Three key things you need to consider when looking to change your ERP solution
“There is nothing wrong in change, if it is in the right direction. To improve is to change, so to be perfect is to have changed often.”
The famous quote was part of Winston Churchill's defence of his first budget as the Chancellor of the Exchequer.
People tasked with reviewing Enterprise Resource Planning (ERP) systems for an organisation may also find themselves defending not only the inevitable change this would bring, but also the budget required to achieve this.
There can be a variety of reasons why a review on your ERP solution is required. For example:
- the software is out of date;
- the hardware is unsupported;
- you encounter frequent crashes; or
- a breach of security or an instance of fraud has occurred.
All of these could hold back, or cause significant harm, to your business.
Whatever the reason for review it is important to consider your organisation's key requirements and project length during the selection process to determine what your next steps should be.
Questions to ask yourself when choosing your next ERP solution
1. Should we go cloud or server based?
Surprisingly the benefits of cloud-based ERP solutions can still be unknown for many organisations. Unless there is a major issue with infrastructure needs like insufficient internet access, the jury is out for the advantages of cloud Software as a Service (SaaS) platforms.
Frequent updates of SaaS ERP keep businesses ahead of the curve by providing the latest functionality and regulatory updates. For example, the Microsoft Dynamics 365 suite updates twice a year with major enhancements – all without disrupting day to day operations.
These cloud-based ERP packages provide organisations the stability of being on a platform which have a 99% uptime. They are managed on world class secure server environments - leaving the IT function to focus more time on more valuable tasks, and less time maintaining outdated local servers.
In addition, the user interfaces of modern cloud ERPs are designed to increase end user adoption and usability – leading to even greater time efficiencies. Being based on modern platforms provides multiple options to connect and automate processes.
2. What would be the running costs of a new solution?
Cost will be an important part of an ERP system review. Having compared required features and capabilities of the various platforms available, the cost factor needs to be considered as a key part of the argument when developing a business case to the board.
Working out the cost of running current systems will be a useful baseline vs investing in a new ERP platform. Calculating the cost of the software licenses, implementation fees, ongoing infrastructure costs, support fees, and the cost of IT resources for maintenance may take time - but be relatively simple. The overall operating expenses provide a steer for the timeline of return on investment (ROI), which leads us to the next question you should be asking…
3. What would be our return on investment (ROI)?
Quantifying an exact ROI from all the gains of a new ERP system will be harder to calculate. Some areas you should investigate are:
efficiencies gained from process improvement and automation;
data and processes being held within one place improving visibility;
reducing the amount of outstanding accounts receivable improving cash flow;
improved employee satisfaction and staff retention due to an ease of use; and
increased response times and reporting capabilities enhancing decision making
If definitive figures or exact timeline of ROI can’t be accurately calculated, then the new ERPs key benefits and indicative savings should be highlighted instead.
Making the case for change in your organisation and delivering it
As Churchill found, there will always be opponents to change. Recognise that change is difficult. Be prepared for resistance when presenting the benefits that a new ERP system will bring to your organisation.
Get end users and decision makers onboard early. Look to change gradually so that it is easier to manage, simpler for users to adopt and to reduce the risk of failure. Do this by looking to implement small steps in the first phase of your implementation - but be mindful of key areas subsequent phases might include.
If delivered correctly, replacing your ERP system may prove to be a turning point in your organisation's IT strategy and culture.
Contact us for more information about how RSM can help your organisation change its ERP system.
About the author
Steve MacDonald is a Managing Consultant for RSM's Technology and Management Consulting service line, specialising in delivering Microsoft Dynamics 365 Business Central solutions to organisations across all sectors.