Implementing an ERP is usually a long, arduous and expensive endeavor. Good answers to the 'Why' question are imperative, in our mind, to justify moving forward. We frequently see firms choosing to invest in an ERP for the wrong reasons.
A fancy new implementation isn’t always the answer
Implementing a new ERP is something that many businesses, especially those that have enjoyed a period of rapid growth, consider. It’s one of the subjects we’re often consulted on. The first questions we always ask: Why?
Implementing an ERP is usually a long, arduous and expensive endeavor. Good answers to the ‘Why’ question are imperative, in our mind, to justify moving forward. We frequently see firms choosing to invest in an ERP for the wrong reasons. Below are a few justifications we often hear when examining ERP transformation opportunities:
“I need a new ERP to drive operational inefficiency” Good ERP sales reps can earn 7-figure salaries, so it’s no surprise these individuals can lead companies to believe new ERPs are the “silver bullet” to their problems. And while a well implemented ERP can help resolve points of inefficiency, this only works if business processes are designed correctly from the start. An ERP alone will not solve operational inefficiency, and many of the gains from stronger processes can actually be implemented without a new ERP.
ERP as a transformational enabler – Another common story is that ERP is a prerequisite to perform other key transformation initiatives within the company. While an ERP system may enable business functions to operate more effectively, it is a tool that must appropriately selected and implemented in the right situation. Believing that implementing an ERP will allow a business to achieve other objectives without doing the proper homework is a common pitfall that could leave a business worse off than when it started.
“I need a new ERP to enable my organizational transformation”. Another widely cited catalyst is that a new ERP is needed to enable transformation initiatives within the company. The key question to ask in this line of thought: “What is it the business can’t do today in the current ERP that it needs to be able to do?” Very often, the answers to that question fail to hold up to cross-examination, and in reality, the current ERP can be extended to accommodate the desired change.
“I need a new ERP to close infrastructure/security/data gaps”. Consolidating technologies into a single ERP both centralizes and reduces the translation of data and can also streamline a company’s infrastructure footprint. All of this is positive. But many of the causes of disjointed data and security vulnerabilities have little to do with underlying applications and far more to do with general data hygiene. Ensuring data is correctly sanitized, de-duplicated and secured remains one of the most challenging objectives of a successful ERP program. Without proper homework and planning, this is one of the most prevalent reasons that ERP programs fail. Doing this kind of data normalization work is something that can be done with or without a new ERP, and many of the benefits can be realized with or without, as well.
Contemplating an ERP transition is one of the most complex technology endeavors a business can undertake with substantial monetary, operational, and technological challenges. Proper planning and oversight can be the deciding factor between operational and technological efficiencies that can deliver significant value to a business and a failure that takes longer and costs more to implement.
In short, make sure answers to the ‘Why’ question stand up to scrutiny before jumping all-in on a new ERP.
About Liberty Advisor Group
Liberty Advisor Group is a goal-oriented, client-focused and results-driven consulting firm. We are a lean, hand-picked team of strategists, technologists and entrepreneurs – battle-tested experts with a steadfast, start-up attitude. A team with an average experience of 15+ years, that has delivered over $1 billion in operating income improvement and over 300 M&A deals for our clients. Liberty has a proven track record in Business and Technology Strategy, Transformation and Assurance, Data Analytics, Business Threat Intelligence, and Mergers and Acquisitions. We collaborate, integrate and ideate in real-time with our clients to deliver situation-specific solutions that work.