8 years ago we first published a series of posts entitled “Software That Matters.” It was an ERP implementer’s point of view, culled from long experience, on why and how to purchase a business management software system. Later, we turned Software That Matters into a popular white paper that has since been viewed hundreds of times.
Now eight years later, we thought it was time for an update, to reflect lessons learned since then. (We also did a 2015 update three years ago.) Much of what we wrote then remains every bit as true today. But we decided again to carefully retrace our steps, re-edit our paper, add some comments and present it as a series of blog posts that will carry us through November, 2018. We think that’s timely, as many companies at this time of year tend to reconsider the software they use to run their business — and how they might do better.
In our series we will again try to convey what’s important, what to measure, how to buy, what works, what it costs… and the many other business considerations required of this strategic investment, in what is probably the most important (and expensive) software a company will ever buy. In other words, the Software That Matters.
Key Conclusions About ERP
Our purpose has been to set down in writing the fundamentals for how you know when you need an ERP system (or a new system)… its strategic importance… the key motivators that indicate the need for ERP… a few client success stories on ERP’s benefits… what it costs for software and services to get started… how to get started… key performance indicators… the importance of turning information into action… and what your business management system should provide.
We’ve covered a lot of ground. While covering the broad spectrum of ERP in the small to mid-size business requires dealing in some generalities, we’ve tried to be specific as possible about why to do it and what a typical project might cost — of course, there is no ‘typical’ project, but our guidelines should certainly give you a few key objectives and a manageable budget from which to work. A few key takeaways:
- Remember, ERP is a strategic investment in your company’s long term health, even survival. Thus, it is a long-term business improvement strategy. It is essential to sound growth.
- You’ll know you need ERP if: You have information scattered across many independent ‘silos’… You frequently key and re-key data… You rely on spreadsheets to run your business… Different parts or your business do not have equal, common access to others… Information is hard to find, organize or retrieve… You don’t know what it costs to complete a project or build a product… You have no common database or history of projects, products, customers. In short, if you don’t have all your information under the fewest possible umbrellas, then you need to look into an ERP system. How else will you be able to discover, report, and turn information into actions that lead to significant business improvement and growth?
- Done right, ERP pays for itself – many times over. ERP will make you money.
- Start small. Where possible, segregate one or two key functional areas for early-stage implementation. Work from a project plan. Review and assess regularly. Build, a step at a time. Remember, like continuous improvement (which ERP really is), it’s a process not an event.
- Recognize the costs. Each project is unique, but a business in the $10 to $30 million dollar (revenues) range can get all the software it needs and a good foundation in services for around $100,000. Again, user counts and complexity greatly affect the final figure. But it’s a good starting point for a strong foundation that you can build upon for years to come. You can probably even get started for less than that, but have realistic expectations. Oh, and don’t skimp on training. Scale back the scope of your efforts if need be, but don’t shortchange the very people who will make (and save) you money when ERP is intelligently implemented. Train them well.
- Your mother was right – if it sounds too good to be true, it is. Trying to go it alone or ‘do it on the cheap’ yields failure stories, not success stories. Do your homework. As W. Edwards Deming said: “It is management’s job to know.” That’s how companies get to ROI.