For small to midsize businesses, whether or not to initially select or even upgrade their ERP (enterprise resource planning) system is a major, and sometimes complex decision. When making IT investment decisions, companies need to carefully consider several key factors, including, but limited to, how the new application will serve "greater good," and provide measureable ROI within the short term, so that the long term is consumed with growing the business.
In short, ERP systems process an organizations transactions, helping to streamline and better manage areas such as accounting inventory, manufacturing, sales, human resources and business reporting, all from a single, integrated solution. These systems can be and are commonly integrated into other software such as CRM (customer relationship managment), EDI (electronic data interchange), and BI (business intelligence). The only downside with such a potentially complex system that manages your entire business is cost.
"In the late 90s, most companies upgraded or replaced their ERP systems to prepare for Y2K. Since then, obviously there have been significant technologies and functiionalities available," said Doug Schrock, a leading industry analyst and consultant. "With an average life of 12-15 years for most ERP systems, and companies experiencing better financial and operational performance following the worst of the recession, we're see a large number of these small to midsize clients ready for an upgrade."
Schrock further notes that when evaluating ERP systems, a companies has three basic options: stay put with what it has, enhance the system with upgrade, or replace it with a leading ERP system. When evaluating these options, these small-midsize companies should focus on three primary considerations.
- Investment Thesis - what does the company expect to realize from its investment, and how would an ERP upgrade support the vision?
- Unmet business needs - do the existing shortcomings of the current ERP system constrain it from efficiently supporting the business? Are the capabilitiese of such inhibiting the company's ability to expand? Are their significant internal control or unresolved software integration issues?
- Organizational capabilities - does the companies have the ability to take on a disruptive and costly project of this scale? Are the right leaders (or influencers) in place to guide the company through the necessary procedural and organizational changes so that the desired result is met as quickly and efficiently as possible?
