Signs That You May be Suffering From ERP Systems Erosion
We often work with clients who are determined to replace their legacy ERP systems. More often than not, by the time a company engages Panorama to evaluate and select a new system, key players in the organization are determined to find something better than what they have now. The software doesn’t work, employees are frustrated, and executives don’t have visibility into business operations.
Sounds like a no brainer, so why would an organization want to consider keeping their current system? There is one key reason: application erosion. Even after 15 years in the ERP consulting industry, I am still amazed by how many companies have trouble with their business processes or suffer from organizational change management issues, but blame the software instead. It is not at all uncommon for us to find that their core issues can be addressed simply by upgrading the software to a more recent version, better aligning business processes with software functionality, or addressing common organizational change management issues.
Here are a few things to consider when determining whether or not you are suffering from ERP systems erosion:
- Are your operating on an old version of the software or have you migrated off of maintenance? If so, there is a fairly high probability that a less risky and less costly upgrade to a newer version of the software will deliver a more positive return on investment than a full rip and replace of the system. In addition, your incumbent ERP vendor will often more aggressively price their software in an attempt to protect their maintenance revenue stream and keep you from opening up the field to competition.
- How much is the software really to blame? I can confidently say that ERP systems get more than their unfair share of blame for business and operational issues. More often than not, business processes or broken, people aren’t properly trained, or the software was poorly implemented, yet the ERP software gets a bad name internally nevertheless.
- Has your software kept up with your business? Most organizations evolve fairly rapidly, so there are going to be inevitable disconnects between evolving business processes and the software the way it was implemented. In addition, most modern ERP software is very flexible, yet end-users often assume that the software will only work the way it was originally configured and implemented. For these reasons, it is important to explore ways that your existing software can be reconfigured to meet the changing needs of your business.
At the end of the day, it is a safe bet to assume that a more incremental upgrade or adjustment to your current system is going to involve less cost and risk than a full replacement. Obviously, you don’t want to pursue this path if the software really is a bad fit, but it’s important to make certain you have explored all of your viable options as part of an effective ERP evaluation and selection process.
Learn more about ERP best practices by attending one of our upcoming ERP webinars.
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About Eric Kimberling
After 15 years of ERP consulting at large firms including PricewaterhouseCoopers and SchlumbergerSema, Eric realized the need for an independent consulting firm that really understands ERP. He began his career as an ERP organizational change management consultant and eventually broadened his background to include implementation project management and software selection. Eric’s background includes extensive ERP software selection, ERP organizational change, and ERP implementation project management experience. Throughout his career, Eric has helped dozens of high-profile and global companies with their ERP initiatives, including Kodak, Samsonite, Coors, Duke Energy, and Lucent Technologies to name a few. In addition to extensive ERP experience, Eric has also helped clients with business process re-engineering, merger and acquisition integration, strategic planning, and six sigma. Eric holds an MBA from Daniels College of Business at the University of Denver.
I would agree with your comments, but suggest that it is not only ERP software. I have seen the assumption made on several occassions for an application that has been in place for sometime, that when a new requirement comes along, it must mean a new application is needed. People are frequently unaware of the capabilities of what they have got simply because they are only used to using it for certain functions and do not have the time, or inclination, to explore. (but they have got time to explore a new app). It strikes me as similar to a comment made by my engineering manager at the start of my career, when he expressed his frustration at not being allowed to pursue what he thought was a better solution with “There is always time to do it wrong twice, but never right once”. We did have to iterate. The equivalent here is all the time to evaluate, implement, migrate and train for a new system vs taking a look at what you have first. Having said that, I have also seen systems that are so heavily customised (as opposed to configured) that upgardes and making use of unused standard functionality are blocked by the sheer effort involved in upgrading. In my opinion to protect your investment going forward the first rule is don’t customsie; the second is, if you have to customise, only use the standard interfaces provided.
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