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By Richard Haugen • April 27, 2018

Modified Systems Have Become Unsustainable

Outdated software and business processes are slowing your growth and costing you money.

By Richard Haugen

Over the years I have worked with a lot of companies identifying problems and outlining solutions.   It is very common to discover that a company who started with the goal of keeping things simple, found themselves slowly, work around by work around, backed into a complex solution that ultimately limits their ability to grow and efficiently respond to changes in their go to market approach.A contributing factor that magnifies this unintended complexity is  when a company holds on to siloed applications too long, running things with what they started with out of comfort.   

Many companies and especially startups often begin with an e-Commerce platform, Quickbooks for financials, bill.com for payment management, Concur for expenses, Excel for forecasting and inventory tracking, and a 3PL (Third Party Logistics company) who actually handles all their incoming and outgoing shipments.  They then start bolting on upgrades to alleviate pain points as they arise. What they don’t always recognize is that they are already starting out with six silos of information. There may be some integration between components, but the probability of achieving timely information on the state of their business has already be compromised from the beginning.  

There are BI (Business Intelligence) companies that make very good money helping you try to bring all the siloed information together - that adds an additional seventh silo. There is simply no way to add layers to fix the mess without making the process even more complicated. This isn’t to say this model won’t work for awhile. There are still plenty of companies running on bookkeeping software, spreadsheets and post-it notes.   

Bright, highly motivated people are amazing, and can keep a tangled mismatched model running well past its useful life.Protecting this system model and slowing the opportunity to replace it is the common refrain “this has been working so far” and often mentioned in conjunction with  ‘it is saving us money’. That may be true for each individual component, but it is rarely the case if a company honestly totals all the costs of all the components, and the time and effort to integrate or manually bring the data together, the costs of the mistakes made because of bad data, and the opportunity cost of having your bright, highly motivated people chase data and update excel workbooks all day instead of focusing on forecasting, planning and growing your business.   

Modified systems have become unsustainable to the point where IT spends more of their resources just keeping the systems running.

Often companies shy away from the concept of ERP because they think it is too big, too expensive, and to complex.   This may have been the case 20 years ago, but like all technology, things have come a long, long way in the past 20 years.It is now possible to have all the advantages of decades of experience, put into an easy to use, cloud-based ERP system from companies like SAP at a fraction of what it used to cost and in a fraction of the time it used to take.   

This makes it possible for young companies to leverage best practices and seamless real time data to effectively monitor, view and grow their business by not having to focus on the backend processes. Embedded analytics can pull data from every area of the company to give decision makers the information they need to make good decisions in a fraction of the time needed to export and merge spreadsheets.   One of the challenges younger consumer product companies have is successfully integrating with their 3rd Party Logistics providers (3PL).  

 Platforms like SAP Business ByDesign and SAP Business One have pre-defined web services, interfaces, and work centers that make it easy for 3PL’s to map their systems to the ERP.  These interfaces support multiple 3PL’s and locations allowing the the company to support simple to complex distribution chains and multiple distribution channels without having to worry about developing the technology to support the complexity.Business rules and market conditions are changing all the time.  Having the ability to communicate the company’s value to management, employees and investors is critical. You need clear data from all points of the business to generate true information on which to base your decisions.  

You need better and new technology to buttress your decision-making capabilities. Dig into the details on the flexibility and scalability of ERP solutions for CPG companies  https://www.nbs-us.com/sap-for-consumer-products-retail