenges is presented. Evaluating alternatives is a difficult, high-stakes responsibility. It starts with clarifying requirements; experience has proven that those companies which know what they want, with a well-defined and clearly articulated list of requirements, tend to have higher satisfaction from their deployment than those that figure things out as they go.
Critical Business Issues approach
A proven approach is to identify what we call ‘the CBIs’. These are the Critical Business Issues, and by that, we mean ‘What makes a company tick? How does it create value? What are the key measures that need to be monitored or controlled?’
If a system under evaluation doesn’t address the CBIs, the action to take is quite simple. It should not be investigated further. This is a useful filter because it is quickly applied and narrows down the number of systems to be considered.
Of importance, too, is the necessity to clarify the decision-making criteria. Making decisions is easier with a structured approach. While there are many other approaches, I have used the Kepner-Tregoe Decision Analysis methodology, which advocates identification of the criteria for success, and ranking these before considering options. The methodology also provides a structured way of evaluating alternatives using these criteria, and a risk assessment tool.
Narrowing down ERP software choices
As the process narrows down, the time will come to select several potential systems for evaluation. Since evaluation itself is a time-consuming process, the range of options should be substantially reduced to systems which are definitely viable and then choosing from those.
While some systems enjoy a high-profile and will generally be included in any initial list, there are many that do not enjoy the same level of marketing, but which may be a better fit for particular companies. Newer web-based solutions, for example, don’t enjoy the level of marketing that established players do. But, it is well worth exploring these especially in terms of examining international presence and performance. They may enable a level of transformation in your business that more established vendors cannot provide.
Online research provides extensive information and opportunities to identify, explore and evaluate potential systems. Don’t limit the options to what you see on billboards; look beyond the obvious choices as therein may lie the opportunity to introduce changes that could deliver competitive advantage.
And finally, thorough research should also expand your horizons beyond those that existed when setting out on this journey. Our ability to conceptualize new solutions is too often hindered by prior experiences. Our knowledge of current and prior solutions creates blinkers that may prevent us from perceiving solutions that lie outside of our sphere of experience. It is good practice to revise the decision-making criteria based on research findings, before finalizing the selection criteria.
About Computer Initiatives
Computer Initiatives is a specialist provider of accounting system solutions, providing support and implementation of ERP software. The recent addition of cloud-based ERP and CRM means that Computer Initiatives can offer a fully web-based solution to address the requirements of clients taking a strategic view of how to deploy systems that enable them to leverage the power of “The Cloud”.