Timing Your ERP Initiative and Reading the Gas Gauge

I was running late for an appointment last week and jumped in the car to see that my wife had returned the car home with less than 2 miles remaining before the tank was to run empty. The gas station is also just about 2 miles away, and my appointment was another 15 miles or so which I was already late for. As I pulled out of the driveway, I received a call from my wife reminding me that the car “needed gas”.

This scenario might sound familiar to many with a family member who doesn’t quite grasp the concept of miles per gallon, but it is also coincidentally also similar to the current technology situation we run into with many of our clients.

The concept of “maximizing gain” or using an existing ERP or other solution until the breaking point seems to be a current goal of many CFOs. We don’t throw away pens until they’re empty, we use every piece of scrap available in our production cycle and we certainly don’t replace the toilet paper roll until it’s empty, so why in the world should we replace technology that is still working for us.

Here are the problems with this perspective:

1. 1. The first problem is in what is described as “working.” Technology today does, or at least should do more than simply provide baseline support for a business.  Companies today are using technology to create competitive advantage and bring themselves ahead of competition.  If you are using technology simply as a support tool you may be missing out.

1. 1. Even as a support tool, when technology does break, the entire business suffers. Production slows or halts, month-end becomes manual, sales don’t get entered and it doesn’t take long for a business to fail.

1. Technology replacement takes time. While you can run to a store to replace pens or toilet paper, ERP software is not so simple.  You can buy it, but replacing it takes far more.  Depending on your business, it can take months or even years to get a new software package implemented and working to your specifications.

Considering these three scenarios, we advise strongly against simply waiting until the last breath to replace technology. Considering the opportunity cost of not maintaining competitive advantage along with the pain of a broken system multiplied by the implantation time factor, look a few years ahead as to when to invest in new technology.

If you’re unsure of when is the right time or if you are sitting on a technology platform that is putting your business at risk, call your favorite independent software advisor to run a technology assessment and evaluate the potential costs/benefits of making a change.

And in case you were wondering, I did make it to the gas station- barely. Just don’t push your company’s future to the same limit.