There is nothing more daunting than the thought of changing your ERP (Enterprise Resource Planning) system. It has been the cause of many sleepless nights for C-suite executives due to the organisational challenges that such a decision holds.
The following saying does come to mind when I ask myself this question as well – If it is not broken why fix it? But there are numerous factors that will play a role in your evaluation and decision-making process for such a significant undertaking.
Here are some key indicators that you should look out for, that may suggest that it is time to make that change:
- Lack of functionality: Change is the only constant! Business processes and strategy are but a few to mention that can change rapidly and this can lead to your current ERP system being unable to meet your business needs or industry-specific needs. It may be time to consider switching to a more robust system that can support your operations and growth.
- Legacy system: If you are running a legacy ERP system that is no longer supported, you may face security risks that open you up to cyberattacks and data breaches. You are also running the risk of compliance issues that may lead to penalties, fines, or legal liability. Compatibility issues with newer hardware or software that can limit functionality, limited data backup and recovery capabilities, and a lack of support for critical business processes are also factors to consider.
- Poor user adoption: If your employees struggle to use the system and are not realising its full potential, it may be time to consider a more user-friendly and intuitive ERP solution. Also be sure to understand if these issues are only related to usability or other factors such as functionality, training, resistance to change, or engagement of users. Flesh out these issues during the implementation phase to avoid these aspects in the future.
- Lack of integration: If your ERP system is not integrated with other critical systems in your organisation, such as your CRM (Customer Relationship Management) or supply chain management system, you may experience data silos, inefficiencies, and inaccuracies. This would be an excellent opportunity to consider a non-modular and fully integrated ERP to ensure a single point of truth.
- Customisation: If your current ERP system does not allow for customisation or requires significant customisation to meet your needs, it may be time to consider switching to a new system that offers greater customisation capabilities or one that needs no customisation at all.
- The total cost of ownership: If your current ERP system is triggering significant maintenance costs and is not providing a good return on investment, it may be time to consider a more cost-effective and efficient solution. You should also consider the cost of lost productivity and potential revenue due to system downtime in comparison to the cost of a new system. You should not be running your ERP systems; your ERP system should be running your business.
- Business growth: If your organisation is growing rapidly, your current ERP system may not be able to scale to support your increasing data volumes, users, and transactions.
In conclusion, there is no one-size-fits-all answer to when it is the right time to change your ERP, nor are these indicators exhaustive. In addition, there may be other indicators specific to your industry, organisation size, or unique business needs that should be considered. It is crucial to take a holistic approach and thoroughly evaluate your current system and assess whether it is meeting your business needs, goals, and strategy, providing a good return on investment, and supporting your current and future growth and long-term success of the organisation.
Changing your ERP system is a significant undertaking, but it may be necessary to ensure that your organisation can continue to operate effectively and efficiently. It is critical that all key stakeholders are involved in the decision-making process and carefully plan and execute the transition to a new system to minimise disruptions to operations.
Ian heads up the SME Business Unit at G3G Africa. He is a key driver in assisting businesses to understand how to leverage technology during the entire business lifecycle. In his 15-year tenure in the ERP industry, he has experience from being an implementation consultant to business process mapping, key account management as well as operations management. Ian is an advocate of digital business transformation and believes that a solid ERP system should be the core of every SME business.