Whether your business operates on a collection of homegrown applications, a select suite of products designed for specific business needs or a full ERP system that does it all, there are several reasons why your organization might benefit from new ERP software. Some reasons hit close to home, like losing out on new customers who prefer a modern shopping experience. Other reasons are out of sheer necessity to keep your business going.

Determining your organization’s motivations is not a small task. Your motivations could be based on a mixture of different factors. To help you determine if your organization might need a new ERP system, we’ve defined some of the major reasons organizations implement or switch to new ERP software, along with some tips, best practices and disclaimers for each:

1. Replacing Your Legacy System

The most obvious reason for an ERP implementation is simply to replace your legacy system. There comes a time in the trajectory of every organization when the CIO or other executives recognize that their current software isn’t cutting it anymore. There are several reasons behind this:

Your Current Software is Outdated

If the business processes that your current system supports have changed, users may be relying on workarounds to perform their daily functions. Workarounds are exactly what their name implies – extra steps performed in a system to work around missing functionality required to complete a task. Workarounds cause inefficiencies, and in turn, can increase costs and create unhappy employees.

Along the lines of employee happiness, a younger workforce may find it difficult to learn the existing application and find newer software more attractive and even familiar. Newer technologies follow similar design patterns to consumer applications of which younger generations are already experts. Retention of the best talent is important to stay competitive in any industry, and keeping your workforce engaged has a direct correlation to employee retention.

Most importantly, the modern consumer is looking for convenience. When a customer transacts with your organization, he or she wants a simple and efficient experience. With older ERP software, sometimes the entry point for customers is extremely dated. For example, a system that accepts sales orders via fax, but not online can turn potential customers away and towards a more accessible competitor.

Your Organization is Going Through Digital Transformation

The phrase “digital transformation” can be heard often when CEOs address stakeholders or VPs give a keynote at internal conferences. But what does it mean? According to the website CIO.com, a digital transformation is the “application of digital capabilities to processes, products, and assets to improve efficiency, enhance customer value, manage risk, and uncover new monetization opportunities.”

One of the biggest shifts in the IT paradigm related to digital transformation is accepting that business applications can live in the cloud and don’t need to be on-premise to be serviced. When an organization decides to transform its IT infrastructure from in-house to a cloud-based setup, most applications require a major upgrade or need to be retired and replaced.

Another shift related to digital transformation is organizations acquiring new, modern applications to perform ancillary functions. For example, suppose an organization implements a new expense tool. Both employees and management alike are loving the new tool as it allows an easy way to submit, view and approve expenses from any kind of device. This scenario may not seem like it has anything to do with needing new ERP software, but what if the organization has several of these examples and none of the applications integrate with the current ERP solution without heavy customization? A new system would most likely be more efficient and beneficial than creating all those custom interfaces.

Your Legacy System has Issues

The most dire of reasons for replacing your legacy software is the need to address issues with the current platform. Workarounds alone may not be enough to solve a business problem created by your system. If your legacy system simply cannot handle real-time inventory updates and your sales depend on this, it’s time for new ERP software.

The worst crime any business application can commit is to provide bad data to its users and customers. If your legacy system is providing inaccurate data to customers (for example, current pricing on items) or faulty data is being used in demand forecasting, it’s time to part ways with it. In an era where consumers have a wide-reaching platform to share their mishaps with the world (a.k.a. social media and review sites), it’s critical to have a system you can trust to provide accurate and relevant information to your customers.

2. Scaling Your Business

When business is good, it grows – and with growth comes a need for a more robust enterprise backbone. There are some ERP systems that are built for small to medium sized businesses (think Sage) and others that are built for large enterprises (think SAP). If your organization has substantially expanded since you implemented ERP, you may be outgrowing your system. Here are some telltale signs that your business could benefit from new ERP software to scale your business:

Performance is Slow in the Current System

Due to increased transactional volume, the performance of some ERP solutions may slow depending on their architecture. This will become apparent when users submit tickets for reports taking longer to run than normal or when batch jobs are not completing in the time they are allotted.

Users Experience Intermittent Issues and Outages

If your ticketing system is constantly filled with users reporting outages and issues, your ERP system likely is not keeping up with the business demand. A key indicator is time-out related issues. Once you start seeing an influx of these, you’ll know it’s time to make a change.

If a new ERP solution is implemented for this reason, it’s a smart idea to pay particular attention to performance requirements and load testing throughout the implementation.

3. Cutting Costs

Commonly, one of the first places an organization looks to reduce costs is to the IT department. After some analysis, a CIO or business leader could find that moving to a new ERP system would save the company a significant amount. Cost savings could come in the form of lower cost licensing and savings on custom support fees:

Lower Licensing Costs

Different vendors have varying licensing models – some can be considered a premium while others are in the affordable range. Comparing your licensing cost for your current ERP solution to others in the market requires reaching out to the sales teams of different ERP vendors. It may seem too early when you’re simply trying to analyze the costs, but bringing in different vendors can actually save costs in the long run as the sales teams are fighting for your business.

If this seems a little intimidating, Panorama offers ERP selection and contract negotiation services to help you through the RFP process and to be your advocate in meetings with vendors. Our experienced team can help you make the right decision for your organization when selecting a new ERP solution.

No Custom Support Fees

If your organization is currently paying vendor fees to support custom applications, this may be another place to save. Implementing new ERP software provides the opportunity to realign your business processes with industry standards, allowing you to drop custom support and utilize out-of-the-box capabilities of the system.

4. Upgrading Your Existing ERP

Another reason for implementing a new ERP system is the need for a software upgrade. There are a few key reasons for performing an upgrade, each with slightly different implications:

The Current Software Version is Sunsetting

Software vendors can’t support all versions of a product indefinitely, and with that constraint comes the need for customers to upgrade. Typically, when a vendor has a major version of their software approaching the end of its life in terms of technical support, they will proactively reach out to customers to help them through a transition plan. During this communication with the vendor is the right time to make your ERP selection to the appropriate version, or new product, for your unique needs.

Bug Fixes are Included in the new Release

As mentioned previously, oftentimes users will be resourceful and find workarounds to system shortcomings to complete vital tasks. If an upgraded version has fixes to these workarounds, the justification for upgrading is satisfied immediately.

Contrary to the previously mentioned scenarios, upgrading your existing ERP solution can be handled differently than a brand-new implementation. Users are already familiar with the software and communication can be adjusted to excite users about coming improvements. Your organizational change management strategy will look different for an ERP upgrade, as users are more open to improvements than large-scale changes.

ERP Selection Help

No matter your reason for implementing (or upgrading to) a new ERP system, having an experienced team in your corner will make any project less stressful and more productive. Our ERP consultants are experts in ERP selection and can ensure you invest enough in the selection process to save time and money during implementation.

Most organizations would agree that evaluating ERP software is as enjoyable as being stranded in a blizzard. There are so many ERP vendors in the market today that it’s hard to see the details while there’s a flurry of snow blowing around you.

If you’re about to begin ERP selection, a good place to start digging into the details is with some of the more well-known ERP vendors. While these vendors are a good fit for many organizations, they may not be right for yours. Then again, one of these vendors’ products might be just what your organization needs to reach its strategic goals.

Why not find out for sure by looking at some of the product details that most organizations aren’t privy to until the later stages of selection? Our ERP consultants have in-depth knowledge on hundreds of ERP vendors, but today, let’s look at some insider information on Oracle and some of its products.

Oracle Overview

Founded in 1977, Oracle is a $39 billion-dollar company that develops enterprise software and other technology for mid- to large-sized organizations. Oracle’s primary strength is developing and acquiring robust product lines, such NetSuite, that provide flexible functionality to a variety of industry niches. We have evaluated and/or implemented Oracle products for organizations across various industries and verticals and found Oracle’s products to be very versatile.

Insider Information on Certain Oracle Products

Oracle JD Edwards (JDE)

JDE has always been a good fit for manufacturing companies and professional services companies. However, in our experience, JDE is not as good of a fit for consumer-packaged goods companies that have extensive distribution, supply chain management and transportation needs. Typically, JDE works best for larger organizations with complex manufacturing and service management processes.    

While JDE is a robust product, it isn’t receiving the same R&D funding it once did. Oracle has significantly reduced the amount of development and minimized the research component of JDE funding. Our recent experience with Oracle at client engagements has confirmed the fact that little to no new development of JDE will be performed. This was stated by numerous Oracle representatives at multiple levels.

This trend is mostly due to the fact that Oracle has decided to focus on its Cloud Applications. This shift in focus means that it will only be a matter of time before a vast majority of JDE system integrators and resellers will no longer focus on JDE.

Typically, in these times of transition, an ERP vendor shifts internal resources to its new product. We have found this to be the case with Oracle, as they are decreasing technical support resources for JDE in order to focus on training and certifications for its Cloud Applications.

So what is Oracle’s long-term plan for JDE? Oracle will continue to release updates, but they likely will only include functionality that has already been developed by the channel or include minor bug fixes. Many vendors follow a similar process when starting to sunset a product line.

The sunsetting of JDE doesn’t just affect organizations in the long-term, but in the immediate term as well. Organizations using JDE may find the user interface difficult to navigate. This is because Oracle has not made any significant improvements to the JDE user experience in many years, and they don’t intend to make any improvements in the future. It’s not surprising that JDE has historically had a low rate of user adoption. This is not a challenge that cannot be overcome, however, as we have used organizational change management activities to increase user acceptance of new ERP software.

All technology that Oracle is currently developing is designed for the cloud model. Development kits, integration toolsets and other integration technologies are being built on a common cloud platform. Fortunately, JDE can be embedded onto this platform, and we hope that it will eventually be integrated so customers don’t have to be responsible for their own system maintenance.                   

Despite the lack of research and development, JDE is still a very functional product. Based on RFP summaries from our recent client engagements, we have found that JDE can meet most clients’ financial, manufacturing and professional services requirements. If you’re considering an ERP implementation in one of these industries, JDE may be a good fit.

Oracle Cloud Applications

The Oracle Cloud Applications are designed for organizations across industries with at least $750 million in annual revenue. Smaller organizations can run the application set but are often resource-constrained, which leads to less functionality being adopted or implemented.   

Oracle started developing its Cloud Applications seven to eight years ago. While rebranding Oracle Fusion into the Cloud Apps and broadening the scope of functional areas has benefited Oracle’s cloud ERP offering, it still lacks some functionality. This is slowing down their new sale and cloud conversion rates.

The intent of the product is to bring best practices from their other products (CRM, Manufacturing, Financials – Seibel, JDE and EBS). However, not all complex processes and functionality have been built into the new application, and Oracle is relying on system integrators for heavy configuration or product extensions to supply basic functionality. Many organizations, including Panorama clients, see the Cloud Apps as too risky and too expensive.

However, the Cloud Apps do have an intuitive user interface. Historically, separate applications, like Transportation Management or Demand Forecasting, had different user interfaces and were difficult to navigate. With the Cloud Apps, Oracle has done a nice job of combining functionality of these separate applications while updating and harmonizing the user interface.

Despite the intuitive user interface, we have found that user adoption rates for the Cloud Apps are behind the curve when compared to other leading vendors regarding innovation, deployment methods and overall maturity. For example, Oracle has been developing their artificial intelligence platform for many years, but it has lagged in functionality for production and distribution environments.

Another challenge for the Cloud Apps has been Oracle’s recent change in leadership. Last year, Thomas Kurian, Oracle’s President of Product Development in charge of the Cloud Apps, left the company, leaving the focus of the future development of the Cloud Apps unclear. Kurian wanted Oracle to be more public-platform-agnostic, inclusive of Amazon Web Services (AWS) and Microsoft Azure. This conflicted with Oracle co-founder, Larry Ellison’s desire to continue to operate solely on the Oracle platform.

What does this mean for Cloud App customers and potential customers? For the time being, the Cloud Apps will only operate on the Oracle platform and not the Azure or AWS platforms. This may pose challenges for some organizations as full dedication to the Oracle platform, including toolsets and services, is often too much to ask for mid-sized organizations. Platforms like Azure and AWS make it easier for customers to source experienced resources to support their ERP systems.  

Oracle’s dedication to the Oracle platform has also affected customers’ ability to automate certain business processes as some functionality is still in development. While Oracle continues to develop functionality, it is hesitant to tie future releases to specific dates. As a result, many system integrators are developing their own extensions as a bridge until Oracle releases the necessary functionality.

During ERP implementation, organizations often become frustrated with products that lack certain functionality as this can mean a longer time to full benefits realization and return on investment. However, this does not need to lead to ERP failure, as long as the organization sets realistic expectations and has a plan for continuous improvement.

Despite slow product development, the Cloud Applications is headed in the right direction, with new functionality emerging every day. Based on RFP summaries from our recent client engagements, we have found that the Cloud Apps can meet most clients’ financial, manufacturing, consumer-packaged goods and supply chain management needs.

Should You Implement an Oracle Product?

Your ERP selection considerations will depend on your organization’s unique needs and goals. Therefore, your decision about Oracle shouldn’t be based solely on this blog post. Oracle has many other viable products that may be a good fit for your organization’s business requirements and digital strategy.

Panorama’s ERP consultants can help you prepare for ERP selection by understanding your unique organizational goals and recommending suitable products from several different vendors. We are experienced in facilitating vendor demonstrations and evaluating products against organizations’ business requirements.

More organizations are realizing the benefits of ERP software. Not only are Fortune 500 companies implementing and upgrading ERP systems, but small businesses are taking advantage of niche ERP solutions tailored for their industry. If your organization is looking to realize increased business benefits from ERP software, our experience has shown it is critical to develop a detailed and comprehensive business case.

By developing a business case for new ERP software, you can shed light on operational issues, determine how to solve them and estimate the resulting business benefits. This is easier said than done, as organizations tend to have different ideas regarding what constitutes an effective business case. With that in mind, we want to share seven tips for developing an effective ERP business case:

Understand the Importance of a Business Case

Don’t develop a business case until you understand its importance. You’ll develop a much more thorough business case when you know what’s at stake. So, what’s at stake? Business benefits. A business case ensures your organization realizes measurable business benefits from its ERP software. It ensures the project achieves business goals, not just IT goals.

Identify Pain Points

A good business case begins by identifying problems and determining what solutions are needed to solve them. Not everyone will agree that problems exist or that they require an ERP solution. A business case can help you achieve organizational alignment regarding the need for an ERP system.

Acknowledge Challenges and Risks

There are, obviously, challenges in every ERP implementation. A business case allows an organization to take an honest look at obstacles that must be overcome, whether it’s a lack of resources, lack of expertise and/or lack of employee and executive buy-in. We have seen many high-profile cases where ERP implementations failed because those responsible for developing the business case and implementing the system were not forthcoming about potential risks.

Determine Your Organizational Goals

Chances are, your reason for implementing ERP software isn’t just to replace an old system. Often, we find organizations have many goals they want to achieve through implementation:

Improving Customer Service

Every business case should consider the customer service benefits of new ERP software. Does your organization want to enable customers to order online 30% faster once an ERP solution is implemented? If so, include this in your business case.

Improving Business Processes

If your operational pain points are related to broken or inefficient business processes, then outline these processes in your business case. Potential process improvements should be specific and measurable.

Improving Employee Morale

An ERP system can improve employee morale by making employees’ jobs easier. Employee morale is measurable since it can be gauged by distributing surveys, conducting focus groups and/or tracking turnover rates.

Increasing Revenue

If processes are streamlined, customer satisfaction increases and employee morale improves, this will most likely result in a positive financial outcome as well. We have found that identifying potential cost savings within a business case increases the likelihood of achieving executive buy-in. The business case also should outline the total cost of ownership of new ERP software, including implementation costs. When you focus on both the costs and the benefits, you can show how the latter outweighs the former. After all, ROI is the language of executives.

Consider Alternatives to Implementing ERP

Instead of implementing new ERP software, some organizations upgrade their existing software, improve their business processes without new technology, or simply decide to do nothing for the time being. It is important to examine the costs of each of these options against the cost of an ERP implementation. For example, it may become evident that the cost of doing nothing and remaining inefficient is greater than the cost of an ERP project.

Develop an ERP Project Plan

Your business case should include a detailed section outlining the components of your ERP project plan. While the business case helps get the project off the ground, the project plan ensures a project maintains momentum and sticks to the expected timeline and budget. Accounting for all essential project activities, including change management and business process reengineering, sets realistic expectations regarding implementation timeline and budget.

Measure the Results

Once you’ve built a business case and begun your project, it’s time to start measuring results. It’s important to measure results throughout the project so you can track your progress, promote accountability and monitor your budget. Measuring results can also help sustain project buy-in when and if it wanes.

A Business Case Supports ERP Success

A thorough business case will, more often than not, result in a successful ERP selection and implementation. If your organization is considering an ERP implementation, Panorama’s ERP consultants can guide you in developing a business case that allows you continuously prove the value of new ERP software.

Organizations implement ERP systems for a variety of reasons. While one organization may want to streamline its order-to-cash process, another might be more interested in refining its hiring practices.

To address these unique needs, ERP vendors have developed systems that address a variety of functional areas. Below are examples of five functional areas that can be improved with the implementation of a modern ERP solution:

Finance, Accounting, Payables and Receivables

Virtually every organization that invests in an ERP system does so in order to gain greater control over their financial operation. All financial activity within your organization can benefit from an integrated ERP system. It enables your organization to successfully manage financials with a modern, integrated interface geared to higher levels of productivity and transparency.

Customer Service

Many ERP systems have e-commerce functionality. Others integrate well with standalone e-commerce systems. In either case, you can gain better data insights by ensuring your e-commerce function isn’t siloed. Better data insights can in turn improve your customer service. One of our process manufacturing clients implemented an integrated ERP system that automated their inbound customer service, giving reps more time for outbound calls.

Supply Chain Management

Successfully refining the supply chain management function is the holy grail for manufacturing companies that deal with materials, inventory, assembly and line personnel. ERP software can help you streamline your manufacturing processes domestically and internationally. When dealing with variations such as manufacturing compliance from country to country, currency fluctuations and import/export laws, an ERP solution well-versed in supply chain management can be a valuable asset.

Order Processing

An order processing module within an ERP system is designed to help an organization better manage order entry, credit checking, shipping, sales analysis and reporting. Oracle SCM Cloud and others like it provide the capability to manage inventory, shipping and other fulfilment tasks. Many of these systems also feature customer interface modules that can integrate into your company’s website and various modules with IoT capability.

Human Resources

ERP solutions with a human resources module can improve the management of staff system-wide and is a great benefit for any organization no matter the size. Robust capabilities are not necessary for every organization, but for those that do require them, there are a few providers that offer it.

Project Management

When activities such as billing, expense management and human capital management must be accounted for and incorporated into your overall balance sheet, ERP solutions can play an important role in helping your organization run smoothly and accommodate when scalability is necessary.

How to Maximize ERP Business Benefits

While ERP software can automate many functional areas, you’ll realize more business benefits if you optimize your functional areas prior to ERP selection. Requirements gathering workshops can help you understand your business processes and identify pain points. From there, you can determine which processes need improvement.

This method – known as business process reengineering – ensures your ERP system supports your organizational goals. When you improve your processes, your ERP implementation is no longer an IT project, but a strategic initiative that executives are more likely to support.

We recently conducted process mapping workshops with a company specializing in government subcontracting. Employees and executives were so excited about the future state processes they designed that they turned the process maps into giant posters for display in executives’ offices.

This is an example of organizational alignment. You should strive for this alignment no matter what functional areas you’re automating. If you want to turn your IT project into a strategic business initiative, our ERP consultants can help.

The beauty of ERP software is that it can manage both sides of an organization’s operation: the procurement and accounts payable side, as well as the order-to-cash and accounts receivable side. While both sides of the equation are critical to the financial health of any company, it is the nurturing of customer relationships that ultimately keeps the lights on.

To improve the customer experience, an ERP system is necessary and should incorporate several different modules. Whether each module is a built-in component of the core or an integrated, third-party add-on, it must all work seamlessly from beginning to end. 

Good customer relationships don’t just happen. They are a byproduct of strategic actions at several stages of the engagement continuum. Each of these processes can and should be managed by an integrated ERP system. Conducting a technology assessment can help you document your pain points and identify the processes where ERP software can make a difference.

5 Ways an ERP System can Improve the Customer Experience

Customer Management

Managing customer relationships is a vital component of the order-to-cash process. The best way to handle customer relationships, especially for mid-size and large organizations, is to look for an ERP vendor that incorporates master data management (MDM) and customer relationship management (CRM). While the MDM and CRM can be used together, they could also be two different modules with two distinct purposes.

An MDM module can ensure consistent and reliable customer information is gathered, housed and retrievable by internal stakeholders. That information can include key pieces of data such as order history, company history, credit information, locations, key contacts, annual revenue and more. It can be thought of as a catalog of all relevant data about that customer.

The challenge many organizations have when implementing an MDM module is compiling all necessary data from each customer. The information may already exist in some form but could be scattered in various locations and formats. If information is scattered, then identifying and consolidating that information into a single resource is necessary. Once consolidated, that information is available to all internal stakeholders and modules through integration.

While MDM compiles overall data about a customer, a CRM solution enables sales staff to track prospect and customer interactions in order to identify opportunities. For organizations that have more than a handful of customers, manually tracking of every interaction is nearly impossible. Only a CRM system can consolidate trends, opportunities, preferences and financial data. This allows organizations to better plan revenue projections and budgets.

Many of our clients are seeking better data insights that they can use to improve the customer experience. We often walk these clients through business process reengineering to ensure their processes are aligned with their digital strategy.

Order Management and Fulfilment

An order management system (OMS) allows companies to track the status of every customer order at every stage. By understanding when orders are being entered as well as how and when they will be fulfilled, an organization can better manage customer relationships. An OMS can also help an organization manage different shipping options, warehousing and multiple currencies. During ERP selection, be sure to look for a system that can . . .

• Improve customer relationships – The customer experience can be greatly enhanced by enabling a better ordering process, faster delivery and more accurate invoicing. The more enhanced the experience, the more confidence customers will have when placing an order. If an issue with an order does occur, an OMS allows staff to quickly identify and correct the problem.
• Maximize working capital and cash flow – An OMS reduces errors, increases the speed of order fulfillment and enables more accurate billing. As a result, a company can experience improved cash flow and greater working capital.
• Enhance supply chain efficiency – An OMS can provide valuable insight into inventory, workflow, pricing and market trends. This can lead to greater organizational efficiency and facilitate proactive decision making. From a supply chain perspective, an OMS may help reduce costs due to leaner inventories and an understanding that products and materials can always be sourced quickly from other reliable providers.
• Improve staff management – By allowing customers to place orders online in a way that is connected to an ERP solution, the organization can better manage its staff. Automating the ordering process will funnel customer requests into the operation where resources are then allocated to ensure the operation is properly staffed. Handling orders this way enables organizations to better meet customer expectations.

Credit Management

Incorporating a credit management component into an ERP system allows for transparency, helping an organization adhere to an approved set of terms for each customer.

Without such a credit management policy and overall credit philosophy incorporated into an integrated ERP solution, organizations put themselves at greater risk by possibly extending credit terms to customers that may be unable to pay.

While many companies mistakenly place the responsibility solely on customers for unpaid debts, quite the opposite should be true. It is often the lack of a clear credit policy within an organization that results in late or unpaid invoices.

In the same way that fences make for better neighbors, a clear and actionable credit policy incorporated into an ERP system makes for better customer engagements.

Invoicing and Accounts Receivable

When submitting invoices to customers, leveraging technology and incorporating some form of automation is preferred over manual submission. Automation allows for better tracking and helps organizations get paid more efficiently.

A robust ERP solution should incorporate some form of invoice automation, ideally via a method that submits the invoice directly into the ERP software. This helps eliminate errors and delayed payments.

ERP solutions can provide comprehensive accounts receivable reporting, tracking the progress by which invoices are submitted and ultimately paid. This capability can help organizations identify and eliminate possible invoicing errors well before they get to the customer.

Payment and Cash Application

Almost no other segment of the order-to-cash process requires more attention than customer payment and cash application. These two processes are vital to the health of every business. Leveraging ERP software that can manage these two areas will go a long way in ensuring on-time customer payment and accurate application of that payment to a customer’s account.

While the payment process may sound straightforward, it’s a challenge for many organizations. Even after a new system is implemented, optimized processes may be difficult to maintain. This is because employees often resist new processes and cling to the old way of doing things. We employ change management techniques to help clients mitigate this challenge.

Customer Engagement Affects the Entire Organization

While ERP software can effectively manage multiple operational areas within a company, the area that has a ripple effect across the entire organization is customer engagement. It’s the experience customers have while engaging with their providers that will go a long way in determining whether that customer will continue the relationship or find another provider to do business with. A robust ERP system is an organization’s secret weapon, helping them provide the experience customers desire.

If you’re considering an ERP implementation, be sure to develop a business case that outlines all of the benefits you expect to achieve, especially those related to the customer experience. Our ERP consultants can guide you through the process of convincing executives to invest in ERP software. You can schedule a free consultation below.

With advancements in technology and faster, more reliable internet capability, we’re seeing more organizations use a mixture of IT solutions to address their specific needs. This mixture is sometimes referred to as a postmodern ERP approach.

A postmodern ERP system might be configured many different ways, but primarily it’s understood as an on-premise system augmented by several SaaS solutions that have been tightly integrated with the on-premise system.

The term postmodern ERP was coined by Gartner, identifying it as:

A technology strategy that automates and links administrative and operational business capabilities (such as finance, HR, purchasing, manufacturing and distribution) with appropriate levels of integration that balance the benefits of vendor-delivered integration against business flexibility and agility. This definition highlights that there are two categories of ERP strategy: administrative and operational.*

In other words, there are multiple parts to a postmodern ERP system: from financial, supply chain and manufacturing modules to marketing and staff management modules. What is required is a core ERP system with integration of various components that enhance the core – all designed to meet an organization’s unique needs.

While most large organizations tend to use on-premise, all-inclusive ERP solutions, the trend is moving toward the postmodern model. This is due to the unique role ERP vendors play, especially those that operate as SaaS companies. These vendors provide a level of flexibility that less nimble providers can’t. SaaS providers often focus on niche functionality that some of the larger players don’t address very well.

The postmodern ERP trend will likely continue and evolve into greater integration of in-the-cloud core systems with continued integration of other solutions. Because this trend is not lost on many of the smaller solution providers, they often position their compatibility with the larger ERP systems as a component of their value proposition.

It’s not just niche software providers who are benefiting from this trend. Systems integrators and other IT companies are positioning themselves as experts on the complex integrations and customizations necessary to make postmodern ERP work.

Should You Consider Postmodern ERP?

The important issue to remember regarding the move toward postmodern ERP software is that it is a strategy and an approach, not a product. There is no “Postmodern ERP” product developed and sold by ERP Company, Inc. In our experience with clients, we’ve found that some organizations find this approach ideal for their needs, while others find it too cumbersome and costly.

Organizations considering a postmodern ERP implementation must do a great deal of homework to determine which new software will work well with existing systems and who will handle the integration and future management.

Larger corporations may find the postmodern approach more attractive, as they likely have a robust IT budget and in-house expertise to effectively manage the implement a new digital strategy.

Smaller organizations, with more limited budgets and smaller IT departments, might find the work necessary to pull off a transition to a postmodern ERP environment too cost-prohibitive. If the new environment requires a great deal of manual intervention and data does not seamlessly flow from one system to the next, then a move to postmodern ERP might be a waste of time and resources. In our project recovery engagements, we’ve seen how data inconsistencies can cause a ripple effect throughout the organization, setting the company back financially and impeding their customer engagement and growth strategy.

Postmodern ERP Challenges

For any worthwhile endeavor, especially those that could have a transformative effect on an organization, there are always pitfalls and challenges. While pitfalls should be avoided, challenges should be identified and embraced. The key to any organization hoping to transition to a postmodern ERP environment is to embrace and overcome those challenges.

Integration

Although a postmodern ERP system may be an ideal solution for many companies, it usually requires a great deal of integration and oversight by IT personnel. A vital component to managing pre- and post-integration is the ongoing management. After different components have been integrated, individual solution providers may change a component of their software. If that is the case, a refinement of the original integration may be required. Being aware of and planning for these situations will be important for those with hands-on management of this process.

Customization

In addition to complex integration, customization will likely be required, depending on how the add-on is developed and the functionality the organization is hoping for. Customization may be ongoing in a postmodern ERP environment, as specific requirements from different solutions could change every so often depending on industry standards, changes in reporting, etc.

Training

If using different, yet integrated, systems in a postmodern environment, training of employees may be different from one system to the next. Anticipating training needs, investing in the training and being aware of when functionality changes from one solution to the next should be factored into the transition. We frequently use change management plans at organizations experiencing significant technology changes.

SaaS Service Level Agreements

Finally, support will likely vary from solution to solution. Even if a postmodern ERP system is so well-integrated that it runs like a Swiss watch, one weak link in a particular add-on solution could impact the entire system. Isolating the issue could prove problematic, especially with multiple add-on systems. It will be important for any organization implementing a postmodern ERP system to clearly understand what is and is not included in the service level agreement (SLA) associated with individual solutions. It’s also imperative that organizations understand if warranties and support have been voided based on certain customizations.

Postmodern ERP Checklist

Similar to the due diligence performed during an ERP selection, organizations should approach a transition to a postmodern ERP environment with discipline and commitment. Several items should be included on an organization’s checklist:

Stakeholder Involvement

As is often the case when making enterprise-level decisions with organization-wide impact, a team of stakeholders should be involved. Since several different systems will require integration into a core system, stakeholders from the impacted departments should have input into what processes are most important to their area. Focus on business process management as early as possible.

ERP System Evaluation

Since the notion of a postmodern ERP environment means dealing with several distinct solutions, a thorough understanding of what each provider offers – and doesn’t offer – is paramount. It’s also necessary to understand how warranties and SLAs will be impacted if integration requires a great deal of customization. If customization voids certain SLAs, the organization must determine if their in-house support team is capable of addressing issues as they arise. Finally, if significant changes are made to SaaS solutions that have been meticulously integrated into a core system, a significant upgrade to that solution might require another intricate integration.

Total Cost of Ownership Analysis

As mentioned earlier, some postmodern ERP systems may be cost-prohibitive. The total costs must be weighed against other solutions that might be more balance sheet-friendly. The overall cost of doing nothing should also be weighed against such a transition.

What’s Your Business Strategy?

Each organization’s approach to postmodern ERP will look different. It’s not important that an organization move to a pure postmodern ERP environment. What’s important is each organization configures a solution that suits their unique needs.

If you’re considering a postmodern ERP approach, our ERP consultants can help you weigh the costs and benefits. We will assist you in understanding your business strategy and ensuring organizational alignment before you make any technology decisions.

*Gartner, IT Glossary: Postmodern ERP, https://www.gartner.com/it-glossary/postmodern-erp, 2019

Manufacturing organizations today are increasingly focused on streamlining their operations to drive profits, increase margins and deliver high quality to customers in a timely fashion. While striving to remain competitive, some manufacturing organizations use every tool imaginable except the one tool that can truly help them: ERP software.

A robust ERP system helps organizations properly integrate and streamline interdependent departments. For most companies, it’s very important. For manufacturers, it’s vital.

Understanding Manufacturing ERP Software

Early attempts at developing an enterprise resource planning system can be traced back to the 1940s with the advent of calculating machines. This effort evolved into an early version of an ERP system in the 1960s through a collaboration between tractor manufacturer J.I. Case and IBM. The challenge at that time was to get a better handle on planning and scheduling materials for complex manufacturing operations. By the 1970s, companies such as JD Edwards, Lawson Software, SAP and Oracle were building ERP systems.

Today, ERP solutions are helping companies in various industries improve efficiency and help managers deliver on the promise of increased profits. Our clients in the manufacturing industry have seen many benefits from implementing enterprise software:

1. ERP Software Integrates Your Supply Chain

Effectively managing the inflow and outflow of materials is vital to any manufacturing organization.

In addition to managing materials, a robust ERP solution can manage a global supply chain that requires an understanding of multiple languages and currencies. Every country does business differently. For example, some countries incorporate a value-added tax while others don’t. Rather than having staff focus on the minutia of manually managing every detail of every transaction, you can implement an ERP system to automate operations. As a result, staff is freed up to focus on higher-value work.

2. ERP Software Improves Production Scheduling

To ensure materials coming into the organization are used when ordered and excess inventory does not accumulate, those materials must be planned into production. Enterprise software not only helps manage the procurement, pricing and payment of raw materials, it also helps manage scheduling of staff as well as machine operation and maintenance to maximize production schedules.

Some of our manufacturing clients use an engineer-to-order process where the order is placed prior to the product being designed, engineered and finished. These organizations benefit from ERP solutions that incorporate just-in-time inventory and an automated ordering system for customers. Depending on the items being produced and supply chain capability, a customer could place a tailored order on Monday and have the final product delivered by Friday – all with little to no waste.

A manufacturing ERP implementation also can help you utilize a just-in sequencing process, where materials are ordered and utilized in a production schedule as they arrive. If your system has serial genealogy functionality, you can trace the location and constituent components of completed goods to build complex products at scale.

The manual intervention and ensuing paperwork would be unmanageable without automation of these processes.

3. ERP Software Improves the Customer Experience

Many enterprise systems allow customers to access a customer portal and inquire about product availability, delivery and price. This data can then be used to dictate production schedules. When a customer can easily place orders and have them quickly delivered, that customer will be more inclined to be loyal to your organization.

We always recommend that our manufacturing clients not allow customers to place orders by phone. Organizations with millions or billions of dollars in revenue and an extensive global supply chain require automation.

4. ERP Software Removes Silos in Your Financial Operations

A manufacturer can be both a customer and a supplier. In these cases, it’s important to implement an integrated system with the modules necessary to manage both sides of the business. When evaluating ERP vendors, look for a system that manages the order-to-cash process for the supplier side, as well as the procure-to-pay process for the customer side. This is especially helpful for organizations that have incorporated a shared services model, where management of customer and supplier functions is managed centrally.  

Most suppliers prefer to be paid as quickly as possible, while most customers wish to hold onto their cash for as long as possible. An organization with separate supplier and customer financial operations can be disconnected from this financial philosophy. An ERP system, especially if deployed in a shared services department, can alleviate siloed mentality and integrate decision making.  

5. ERP Software Helps You Manage Staff and Other Resources

No manufacturing organization, no matter how much automation is introduced, can adequately function without appropriate staffing. An ERP solution can help with staffing issues, such as scheduling, hourly wages, time off/vacation, skill set, etc.

When managing a particular margin for products being shipped to a customer, a manufacturer with an enterprise system might only schedule certain staff to handle certain production lines. Without an ERP system, an organization might allow any staff at any hourly wage to operate any line, which might throw off and endanger margins, profits and overall staff availability.

ERP is Essential for Manufacturing Operations

During the ERP selection process, manufacturers may be overwhelmed by choices. However, focusing on finding a system that helps you achieve these five benefits is a good place to start. If you’re considering implementing a manufacturing ERP solution, be sure to contact us to help you develop a digital strategy and select the best system to meet your organization’s unique needs.

If you’re in a similar situation, you’re probably wondering how to transition to a new system. Before you make any decisions, you’ll want to read this post to learn about the potential risks of ERP transitions.

Why ERP Vendors Sunset Products

A vendor may have 30 different systems they’ve built or acquired over the years. Some of these are older applications. Consolidating these products and moving them to the cloud is one way for vendors to simplify their product offerings. It also allows vendors to reallocate funds to what they believe will be most profitable in the future.

How ERP Vendors Sunset Products

The process of retiring an ERP system can take several years – sometimes up to eight. During this time, a vendor cuts back on their implementation resources, removes technical support and reduces R&D funding. The product may still have new releases but these are not major. They are bug fixes or minor tweaking of the IP. If the product is moving to the cloud, the vendor will take best practices from this product and combine it with best practices from other products.

How to Transition to a New ERP System

Here are four tips for responding to the phasing out of your ERP system:

1. Understand the Vendor’s Sunsetting Plan for Your Product

It’s important to know what the sunsetting looks like in terms of timing and support. There are several questions you should ask your vendor:

• Will the phasing out be immediate (3 to 6 months) or will it be completed over a longer period of time (18 months)?
• Will support for issues, such as bugs and security patches, still be available? If so, for how long?
• Will new features still be added to the software or has the final feature already been added?

2. Involve Stakeholders in the Decision-making Process

Your transition team should include stakeholders from every department that will be affected by the change. The team will need to make decisions about how much to invest in the current ERP software in the interim. Most organizations decide to invest in fewer upgrades and less technical configuration. Each stakeholder should have input commensurate with their use of the ERP system.

3. Develop a Transition Plan

Does your current ERP vendor offer a comparable solution that your organization could migrate to, or will you make a wholesale transition to another vendor’s solution? While your vendor may offer you discounts for transitioning to their cloud offering, it usually comes out to be a similar cost as moving to another vendor.

Besides cost, another important factor for many organizations is ease of transition. However, the transition to your vendor’s cloud offering won’t necessarily be easier than the transition to another vendors’ product. In many cases, an upgrade is just as extensive as a full ERP implementation.

Whichever path you choose, you should ensure the new ERP solution aligns with your business requirements and organizational strategy. If you haven’t looked at your business processes in a while, you may want to spend time on business process reengineering before selecting a new system. This takes time, so don’t abandon your current solution too quickly.

Many organizations think a new system means more functionality, but this isn’t always the case. Some cloud ERP solutions are still being developed and may not have all the functionality you need.

4. Prepare Your Employees

As with any ERP implementation, employees need to be informed of upcoming changes. Personalized communication and training are essential.

While the new ERP solution offered by your current vendor may have familiar features, don’t discount the possibility that a different vendor might offer a solution that is more user-friendly. Either way, it’s important to invest in change management before selecting and implementing new enterprise software.

Challenges of Transitioning to New ERP Software

A mid-sized agricultural distributor was using an old version of Microsoft Dynamics GP for accounting and finance. The organization knew this product was on the sunset path, so they implemented a new system without engaging an ERP consultant.

The organization eventually discovered that the new system did not have the right functionality. As a result, they invested in extensive customization. They also implemented niche solutions for warehouse management, transportation management, advanced forecasting and demand planning. It wasn’t long before they decided to hire an ERP consultant.

The organization hired us to help find a single solution to replace their best-of-breed solution. The hurried transition off GP had created a mess of disparate solutions.

How did this happen? The organization had replaced GP too quickly. If they had taken their time and sought third-party guidance earlier, they would not be in a position of needing another replacement so soon after the first.

When transitioning off an old ERP, be sure to implement a solution that will last your organization at least five

Is Your ERP System Sunsetting?

If you’ve just discovered your ERP system is being retired, don’t panic. Vendors’ sunsetting timeframes are long on purpose. They know they have a large install base, and they know it takes organizations significant time to assess and transition to new solutions.

You have enough time to find a solution that aligns with your digital strategy.

As you begin ERP selection, you’re probably wondering how long the process takes. If you want to set realistic expectations, you need to plan for some of the overlooked aspects of ERP selection. This includes defining organizational goals, developing an IT strategy, evaluating deployment options, defining business processes and reviewing statements of work.

5 Overlooked Selection Activities

Defining Organizational Goals

Many organizations decide to evaluate ERP systems because their current system cannot scale to support the company’s growth. However, this reason alone doesn’t justify an ERP investment. You must be able to articulate how a new ERP system aligns with your organizational goals.

While enabling business growth may seem like a legitimate goal, it’s not specific and measurable enough. Consider goals such as improving data visibility or improving the customer experience. These goals are legitimate because you can measure the return on investment.

Before evaluating ERP systems, you should develop a business case to justify the investment and to estimate business benefits and return on investment. (You can use our ROI Calculator for these initial estimates). Defining your goals and developing a business case ensures you realize the full potential of ERP software. It also ensures organizational alignment.

Developing an IT Strategy

Once you understand your organization’s overall strategy and goals, you can develop an IT strategy. Now, you have a lens through which to evaluate your current enterprise systems and infrastructure. Determine what’s working and what needs to change if you are going to pursue new organizational goals.

Understanding your current state is essential as you’ll need to determine how new ERP software will integrate with your current IT infrastructure. For example, a best-of-breed solution may require many more integrations to your existing systems than a single ERP solution. Additional software integrations are worth the investment if a best-of-breed strategy aligns with your organization’s long-term goals. In fact, a standalone CRM system may have more robust functionality than a CRM application within a single ERP system.

When selecting best-of-breed ERP software, one mistake many organizations make is looking for software for one particular functional area without considering other functional areas. While all your business functions may not be in need of improvement at this current juncture, they likely will require new technology in the future. The functional area you’re focusing on now needs technology that will align with technology you implement in the future. If you define your long-term IT strategy, you will know what to look for in a standalone CRM system or HCM system.

The final step in developing an IT strategy is defining key performance indicators (KPIs). This will help you measure your return on investment throughout your ERP implementation. It’s also important to develop a benefits realization plan.

Evaluating Deployment Options

While evaluating deployment options is part of developing an IT strategy, it deserves to be mentioned separately. There are some important market trends of which you should be aware.

Lately, ERP vendors have increased their investments in cloud and SaaS ERP. As a result, many organizations who’ve been partial to on-premise software are now considering moving to the cloud.

Different deployment options each have their risks and benefits. Your decision should depend on your organization’s unique needs and goals. While cloud and SaaS solutions can be easier to deploy, they can limit your flexibility. ERP vendors may claim they will only support cloud solutions in the near future, but we have found this is purely a sales tactic. Cloud ERP is more profitable for vendors, so they provide higher compensation to sales reps who successfully sell cloud technology.

The truth is, on-premise software isn’t dead. We work with several VARs and system integrators that still sell and support on-premise solutions. These solutions are viable. In fact, some have ten- to twenty-year roadmaps, which is great news for their large install bases. As you’re evaluating deployment options, be sure to take the cloud sales hype with a grain of salt.

Many organizations choose cloud deployment for some but not all their business functions. This is called hybrid deployment. In these situations, organizations keep their back-office functions on-premise and implement cloud solutions for functions like sales and marketing.

Defining Your Business Processes

How can you know what enterprise technology you need without knowing what business processes it needs to support? You can’t. That’s why it’s important to define your business processes before selecting ERP software.

Start by mapping your current processes and looking for pain points. Involve all departments and ensure managers seek input from their teams. This collaborative approach results in process improvements that align with your organizational goals. Your future state will be a combination of optimized and standardized processes from which you can define business requirements. Prioritize these requirements so you can evaluate the functionality of various enterprise systems and determine which systems are most effective at addressing your highest-priority requirements.

Business process reengineering is a complex activity that can increase your selection timeframe. However, you will make up for this time during implementation since you won’t have to spend time defining your processes after selection.

Reviewing Statements of Work

Once you have statements of work from your top vendors, you may think the worst is behind you. Unfortunately, one of the most challenging tasks of selection remains: You must compare cost estimates that each make different assumptions about your implementation approach and desired level of customization.

When reviewing statements of work, you should ensure that the estimates include essentials, such as support and maintenance fees. You don’t want your system to go down just because you didn’t keep it updated. You also don’t want a security breach.

As you can imagine, this process is confusing and time consuming. Many organizations hire an independent ERP consultant to analyze statements of work and negotiate with vendors.

How Long Does ERP Selection Take?

These five activities don’t encompass the entire ERP selection process. ERP selection also requires you to conduct organizational readiness assessments, develop a data management strategy and attend ERP vendor demos, among other things.

All these activities can add up to a selection process that takes a minimum of fourteen weeks. Larger organizations with multiple locations typically need at least sixteen weeks to select the right system.

Now that you have realistic expectations, you can find the right expert to assist you. Look for an ERP consultant that focuses on all the necessary success factors of ERP selection.

You know you need new ERP software, but before you dive in, you should understand the basics of this often-misused technology. Once you understand the basics, you can develop an ERP strategy.

What is ERP software?

Enterprise resource planning (ERP) software is used by organizations to integrate and organize the data necessary for front office and back office operations. ERP software integrates organizations’ key operations, including the manufacturing, distribution, financial and human resources, into one software system.

When properly implemented, an ERP solution increases organizational efficiency, performance and profitability. However, ERP implementations are challenging and often require an ERP consultant to manage the software selection, implementation, process management and organizational change. A large enterprise software implementation is particularly difficult when multiple, global locations are involved. Strong project management is key to achieving an integrated enterprise.

What are the most popular ERP vendors?

SAP, Oracle, Microsoft Dynamics and Infor are among the most popular ERP vendors. One of the most searched terms on Google is “SAP vs. Oracle.” That should tell you something about the popularity of these vendors.

Niche software vendors are also popular, especially for smaller organizations or organizations looking for industry-specific functionality. Niche products are designed for specific industries or business functions. For example, Syspro, IQMS and Plex are specifically built for the manufacturing industry.

While you may want to select a well-known enterprise resource planning system, the best solution depends on your unique business needs. A better question is, “What are the best ERP vendors for my future-state processes and organizational goals?”

What kind of organizations use ERP software?

ERP software is beneficial to organizations regardless of size or industry. In recent years, small- to mid-sized organizations have fueled most of the growth in the ERP industry. While large enterprises dominated ERP usage in the past, niche solutions have made it possible for smaller organizations to implement ERP software.

Organizations pursuing digital transformation often implement ERP software to enable their digital strategies. These organizations use technology to create new business and operating models. Their goal in implementing new technology is to improve data insights and the customer experience.

What is the difference between ERP and CRM software?

Customer relationship management (CRM) software is a type of enterprise software that automates the sales and marketing functions of an organization. Many vendors include CRM software in their full suite of solutions, but some organizations take a best-of-breed approach. They’ll implement a CRM system from another vendor and integrate it with their main system.

CRM software provides real-time data on lead behavior and demographics allowing organizations to personalize their communication with leads and customers. CRM functionality enables organizations to maximize the benefits of their ERP implementations. Improving the customer experience is a common reason organizations implement software solutions.

What is manufacturing resource planning (MRP II) software?

MRP software is included in most ERP systems. While ERP automates the entire supply chain, manufacturing resource planning focuses on the manufacturing processes involved in product conception through production planning. For example, when you need to purchase raw materials to build a product, MRP software allows you to create an accurate bill of materials.

An MRP system can be purchased as a standalone system or as part of a full ERP system. Some organizations take a best-of-breed approach when it comes to the individual modules within an MRP system. For example, they may look for a specialized solution for a function like materials costing.

How much does ERP software cost?

ERP software for larger organizations tends to cost more than niche software. However, even the larger vendors offer point solutions that can be implemented individually. Organizations can save money by only implementing the functionality they need instead of implementing a full suite of solutions.

Licensing costs also depend on the deployment model. While cloud computing may be cheaper in the short-term, it is more expensive than on-premise software in the long-term. Cloud and SaaS ERP is subscription-based so you pay per user or per module. If you plan to implement software in phases, be sure you’re not paying for all licenses upfront.

Maintenance, customization and resources are other costs to consider. You’ll need resources for configuration, data migration and implementation. Beyond these technical components, you’ll need to budget for business process reengineering and change management. The ideal ratio of software costs to service costs is 2:3.

If a vendor’s proposal seems unreasonable, you can negotiate a better price by hiring an independent enterprise software consultant. An ERP selection consultant can facilitate apples-to-apples comparisons of vendors’ statements of work, so you know your points of leverage. Some ERP consultants save clients as much as 30-60% of what they would have paid otherwise.

While ERP software is expensive, cost shouldn’t be your main concern when deciding whether to initiate an ERP implementation. You likely will recoup your costs within three years due to the business benefits you achieved.

What are some of the risks associated with ERP software?

While ERP has the potential to provide numerous business benefits, it can also be a risky proposition. If not managed properly, ERP projects can cost more and take longer than expected. They can also cause operational disruption and employee resistance.

Organizations assume the most risk when they approach their ERP project from a technical perspective instead of business perspective. If you don’t align new technology with your people and processes, you may not realize expected business benefits. You can’t improve data visibility if your ERP system can’t support optimized processes. You also can’t improve the customer experience if your employees don’t know how to perform optimized processes. Other than ERP failure, the biggest risk of ERP implementation is a low ROI.

A Business Case for ERP Software

Once you’ve recognized your need for new ERP software, you should define what kind of technology you need based on your digital strategy. This will help you develop a business case convincing executives to make the investment. Be sure to highlight not only benefits of ERP software but also the costs and risks. With a strong business case, you’ll have the executive support necessary for a successful ERP selection.

How do you decide which ERP system to implement when internal bias and vendor enthusiasm threaten to sway you? The best way to evaluate ERP systems is to weigh the strengths and weaknesses of each according to the following six criteria.

ERP Selection Criteria

1. Deployment Options

Most Tier I ERP vendors are heavily investing in cloud technology, but functionality is still limited compared to many on-premise solutions. This doesn’t mean every organization should select an on-premise solution. In the future, your ERP vendor may stop developing or even supporting their on-premise products. At that point, you’ll have to transition to the cloud, which is more complex and time-consuming than vendors claim.

While vendors are heavily investing in their cloud offerings and providing more robust functionality, the novelty of the cloud is still intimidating to many organizations. No one wants to be among the first to take the leap. They want a long list of references from companies of similar size and industry. A vendor’s cloud implementation resume for large organizations may be smaller than you expect.

2. Scalability

Software scalability refers to a system’s ability to handle an increasing amount of work and increasing number of users.

Some ERP vendors target large organizations with complex operations, but do you know which products and deployment models can continuously scale to support your growing business? If your customer base increases, the software should be able to handle an increasing number of users and transactions. It should continue to provide real-time data despite an increase in data volume.

Scalability can be expensive for some on-premise solutions. You might need to purchase additional servers to support the increased workload. It’s important to ask vendors what their products can support out-of-the-box and if they can be scaled.

3. Technical Fit

ERP vendors have different functional strengths that make them well-suited for certain industries. While industry focus is a strong indicator of technical fit, your business requirements should have the final say.

If you take the time to map your step-by-step processes and define your ERP requirements, you can ask vendors to demonstrate specific functionality. You’re not expecting too much by asking a vendor to demo their ERP system based on your requirements list rather than presenting a canned sales demo. Sharing your business requirements with vendors and allowing access to subject matter experts ensures vendors fully understand your business.

While no ERP system can address every possible business requirement, you should look for a system that addresses your highest priority requirements. In addition, you should determine which processes should be standardized based on ERP functionality, and which processes are competitive differentiators that could require software customization.

4. References

Vendors will make many claims about their system’s capabilities and ease of use. If you want to validate these claims, you should request references, so you can ask previous customers about their experience.

What functionality did they implement, and did they achieve the desired results? Did the vendor offer ongoing support and training?

References should be from organizations similar to your own that have implemented similar functionality. If you’re considering cloud ERP, ask for references that have deployed their software in the cloud.

5. Return on Investment

While total cost of ownership is a common consideration during ERP software selection, return on investment (ROI) is even more important. If you choose an ERP system based on ROI rather than total cost of ownership, your ERP project will result in increased business benefits.

Developing a business case will help you quantify the benefits you expect. This will guide you in improving your processes and defining your business requirements. Your ERP system will be more likely to deliver a high ROI if it’s configured based on optimized processes.

If you’re comparing the ROI of several different ERP systems, you may find Panorama’s ROI Calculator useful.

6. Product Viability

Do you know the long-term outlook of the ERP software you’re evaluating? While SAP and Oracle aren’t likely to go out of business any time soon, they may stop supporting certain products.

It’s also worth knowing where a vendor plans to invest their R&D in the future, as it’s your responsibility to select a product that will support your organization in the long-term.

You should conduct industry research to determine if a software product is on par with its competition. If not, the vendor may be planning to discontinue the product. In the short-term, product stagnation hurts your business as you’ll spend a fortune on customization just to remain innovative.

Other Selection Considerations

Before beginning the ERP selection process, you should define a digital strategy. What are the pain points of your current IT infrastructure, and what needs to change to support your organizational objectives?

While an ERP implementation can bring much needed change, the only way to enable long-term, large-scale change is through business process reengineering and change management. Even if you select one of the top ERP systems, you won’t transform your organization unless you enable change by focusing on your people and processes.

The SAP vs. Oracle debate is common among large, complex organizations. Clients often ask us, “which is the better ERP system?” Of course, as an independent ERP consultant, we determine the best fit for our clients based on their unique business requirements. Nonetheless, we’d like to provide a comparison of SAP and Oracle based on industry benchmarks, client experience and vendor demo scores.

A Brief Overview of SAP and Oracle

SAP primarily builds its products from the ground up rather than through acquisition. The vendor targets organizations with at least $1 billion in annual revenue. SAP ERP software has deep functionality, so it requires a very technical, time-consuming implementation.

Oracle’s primary strength is acquiring product lines that can provide flexible functionality to a variety of industry niches. However, niche functionality is still transitioning from EBS and JD Edwards into Oracle’s newer products. Oracle targets organizations with at least $750 million in annual revenue.

Both SAP and Oracle provide a full business suite of solutions, including HCM software, CRM software, SCM software, etc. Both vendors were featured in our manufacturing report and distribution report on the top ERP systems for those industries. The vendors in these reports have robust supply chain management functionality and inventory management functionality. They also offer strong production management software.

ERP Industry Benchmarks

When evaluating ERP vendors, it can be helpful to consider industry benchmarks and independent research. Panorama’s 2019 Clash of the Titans report provides benchmarks on some of the challenges organizations experience when implementing SAP or Oracle:

ERP Implementation Duration

According to our report, SAP implementations last around 14.7 months, while Oracle implementations take about 12 months. One possible reason that SAP implementations take longer is because its clients are typically global and complex organizations. These organizations choose SAP because of its scalability and robust functionality. Global implementations naturally require a longer time commitment due to the number of locations and decisions about standardization vs. localization.

Operational Disruption

ERP implementations can cause operational disruptions, such as the inability to manufacture or ship products.

Disruptions that occur during SAP implementations last about 128.5 days, while disruptions that occur during Oracle implementations last about 121.7 days. This might reflect the fact that SAP works with large organizations with complex, global operations. An operational disruption at a large organization can affect multiple locations, which can take more time and effort to resolve.

To reduce the risk of operational disruption, organizations should take a phased implementation approach. It’s also wise to conduct multiple conference room pilots before go-live.

Internal vs. External Resources

Resource allocation is one of the most common struggles for organizations implementing enterprise software. While ERP vendors typically recommend at least eight to twelve full-time internal resources, this isn’t feasible for most organizations. Many organizations heavily rely on external resources from the vendor and systems integrator. Unfortunately, this increases implementation costs.

Organizations implementing Oracle use slightly more internal resources than organizations implementing SAP. In both cases, respondent organizations reported that their team was almost an even split between internal and external resources.

Complex customization is a major reason why organizations rely on external resources. Oracle is a flexible solution that typically requires simple customization and configuration that can be done in-house.

Role of ERP Software in Organizations’ Digital Strategies

More than half of SAP customers reported that their ERP project played a significant role in their digital strategies. However, this was true for less than half of Oracle customers.

Oracle’s marketing strategy seems to focus on promoting specific functionality, such as finance. This might attract more organizations looking to automate particular processes and fewer organizations looking to transform their entire operating model.

Summary of Results

SAP and Oracle both provide robust ERP systems that can transform your organization. These benchmarks don’t prove one vendor is better than the other, but rather highlight challenges organizations may face when working with these vendors.

Diving deeper into these challenges, it’s apparent that they’re not caused by technical shortcomings. Both of these vendors have rich functionality providing value to organizations that understand how enterprise resource planning software aligns with their goals.

Panorama Client Experience With SAP and Oracle

Based on our experience evaluating and implementing these ERP solutions for clients, we’ve gleaned some interesting insights:

Deployment Options

SAP and Oracle both have products with multiple deployment options. They typically encourage our clients to consider cloud-based technology even if they’ve expressed interest in on-premise technology.

Focusing on cloud ERP is a smart move for SAP and Oracle as the market is increasingly demanding flexible deployment options. However, we’ve found that neither SAP nor Oracle have very many references for cloud implementations at large, complex organizations.

Vendor Viability

While SAP and Oracle aren’t likely to go out of business any time soon, they occasionally discontinue certain products.

SAP S/4HANA is a fairly new platform for SAP. The product has strong R&D funding as does Oracle ERP Cloud. However, R&D spending on Oracle EBS on-premise, is waning as the product is moving exclusively to the cloud. It’s difficult to find technical resources to implement EBS on-premise as most Oracle system integrators are focused on the cloud.

Want to learn more? Our SAP vs. Oracle white paper features a case study on a client in the distribution industry.

Demo Scores

We regularly coordinate ERP vendor demonstrations for clients. After each demo, clients score functionality on a scale from 1 to 5. The highest score a vendor can receive is a 5. The following metrics are based on clients’ ratings of SAP and Oracle functionality during the last two years:

SAP and Oracle Scored Closely in These Areas

Demand Forecasting – (SAP) 2.3 / (Oracle) 2.2

Industry Intelligence – IBM partnered with SAP to create a Cognitive Demand Forecasting Solution for the retail industry. The solution can be integrated into SAP S/4HANA and the SAP Customer Activity Repository. Oracle Demand Management Cloud is a supply chain management solution that accurately predicts customer demand for a broad range of industries.

Material Requirements Planning – (SAP) 1.8 / (Oracle) 1.9

Industry Intelligence – SAP recently updated its material requirements planning (MRP) functionality within SAP S/4HANA. Oracle NetSuite also has recent updates to its MRP functionality.

Fixed Asset Management – (SAP) 3.3 / (Oracle) 3.3

Industry Intelligence – SAP Business One has a fixed asset management function that eliminates the need for repetitive manual data entry. Oracle NetSuite Fixed Asset Management automates asset acquisition, depreciation, revaluation and retirement.

E-Commerce – (SAP) 2.2 / (Oracle) 2.2

Industry Intelligence – SAP Upscale Commerce allows manufacturers and merchants to quickly launch “pop-up” e-commerce stores. Oracle Commerce On-premise, has likely stopped releasing updates. However, Oracle Commerce Cloud is frequently updated, with its last update this month.

SAP Scored Higher in These Areas

Multi-Currency – (SAP) 3.0 / (Oracle) 2.7

Industry Intelligence – SAP ECC has improved precision in currency conversion of foreign exchange rates.

Audit Management – (SAP) 3.8 / (Oracle) 3.4

Industry Intelligence – SAP Audit Management instantly captures audit documentation while providing drag-and-drop tools. You can access the application through mobile devices.

User-Defined Dashboards – (SAP) 3.9 / (Oracle) 1.4

Industry Intelligence – Not all BI vendors provide user-friendly dashboards. However, SAP BusinessObjects allows you to create interactive, role-based dashboards accessible from any device. An alternative is SAP Analytics Cloud, which allows you to easily create predictive models and integrate them into workflows.

Oracle Scored Higher in These Areas

Workflow Configuration – (SAP) 2.9 / (Oracle) 3.3

Industry Intelligence – Oracle has a new set of artificial intelligence applications that automate processes within its cloud suite.

Customer Contract Management – (SAP) 3.0 / (Oracle) 3.7

Industry Intelligence – Oracle Project Contract Billing Cloud provides pre-built templates and automates project billing. The application ensures contracts are compliant with project billing requirements.

Purchasing – (SAP) 2.8 / (Oracle) 3.3

Industry Intelligence – Oracle Purchasing Cloud automates routine transactions, such as invoice validation. The application fully integrates with accounts payable functionality.

Quality Assurance – (SAP) 2.1 / (Oracle) 3.1

Industry Intelligence – Oracle Product Lifecycle Management Cloud allows you to define inspection plans by connecting product design standards and quality specifications.

While these scores are just averages of more detailed metrics, they provide a sense of the perceived strengths and weaknesses of each ERP system. Demo scores are one of several factors to consider during an evaluation of SAP and Oracle.

The Final Decision: Oracle vs. SAP

Comparing Oracle and SAP requires an in-depth understanding of software functionality, deployment options and vendor and product viability. An informed decision also requires business process reengineering and requirements definition prior to selection. Armed with this insight, an organization can decide whether SAP, Oracle or another system altogether best fits their business needs.