If you regularly read my blogs, you know I’m a big proponent of the theory that there is never a good time to embark on an ERP software initiative.
In past blogs, I’ve discussed how businesses typically have competing priorities. Limited time, too few resources, and other business initiatives may make it seem like there is never a good time to implement new enterprise software. But, it is important to dive in to gain momentum and avoid analysis paralysis.
Playing devil’s advocate, now can also be a terrible time to choose a new ERP system. In fact, this is a direct comment and observation from one of our clients. Here’s why he has a good point. The ERP software industry is in a state of transition, which is both exciting and risky.
SAP has introduced an entirely new enterprise application platform with SAP S/4HANA, Oracle has migrated its legacy applications to the cloud with Oracle Cloud, and Microsoft is still trying to figure out how to patch together its various applications (Navision, Axapta, Great Plains) into a cohesive Microsoft Dynamics 365 product. These are just three examples of many.
These moving parts can make for a nerve-racking ERP evaluation and selection process. Here are a few things to be aware of as you evaluate the current enterprise software landscape:
Many new ERP software offerings are unproven. Given the recent development and rollout of these solutions, finding real-life case studies of companies that have successfully implemented, can be very difficult. There simply aren’t enough companies out there running S/4HANA, Oracle Cloud, or Dynamics 365. The same can be said for Infor CloudSuite, Epicor, and a multitude of other ERP vendors that have recently migrated their solutions to the cloud. Many clients we work with are risk-averse and uncomfortable with being on the bleeding edge of software adoption, so this might be a concern.
There is a higher level of risk with fresh solutions. While software vendors and industry analysts proclaim that modern systems entail less risk than their legacy counterparts, the reality is that no one knows (yet). It could be that the vendors have worked through all the bugs and potential deployment issues, and everything will be fine, but most CIOs and executives aren’t willing to stake their careers on that unproven hope. Today’s enterprise software buyer needs to accept the fact that there is an elevated level of risk in some current ERP offerings.
Potential higher total cost of ownership – but what about business benefits and ROI? Pricing on some of these newer solutions is ambiguous at best, or worse yet, higher than expected. Perpetual cloud pricing models, paying for, “in memory databases” and other kickers can quickly escalate costs. Perhaps, even more concerning: there are no credible benchmarks for the types of business benefits that customers are realizing. While Panorama prides itself on maintaining strong research into the pulse of the market, even our knowledge base has not yet captured the average realized business benefits of these new systems.
On the bright side, innovative technology can potentially transform your business. The risk-reward profile may look different, but many of these solutions are conceptually quantum leaps in terms of functionality and technological architecture. But, the unknowns, costs, and risks are variables to consider.
You might choose to embark on these initiatives anyway – because you must. Business goes on, your job is to advance your organization, and you play the hand you’re dealt. A best practice is to ensure that you have a technology-agnostic evaluation of your options. And when it comes the time to implement, remember that success will be contingent on properly addressing the people and process sides of the equation too.