The other day, I was reading an article about how business investments increased by roughly 10% last quarter, which is the biggest increase in several years. This increase in spending means organizations are investing more in essentials like factories, equipment and ERP software.
While it’s good that businesses are more confident and willing to spend, it also poses a potential red flag: companies forging ahead with an ERP implementation without a clear plan or consideration of all possible alternatives.
Our 2017 ERP Report, published last month, shows that organizations continue to struggle with implementation cost, duration and benefits realization – suggesting that companies are still failing to be strategic and diligent in their digital transformation efforts. If anything, businesses need to take a step back, take a deep breath and think before moving forward with their initiatives.
So, if you are considering an ERP project, here are four reasons why you might want to consider ditching that idea:
1. Your business processes may be the real source of your problems. Too often, organizations assume that new ERP software will solve their operational challenges and inefficiencies. While software can certainly help drive efficiency gains, chances are that you can make big improvements by simply reengineering your business processes. Don’t fall for the myth that processes can’t be reengineered until you know which software you’re going to use in the long-term. In my experience, over half of business process improvements can be made without implementing new software – and those improvements can be implemented at a fraction of the cost and risk.
2. Your organizational design may be another source of problems. This is another way that ERP software can muddy the waters of your business transformation efforts. Without ERP, you still have opportunities to improve your organizational roles, responsibilities and structure. Many companies use their ERP implementations as a mechanism to drive organizational improvements such as standardizing operations, but the technology implementation muddies the waters of the real organizational change management work to be done. By defining and implementing your future state processes first, your ERP implementation will be much smoother.
3. There are too many good alternatives to traditional, monolithic ERP systems. I’m surprised at how many CIOs are still stuck in the 1990s mode of “we need a single, big ERP system” -mentality. This worked back in the day when options were limited, but there are far too many options in the market to limit yourself to high cost, high risk or inflexible options. Best-of-breed digital transformations leveraging the software of multiple vendors no longer have a stigma attached to them. This is why an objective view of your options (read: not from a software vendor or consultant who is peddling a suite of products from one vendor) is so important to understanding your range of options.
4. A technology-agnostic enterprise and digital transformation strategy should be your first step forward. A technology-agnostic and independent strategy should be your first step to deciding on new technology. Not only do you want an objective view of your options, but you want to make sure that the systems you evaluate, select and implement fit into an overarching strategy – not some sort of “shoot first, aim later” big ERP strategy. The costs and risks are simply too high to be gun-slinging your path forward.
While some organizations will still find that single ERP software is the best option for their needs, these decisions should not be based on coincidence or luck. There is a lot at stake – including your job security – so it’s important to leverage the help of independent digital transformation consultants in defining your best path forward.
by: Eric Kimberling