Getting a brand spanking-new ERP sounds awesome, right? Automated everything, the latest and greatest functionality. Like a new car… until you realize the new monthly cost, plus satellite radio, plus the new insurance premium. All of a sudden, your 2013 Camry, and your legacy ERP aren’t looking all that bad.
So how do you really know if a new ERP is warranted? Consider these steps before you embark on selecting and procuring a new ERP:
Complete a digital strategy assessment and roadmap:This exercise is intended to get full perspective on your technology needs. It will certainly outline the needs for ERP, CRM, WMS, HCM, POS and other enterprise applications, as well as eCommerce and web integration, data security and storage, physical infrastructure, etc.Once you have determined a realistic roadmap, you will be better able to match your ERP and other systems to help fill in the gaps. It will help you define what “ERP” means in your organization, and will determine if a niche module or bolt-on solution may be a better approach than ripping and replacing your ERP. For example, following the COVID pandemic, we have received countless inquiries from companies who have significantly increased needs surrounding distribution and inventory. Everyone is ordering on-line and inventory counts and warehousing logistics have taken a beating. Rather than trying to fix this with a new ERP, many companies are finding success in keeping their Microsoft Great Plaines or Sage accounting systems and integrating an advanced WMS and inventory management solution.
Evaluate your processes: We offer this recommendation to anyone looking to do any form of digital transformation. There are almost always some process adjustments to help mitigate current pains, and these do not always require new technology. And here’s a super-secret hint: you will need to do this anyway before selecting a new ERP. So, go ahead and do the following: a) Review processes and document pain points and future state requirements b) Make available process improvements without modification or purchase of software c) Verify if these do the trick or will at least work for awhile d) Review remaining gaps and needs and either update your current technology (see below), or select and implement new technology that aligns with your digital roadmap (see above).
Evaluate modification to your legacy software: Just because it’s old, doesn’t mean it doesn’t work. Just ask Roger Federer who is approaching 40 years old and still ranks in the top 5 men’s tennis players in the world. He may need to watch his diet and visit the chiropractor on occasion, but he can certainly hang with the best. Same with your ERP in many cases. If you implemented a legacy ERP solution years ago and it is “working” but doesn’t necessarily align perfectly to your business, consider that processes change over time. What this means is that your system is working to fit processes that no longer exist, not that it can’t manage your new or revised processes. You may need to upgrade, bring in some additional functionality, etc., but this will certainly be less painful than bringing on a whole new ERP solution.
Once you have completed these steps to some degree, you should have a better idea of where you really need a step-up in technology. It may in fact be time to replace your ERP but validate that you can not water and ultimately play in your own yard before looking over the fence at your neighbor’s green lawn.
Have questions about any of these tactics or digital transformation in general? Please feel free to contact me directly.
Third Stage Consulting Group is a global thought leader in business transformation, ERP software systems, operational change management, and business advisory. Let us take your organization’s digital transformation to the Third Stage.