What is a gap analysis in ERP? In short, it’s the process of evaluating your ERP system to make sure it’s aligned with your business needs.

Sometimes, gaps exist because the software isn’t designed to support certain functions. Other times, gaps can be traced back to an oversight during the project planning phase. Then, there are voids that exist because the feature you need hasn’t yet been configured.

Today, we’re sharing how you can use a gap analysis to analyze your existing system or the system you’re about to implement. 

What is a Gap Analysis in ERP?

A gap analysis is the process of reviewing your current state and determining what you need to do to move into your future state. In an ERP implementation, this means taking a close look at the software you’re using or plan to use.

During this process, you’ll ask questions like: What needs to be added to or changed in our ERP solution to help it fully meet our ongoing business needs?

Implementing software and hoping it works for years to come is wishful thinking. Regular improvements are required to keep your system aligned with your business. Not only will this reveal potential technical issues or shortcomings, but it gives you the opportunity to reengineer business processes to stay productive, profitable, and competitive.

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3 Steps to Perform an ERP Gap Analysis

Step 1: Review Your Current Workflows

Before you can reach your future state, you must understand your current state.

We recommend beginning a gap analysis by evaluating your current workflows. To do so, you should identify all the processes within and between each department.

Then, note how each department interfaces with your current ERP software in the daily tasks they perform.

While it’s easy to assume everything is working as it should, this exercise often reveals pain points and workarounds that are impeding your company’s progress. 

Step 2: Define Objectives

Once you’ve gathered the details on your current state, it’s time to define your top business objectives. These objectives might be sales-related, service-centric, or growth-based. Often, they relate to data visibility.

Note that these will likely differ from the goals you set when you first selected the ERP system, and that’s OK. In fact, it’s to be expected.

Step 3: Plan Your Next Steps

This is where you’ll identify the missing pieces and determine your plan of action. You might choose to optimize your system or supplement it with point solutions.

Before doing so, ask yourself what capabilities would help you achieve your goals and derive continuous business value from your IT investments.

It’s easy to get carried away with unnecessary change requests, so it’s important to have strong change control in place to ensure your implementation stays on-time and on-budget.

erp gap analysis

4 Gaps You May Need to Address

The three-step process above can help you understand the areas in which your ERP software could be improved or enhanced to propel your business forward.

However, it can be difficult to identify these gaps from the inside. When you work closely with a system, its shortcomings often elude you.

That’s why we’ve outlined some common gaps to get you started: 

1. Key Features or Functions Missing

Your business needs have evolved since your initial ERP selection. Now, there might be important features and functions you need that weren’t in your original requirements.

Take customer service, for instance. If you originally focused on sales and marketing functions, you might have skimmed over service-related functions. Now, you’re left with lackluster tools unable to help your team track:

  • Client complaints
  • Warranty claims
  • Service issues

Most organizations have at least one functional gap even if they conducted thorough software requirements gathering sessions.

2. Areas of Redundancy

At its core, an ERP system is meant to automate, streamline, and simplify your workflows. However, if your employees are required to enter the same data into the same fields multiple times, then you may need to go back to the drawing board. 

In many cases, you may need to consider adjustments or integrations to ensure the seamless flow of data among your various systems. 

3. Lack of Flexibility

If your ERP system isn’t agile enough to keep up with evolving business needs, it could be holding you back. This will especially be true if your organization undergoes a significant shift, such as a global expansion or operational restructuring. 

This also applies to more nuanced, granular adjustments.

For example, say you combine two positions from your accounting team into one position. Internally, your employees should be able to adapt to the new workflows and changes to their roles. However, your ERP system may not be designed to take advantage of this organizational efficiency.

Some systems are too rigid and won’t allow you to adjust workflows or change role-based tasks as required. Built-in flexibility is a feature to prioritize if you decide to reconsider your software selection decisions.

4. Lack of Preventative Maintenance

Does your ERP vendor provide preventative maintenance? If not, you not only risk experiencing downtime, but you’re more vulnerable to data breaches. 

In your gap analysis, you can determine if your vendor has included preventative maintenance as part of your plan. If not, then it’s time to add it. 

Conversely, you may find that you have a maintenance plan, but you aren’t making use of it. In that case, speak to your ERP vendor to schedule regular preventative services at a convenient time that will minimize downtime. 

Support During Your ERP Gap Analysis

What is a gap analysis in ERP? It’s the best way to maximize ERP business benefits. This process can reveal inadequacies and inefficiencies that you may have overlooked during the selection process. 

Whether you’re still in the implementation phase or have already gone live, we can help you optimize your investment to ensure long-term ROI. Contact our ERP consultants below to get started.

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