Your ERP software solution (or accounting software system) will need to be replaced at some point in time. The real question is what do you need to do and when do you need to do it.
In support of your anticipated efforts, there are any number of articles, blogs and whitepapers that list the top 5 or 10 steps or top 5 or 10 mistakes to avoid when it comes to purchasing an ERP software solution. In truth I think there’s no perfect methodology for evaluating an ERP software solution. The fact that there are just as many positive steps as there are mistakes and the fact that there are far too many failed implementations leads me to believe that the most critical time in acquiring an ERP software solution is the very beginning before the first product has been reviewed. If that’s the case, maybe we should spend our time creating a foundation for success.
Build a Consensus that it’s Time to Evaluate Your ERP Software Solution Alternatives
There is no such thing as a perfect ERP software solution. Every firm will have some issues with their current ERP software solution (or accounting software solution if they are a small to mid-sized business). At some point the sum total of these issues will exceed the firm’s collective tolerance. This doesn’t mean that a change is in order, but rather that a critical mass of users has decided that maybe there’s a better ERP software solution alternative.
Rather than immediately launching a search for a new ERP software solution, maybe you should evaluate your current ERP software solution (or accounting software if you are using a small business package) and see if it’s possible to improve what you have. You could probably call this an informal evaluation to assess options. In this case the comparison is made between your current ERP software solution and what you could create if you were to improve it and improve your underlying business processes.
Just as you would expect to find once a formal ERP software solution selection project has been launched, all of the key stakeholders should be involved with a notable difference. This analysis is bottom up rather than top down. By this I mean that system users are really driving the analysis. Once this morphs into a formal ERP software solution selection project, executive sponsors and other top managers will need to join the project. This doesn’t mean that staff and operations people will be ignored. Their participation, knowledge and support are critical to finding and implementing a new ERP software solution.
An ERP software solution consists of two key elements: business process support and strategic visioning. This first step was born from a general frustration with the current ERP software solution by every-day users. People need to be able to work efficiently (getting the job done quickly) and effectively (getting the job done well, particularly when it comes to every interaction with customers). An ERP software solution needs to support users first before it can support the strategic visioning of executives. If users can evaluate the current ERP software solution and prove that investing in a new ERP software solution makes sense, then executives and senior managers can be brought into the project.
Identify Strengths and Weaknesses of the Current ERP Software Solution
Each person who has any relationship with the current ERP software solution needs to say what they like and what they do not like. This includes functionality and reports that the current ERP software solution or accounting software system does not apparently support. If this preliminary analysis moves into a formal ERP software selection project, considerably more detail will be required. The information collected here doesn’t have to be that detailed, but it does have to be sufficiently detailed that each reported deficiency can be properly evaluated.
Evaluate What Needs to be Improved
While some users might identify a specific weakness in the ERP software solution, this doesn’t mean that changes will be made. Managers need to evaluate whether the weakness reported is sufficiently critical that some form of action is required. In some cases an analysis might reveal that there is no weakness at all. Maybe it’s just a matter of a user’s perception of the current ERP software solution. Maybe it’s just a matter of supplemental training. The end product of this preliminary analysis is a list of actual weaknesses.
Determine Where you Want to Be
While it’s certainly important to improve your current ERP software solution, duplicating what you are doing today will not allow you to excel. All it will do is help you maintain your competitive position, and that may not even be possible. A critical part of this preliminary analysis is defining where you want to be in the future. Rather than concentrating on where you are and improving that, ignore your current ERP software solution. Define instead what you need to do to increase your competitive excellence. Avoid daydreaming of course. Create instead a reasonable picture of where you would like to be in terms of business processes and the system functionality that would be required to support that level of excellence. Define where you need to be (mandatory minimum) and where you would like to be (optional maximum).
Identify Changes that can be made to the Current ERP Software Solution
At this point you have a list of changes that should be or could be made to your current ERP software solution. Before you launch a formal project to replace your ERP software solution, you need to determine if the current system can be improved sufficiently that a new product is not required. For each weakness identified determine what can be done to eliminate it completely or improve it significantly. In addition determine what functionality you need to support the vision of your future. Are there functions in the current ERP software solution that you are not currently using or might be underutilizing? Can reports be created or modified? Can we integrate a performance metrics system to help us evaluate our current status across all areas of the business. Can fields be added to track critically required information? Can third party products be integrated? Can the system be modified, keeping in mind the fact that cost is not a factor at this point?
All you are evaluating is whether changes can be made to your current ERP software solution, not how much these changes might cost. Most important of all, is there an upgrade available that will eliminate some of these weaknesses or support your future requirements? Please don’t forget that your current ERP software solution is going to be improved over time. Therefore ask your current vendor if some of the weaknesses that persist after you have completed this analysis could be added to the system in the not too distant future.
Determine if you Need to Evaluate Other ERP Software Solution Products
Once you have completed your analysis, gaps may persist. The question you need to answer now is whether these gaps are sufficiently serious that you may need to make a change or that the cost of improving your current system might be significant. Virtually any ERP software solution can be modified. The issue you have to address is whether these changes may so alter your current ERP software solution that the vendor’s normal product upgrade process might be impaired and/or too costly.
This entire preliminary needs analysis has one primary objective. Is it possible to improve your current ERP software solution and improve your current business processes to the point where change is not mandated or justified? If you are not convinced that you can achieve sufficient improvements or compete more effectively using your current ERP software solution, then you need to evaluate other products.
At this point you have just taken the first step to analyze and possibly replace your current ERP software solution. We have created a number of articles that take this discussion further and we would suggest that read them at your leisure. We use the term “leisure” quite deliberately as this first step is the most critical one. Basically you are acquiring knowledge regarding your ERP software solution, the software selection process itself, functionality with which you had no prior knowledge and how you should review and select the product you might purchase.
If you decide that the performance of your ERP software solution needs to be substantially improved, there are two options you can pursue. Keep your current solution and make appropriate improvements or replace it. Rather than making a too quick decision you might regret later, start the process by evaluating what you have right now. Presuming you have improved the business processes that surround your current ERP software solution, spend whatever time is appropriate determining what works and what doesn’t work. Of course if your business processes need to be improved, do that as a first priority.
Even though you might decide to replace your current ERP software solution, you still need to evaluate your current system. How else can you determine what you need from your new ERP software solution?