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How to tell when it is time to replace your ERP system

Does this sound familiar? The business processes that currently support your company’s operations are continually stressed as new concepts are introduced and/or new challenges present themselves. Your business has begun to struggle under the complexity of its own growth and you realize that it is time to re-evaluate the software tools that support your infrastructure; however, the expense of replacing the existing software tool introduces doubt.

Growing your company and maintaining its efficiency is expensive. Funding change can be difficult to justify as fear of the unknown and the reality of many other important and pressing needs that “nudge you” all vie for a share of your budget and time. You never want to invest in “costs to the business” before you have to, but at the same time, as clichéd as it is, you don’t want to wait until the business is “burning down” before you buy insurance.

So how do you know that the time to invest in new software tools is “now” and not a year from now?

Here are 5 things to look for and depending on how much these are impacting your business it may be your time to change. This is in no way an exhaustive list but it is a good start.

Using other systems to help get what you need. No matter how good your business software tools are, it is sometimes difficult to avoid the use of some occasional tool that can deliver a given task – a good example would be reports. A special report not supported by your software i.e. External reports, Excel spreadsheets, or a minor manual report. Do you have many of these and how much has this introduced more complexity to your business Process? External reports – which is the current one? Excel Spreadsheets and manual processes – apart from the known inefficiency of re-keying data, what is the cost of delays between when the data in one system is changed and when that data is updated on the report? These are all inefficiencies from using multiple systems that contribute costs to your bottom line.

Unable to predict if your jobs will be profitable. You are involved in similar types of projects but to predict costs across each project cannot be done to a comfortable degree of certainty. Are you seeing unexpected margin fluctuations and/or roller coaster costs becoming typical of your jobs when delivered? Worse yet, these fluctuations affect your ability to be certain that a particular job will make you money as you have to wait until after the job is completed, at which point it is too late to “fix” things.

You have many Customizations Integrated or 3rd Party Applications added-on to get the functionality you need. You picked your business software based on your needs at that time. Since then, your team has become more mature software users and can now better leverage software tools to efficiently complete their tasks. Does your present IT Tools have the functionality to meet the growing demands identified by your users? Perhaps you already have 5 to 15+ “3rd Party” software pieces to manage – but you have also begun identifying other areas of the business process that would benefit from automation. Instead of managing another 3rd Party software it may be time to investigate introducing a single IT Tool that starts off with all the necessary features, removing all the time and money incurred managing and supporting your multiple 3rd Party tools.

“Near misses”, something bad that “almost” happened: Almost losing money on a project; Almost quoting at the wrong margin; Almost ordering and delivering the wrong equipment; Almost scheduling the services team to be on-site at the wrong customer; Almost forgetting to invoice the customer for a portion or “extras” of the project (happens a lot); Almost overlooking a key customer support issue; Almost forgetting to invoice for something delivered? Are you seeing these near misses often in the company? Are you sure you caught all? Have you quantified this cost to your company’s bottom line?

“Double Checking”. An often overlooked cost to business is the amount of time employees waste double checking because there is no confidence in the information they had initially. Is/was it the “right” data? It may be taking a long time for your systems to process the data into the reports you expect. Do your top producers complain about spending time checking information because they cannot rely on what your system says? i.e. Does your team run to the warehouse to check stock even though you have inventory automated?

There might never be a “convenient time” to introduce new business software tools to your business as “new” will always be disruptive, cost money and require employees to learn how to do things differently.
Given – the business software tool(s) that got you to where you are will probably not get you to where you need to be; your software could be out dated; your software could be under-resourced as far as functionality to meet your current needs – do you want to be proactive rather than reactive? Do not wait until it becomes a crisis but look at these challenges as challenges and not problems. I believe that in business there are no problems, just challenges and all challenges have solutions. Ask the question – are you prepared and using the right tools to meet your business challenges head on?

If your business is growing and/or you are seeing one or more of the critical signs above showing up consistently in your business, then now might be the time to consider making a change.

By Wayne Dinzey