Time to change ERP system?

Have you reached the crossroad where you are considering change of ERP system? Have you had your ERP system for many years and feel that it is time for something “new”? Do you know why you are experiencing this, and what you really want to achieve with a new system?

We are contacted daily by organizations that intend to select and change ERP system. Some of the most common motives are that you are completely or partially tired of your existing vendor and that you feel that the current ERP system is not keeping up with technical development. These two motives are easy to understand. On the other hand, it is often more diffuse when it comes to “what you want to achieve” with a new ERP system. Some of the customers have already gained their own insight into how their business and organization could be developed with the support of a new ERP system, but surprisingly many have no idea at all.

Basically, after many years of consultation, it can be stated that most organizations have the potential to improve their business, and where the ERP system is an important piece of the puzzle. And in rather many cases, it is actually possible to realize parts of this potential within the framework of the existing ERP system. The fact that an ERP system is perceived as an “obstacle” can just as often be addressed “lack of management” at the customer as that the system has fallen behind in technical development. Too many organizations lack the ability or insight to continuously maintain their ERP system with the intention of optimizing its use.

Instead, it is common that the mobilization of resources the customer made during its implementation quickly diminish after go live, after which everyday life resumes. And gradually the added value of the investment decreases. We often meet customers who have had the same ERP system for +20 years and where the setup is more or less identical to how it was configured 20 years earlier, despite the fact that the business has experienced major changes and needs during this time. An active and continuous maintenance of the ERP system is the best basis for achieving a long life of the system and its investment.

At the same time, there are good reasons for many organizations to review their ERP system and in what way the business needs support for the future. A difference today compared to earlier, however, is that an analysis of the ERP system today is more about ensuring a long-term but at the same time flexible “platform” of systems instead of isolating the individual ERP system. The time when customers were looking for “All-In-One” is over. Although in southern Europe it is still common with the attitude that all processes should be supported by one and the same ERP system, the Nordic customers have come to the realization that this (often) becomes more hindering compared to having an integrated system environment consisting of “several” applications that are optimized for their selected focus areas. In some cases “several” means only 2-3 applications and in other cases it may apply to many applications. And not least in process industry, it is common with very many applications when you want to combine your information flows between the machine-related systems (MES) and other administrative applications.

The important thing in an analysis of “future ERP system” is to skip focus on the specific systems and their functional possibilities and limitations. Instead, it is more important to gain insight into how the business will or can develop over time, and with this as a basis establish goals of what “character” the future system support should have. And not infrequently one lands in the conclusion that the optimal situation may include 2-3 applications instead of just 1 application. At the same time, this is a conclusion and a choice of path that must be set against the customer’s ability to “manage” their systems.

Regardless of whether you choose Cloud or On Premise, the systems need continuous care to create the benefit you strive for. And as noted above, it is not uncommon that the customer lacks ability for active maintenance, which means that the customer should either refrain from changing system or choose a system that requires very little maintenance (while in the long run it leads to decreasing value).

The recommendation is to “think ahead” before rushing too far in selection of a new ERP system.