Your ERP system runs your day-to-day operations and is the heart of your business. Few would disagree that without technology, your business could screech to a halt. What is your perception of the dependability and flexibility of your systems? Memories of outages and customer complaints are more vivid than “the good times.”
The lean and mean staffing of many companies doesn’t lend itself to deep dive analyses of what went wrong, much less the implementation of preventative measures. Instead, companies depend on subjective feedback.
Could your IT infrastructure be clouding the true picture of your ERP capabilities?
Companies hire IT professionals, first and foremost, to keep systems running. However, IT professionals often neglect to continuously report information that helps management make decisions. Your organization may need to allocate additional resources to ensure your technology stays one step ahead of where sales and product development is heading. Having an overarching enterprise IT strategy in place is key.
- While senior management may support your IT strategy, employees should regularly exchange ideas regarding its improvement.
- The pace of technological change is so fast that external guidance, information and validation is almost always both needed and welcomed.
- When is the last time a new technology of software was declined by management or IT? Saying no to a new technology or software is sometimes as important as saying yes and is a sign of a forward-thinking organization.
As consultants with over ten years of experience under our belts, we’ve seen cases where more technology doesn’t always equate to better; sometimes the purchased technology doesn’t even work.
Like most business challenges, there are indicators to help evaluate your ERP platform.
Show Me the Numbers
- What gets measured is the base of informed decision making. You probably measure growth in orders, but are you projecting your system limitations before you reach them?
- When a system snafu occurs, do you complete a root cause analysis? After the system is up and running do you bullet proof it by investing IT dollars or exploring alternative solutions?
- What are the pain points of the users of your systems? Employees can be clever about working around system issues — some see it as job security. Employees should be surveyed about the systems they use. This will give you a new perspective and set of numbers.
- What’s the added cost of your periodic software upgrades? How does this compare to new technologies/software available and the added features that they may bring?
- When you are shown numbers or costs, is there a risk and reward component as well as a recommendation?
True story: In a past job, I was working to integrate a new contact management system (CRM). I encountered some resistance from coworkers. They were enduring system outages that were sporadic, yet serious enough to keep them from getting their work done on certain days. While the system issues were reported to IT, little changed. It was only when workers began faithfully documenting the outages for a month that upper management became aware of the problem. In this case the new CRM system needed to be put on hold while time and resources resolved core system issues.Budget vs. Investment
- Is your IT department managing to a predetermined corporate dictated budget? Does it realistically align with the IT strategy and company vision?
- When IT expenditures are approved, who is responsible for the timeline and outcome? Are larger initiatives independently verified by an outside entity?*
- What is the cost of not doing an innovative ERP enhancement? An example of this is digital transformation where a significant change in technology is dictated, e.g. deciding to sell product on the web.
- Companies are less likely to negotiate meaningful vendor software discounts because they are not familiar with the changing product, pricing and software landscape.
- The decision to hire additional personnel vs. system expenditures is a complicated dance as it involves, HR, training and organizational change management (OCM)
- Deferred investments in technology may or may not be overcomeable, but always point to added cost and probable loss of competitive advantage.
Do human judgements affect ERP implementations and enhancements?
Bias Comingles with Knowledge
- IT professionals (like most employees) have biases. In the IT world, this can include biases towards or against certain software and vendors. In some instances, experience with a software can sometimes equate to familiarity, which could mask the availability of better or more cost effective solutions.
- Longer term employees have legacy knowledge of older systems and interfaces. Be aware of this as you look for your champions of change.
- Predicting how technology will grow a business requires a variety of thought leaders from inside and outside of the company, as well as your industry. Many IT professional may be experts in transactional processing vs. emerging technologies or the competitive landscape.
- Technological tools and toys may be suggested, defined as the internet of things (IoT). This requires careful evaluation both in terms of cost to benefit, as well as risk. A financial advisor would be taking on significant risk by texting a client investment advice, while an appliance repair person may be able to give better service by ordering a part using a handheld device.
While every company is different, the need for a more structured, “deeper dive” approach to evaluating the ERP and digital transformation systems that can propel your businesses is warranted and needed. Only then will your next IT expenditure be more strategic and if it is done right, it will feel like the investment that it is.
*Independent verification and validation (IV&V) is a service typically offered by an independent source or consultant. It introduces an outside assessment (including metrics) of the proposed ERP system initiatives, greatly enhancing the likelihood of a successful implementation. This can support or make suggestions to supplement your IT department’s recommendations. Independent assessment and associated recommendations provide management and the project team with actionable advice based on industry standards and best practices. A truly independent ERP consultant like, Panorama Consulting Solutions, should not have any financial incentives or ties to software vendors. They also bring the perspective of having managed hundreds of software implementations and maintain a very current knowledge of the software environment. Ideally they would also have knowledge of, “service recovery”; assisting companies to get back on track when after a major ERP implementation failure.
Download “The Importance of Independent Verification and Validation.”