The 5 most common reasons, in no particular order of frequency, I have encountered through the years for delaying the “go” decision to obtain an ERP are:
- We can't afford it
- The company is not quite ready
- The decision maker does not perceive the value given the cost
- We can get by for another year
- Accounting's reluctance to migrate off the off-the-shelf accounting system
Some of the above reasons could be very valid. For instance, I can agree with “getting by” for companies in survival mode caused by an economic downturn or a short term business situation. However, an objective of “getting by” should not be acceptable for any company trying to grow and realize more profits in the long run.
On the other hand, I will never be able to understand/agree with accounting's comfort level being a determining factor in deciding to upgrade the company's core operational system. If the accounting team is not comfortable, it is certainly understandable as it will be a big change. However, this should not drive the decision to “Go”, because an ERP system skill set is something that will eventually be required by most people in the company and simply delaying the decision is deferring too many benefits.
The remaining reasons might be eliminated through proper education, analysis and open discussions. The education might take the form of discussions with ERP knowledge/expertise, internal meetings or researching ERP benefits Ultimately, the key question to answer is “are the benefits derived from having an ERP system (e.g., improved, efficiencies, leveraging information across the company, lowering cost, improving customer satisfaction) outweigh the cost of the ERP system?”
With regards to the above question, it is important to note, one thing many people fail to consider is an ERP system might pay for itself if it helps eliminate any one of the below situations.
- A lost sale caused by the inability to deliver the product to the customer on the date requested
- Failure to meet regulatory compliance (FDA/CE compliance or Export compliance). One issue is one too many and can be devastating to a company’s survival
- Lost repeat sales caused by customer dissatisfaction caused by incorrect shipments, late deliveries, and non-workable product configurations delivered
- Excessive obsolete inventory due to the lack of timely communication between Engineering, Finance and Manufacturing regarding Engineering Change Notices
- Additional headcount required to compensate for inefficiencies throughout the organization
Implementing an ERP is not an easy task, but it is not something to be feared if managed correctly. The implementation will impact many employees, but that impact cannot be avoided and is best accomplished when your team has more bandwidth and is able to devote more time to fix/optimize processes. In addition, the company will not only reap the benefits sooner, but employee morale will increase as their frustrations diminish when they stop using an inadequate system.
In essence, the best time to implement an ERP system is not when you are getting crushed by the waves of growth. It is far better to get slightly out in front of the waves in order for you to ride the waves to success.