Need A New ERP... Really?

By Enabliser Frank

How often I have sat in front of a CFO or Business Owner to discuss their requirements for a new system. Often this initiative has been generated from a point of pain in the business whereby the existing system is unable to perform a specific task or business function, or perhaps it’s just that it doesn’t do it very well. And so as it is with many aspects of life, we don’t take action until the pain of staying where we are exceeds the perceived pain associated with the change required to move on...

Here in Australia business owners typically change their business systems every 7 to 10 years. In my experience the process is always challenging and requires focused commitment and effort from all areas of the business in order to be successful.

That said - it is vitally important when considering such a disruptive event in the business lifecycle, to clearly understand the real business outcomes that you are expecting from implementing a new business solution and the real business drivers that are dictating that a change of system is required.

Often the issues that have created the point of pain in the business are actually just symptoms of the underlying business issue or environment. By taking some time to evaluate and document exactly how a new business information system can support a business in achieving its wider goals, the investment can be made with some clear outcomes in mind that can be measured to establish the true return on that investment over time.

Some questions that I would be asking my management team when evaluating the value of this investment to my business would be:

  • Why is this important?
  • Why is this important now?
  • What outcomes is this going to generate for my business, my customers and suppliers, and;
  • In what timeframe would these results be delivered?

These questions can only be effectively answered when considered with reference to the core values and mission of the business. This goes to the heart of the business and is a complete topic in itself, but for the purposes of this article let’s assume that our business is very clear on why it exists in the market, what it is trying to achieve, and what value it adds to customers in the markets it serves.

These core values and propositions provide an excellent framework against which the potential value of investment can be assessed.

For example, when I am told we need a stock management system and the current solution doesn’t have one, this is often a symptom of issues that may relate to an ability to understand and meet the requirements of customers for products at given times through out the year.

Now if the company’s core values centre around meeting the needs of customers and fulfilling orders within a day in 99% of cases, then this gives us a framework to answer the questions posed previously.

  • Why is this important?

Because without one we can’t support the needs of our customers which is a core value of the business

  • Why is this important now?

Because customer satisfaction is slipping and we are losing customers due to our inability to fulfil orders in a timely manner

  • What outcomes is this going to generate for my business and my customers and suppliers,

Customer retention will increase, therefore better volume and potential margin upside through better inventory management including supplier optimisation of special buys and logistics management.
and;

  • In what timeframe would these results be delivered?

Appropriate research will be conducted to identify likely effect on stock turns, within a period, effect on margins, life cycle value of a customer etc, and from this a value based timeline would be derived.

So in summary, when considering the possibility of implementing a new ERP solution, take the time to really establish the key business drivers behind the decision, the expected outcomes and how these outcomes will support and add value to the enterprise as a whole.

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